integrated - jse · the village main reef board, assisted by the audit committee, is ultimately...

INTEGRATEDANNUAL REPORT 2013

Taking a differenT view

6950_13_Village MR IR_ES47.indd 1 2013/09/27 8:51 PM

INTEGRATED ANNUAL REPORT 2013

AND BOUNDARY OF REPORTSCOPE

This Integrated Annual Report presents a review of the business, strategy, performance and objectives of Village Main Reef Limited (Village or the Company) for the 12 months ended 30 June 2013.

The audited financial statements set out on pages 80 to 150 were signed and published on 27 September 2013.

The report has been prepared in compliance with the South African Companies Act No. 71 of 2008, the Listings Requirements of the Johannesburg Stock Exchange (JSE); the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code) and in line with the recommendations of the King Code of and Report on Governance Principles for South Africa 2009 (King III).

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and its interpretations adopted by the International Accounting Standards Board (IASB), the South African Institute of Chartered Accountants (SAICA) Financial Reporting Guides as issued by the Accounting Practices Committee, the JSE Listings Requirements and in the manner required by the South African Companies Act 71 of 2008.

Information relating to the economic, social and environmental impacts and performance of the Company is contained within the report as a whole, rather than in a separate sustainability section. Village aims to increase its disclosure to stakeholders as the Company grows and its operations mature.

Website: www.villagemainreef.co.za

Scan to download the Integrated Annual Report 2013 or go to www.villagemainreef.co.za

INTEGRATEDANNUAL REPORT 2013

Taking a differenT view

6950_13_Village MR IR_22Jul_ES1.indd 1 2013/07/22 5:29 PM

DIRECTORS’ DECLARATIONThe Village Main Reef Board, assisted by the Audit Committee, is ultimately responsible for overseeing the integrity of the Integrated Report. The directors confirm that they have collectively reviewed the content of the Integrated Report 2013 and believe it addresses the material issues, and it is a fair presentation of the integrated performance of the Group. The Village Main Reef Board approved this Integrated Report on 26 September 2013.


CONTENTS

1

CONTENTSScope and boundary of report IFC

Key features 1

Our business 2

Managing risk 5

Our material issues 9

Board of directors 10

Letter from the Chairman 13

Chief Executive Officer’s review 17

Mineral resources and mineral reserves 21

Review of operations 37

Corporate governance 54

Remuneration report 62

Directors’ responsibility and approval 67

Audit and risk committee report 68

Directors’ report 71

Independent auditor’s report 79

Summary of audited financial statements 80

Glossary of terms 151

Corporate information IBC

KEY

FEAT

URES

R80 million

INVESTED IN

CONTIN

ENTAL C

OAL

FIRST S

TEP TAKEN T

O STRATEGIC

ALLy

POSITIO

N VILL

AGE AS A

DIV

ERSIFIE

D

RESOURCES INVESTM

ENT COM

PANy

FOUNDATION lA

ID F

OR STRONg

CASh FlO

w

LOSSES A

T BUFFELS

STEM

MED B

y PLA

CING

ThE MIN

E ON C

ARE AND M

AINTENANCE

PRODUCTION A

T

TAU S

USTAIN

ED



BUSINESSOUR

The Company’s assets comprise Lesego Platinum, Cons Murch Mine, Buffelsfontein Gold Mines, Tau Lekoa Mine, the South Gold Plant and Blyvooruitzicht Gold Mining Company (Blyvoor Gold Mine). During the year, Village acquired an interest in Continental Coal Limited.

• Lesego Platinum, a world-class platinum project, is 78% owned by Village. Lesego is located on the Eastern Limb of the Bushveld Igneous Complex (BIC), which contains the greatest concentration of the earth’s known platinum group metal (PGM) resources.

• Cons Murch Mine, located in Limpopo Province, produces antimony with gold as a by-product from its three operating shafts and is one of the largest global producers of antimony outside China. Village owns a 76.6% interest in Cons Murch.

• Tau Lekoa Mine, 100% owned by Village, is located in the Klerksdorp goldfields, close to the town of Orkney in the North West Province.

• Buffels Gold Mine (Buffels) is located in the Klerksdorp goldfields of the Witwatersrand Basin. Buffels, which is 100% owned by Village, was placed on care and maintenance during the current financial period.

• South Gold Plant, operated by Village’s wholly-owned subsidiary, Nicolor, processes all underground gold material of the Group.

• Blyvoor Gold Mine, located in the Carletonville goldfields of the Witwatersrand Basin, produces gold from both underground and surface sources. Village has operated Blyvoor since 1 June 2012, and for accounting purposes recognises a 74% ownership.

• Continental Coal, 16.34% owned by Village, is an Australian listed company with coal assets located in South Africa.

The Company has a black economic empowerment (BEE) ownership in excess of 23%. Broad-based black economic empowerment (BBBEE) partner, Umbono, holds some 11% of Village and Xelexwa a further 7%. Village is proud of the fact that its BEE partners are unrestricted equity holders in the truest sense and continue to positively contribute to the vision and strategy of the Company.

Lesego Platinum has a management agreement in place with Umbono to oversee the design and related work currently underway.

During the current financial year, as part of a restructuring of Village’s Buffelsfontein operations, Buffelsfontein disposed of the Tau Lekoa operations and South Gold Plant to separate legal entities. This resulted in Tau Lekoa and South Gold Plant becoming wholly-owned subsidiaries of Village. Each asset is housed as a separate legal entity and is managed as an autonomous business. Cons Murch Mine is a separate legal entity and is managed as such. Apart from executive

Village is a South African based, mining and resources investment company, with its ordinary shares listed for trading on the main board of the JSE under the share code VIL.

78%* 76.6%** 74%***100%

Buffelsfontein Gold Mines

Blyvoor Gold Mine

Lesego Platinum

100%

South Gold Plant

100%

Tau Lekoa Mine

* 22% owned by Industrial Development Corporation (IDC)** 23.4% owned by Cons Murch Employee Trust*** 20% owned by Khumo Gold SPV (Pty) Ltd and 6% by DRDSA Empowerment Trust

Cons Murch Mine

16.34%

Continental Coal


3

OUR BUSINESS

management capacity, the only other centralised services are financial and regulatory compliance, which is housed in a separate legal entity, Village Shared Services.

As at 30 June 2013, the Group employed 7,824 people, including contractors.

During June 2013, Village restructured its head office, resulting in a number of head office staff being retrenched and the corporate head office being relocated to smaller premises in Bryanston, Johannesburg, South Africa.

The Company’s strategy is to invest in and develop self-sustaining, socially-responsible mining entities. This is achieved by identifying and acquiring assets that represent

value, unlocking opportunities in a way which realises their potential value.

• We aim to:

• make smart investments;

• target strategic investment in smaller companies that can generate their development financing needs internally;

• unlock value and return it to shareholders; and

• develop a diversified portfolio of assets.

• In the longer term, we aim to convert Village from an operator of diversified small mines into a resources investment company.

LESEGO PLATINUM

TAU LEKOA MINE

Northern Cape

Eastern Cape

KwaZulu-Natal

Free State

North WestMpumalanga

Limpopo

Gauteng

Western CapeBUFFELS GOLD MINE AND SOUTH GOLD PLANT

Klerksdorp

Lydenberg

Polokwane

Johannesburg

Pretoria

Durban

East London

Bloemfontein

Port ElizabethCape Town

CONS MURCH MINE

CONTINENTAL COALOPERATIONS ANDDEVELOPMENT

BLYVOOR GOLD MINE

The Village strategy can be summarised as follows:

SMART INVESTMENTS +

STRONg PARTNERShIPS +SMART VAlUE UPlIFT =SElF-SUSTAININg SOCIAllY-RESPONSIBlE INVESTMENT


INTEgRATED ANNUAl REPORT 20134

we remain committed to our

strategy to diversify our assets“

”STRIKINg ThE BAlANCE


5

MANAgINg RISK

RISKMANAgINg

The audit and risk committee approves the risk strategy and the policies that are formulated and implemented by the executive committee and senior management. This system assists the Board in discharging its responsibility for ensuring that the wide range of risks associated with the Group’s operations are managed effectively in support of the creation and preservation of stakeholder wealth and well-being.

The outsourced internal audit function plays a pivotal role in providing assurance to the Board on the effectiveness of the risk management process. Where weaknesses are identified, these are addressed as part of the continual improvement of the risk management process and assurance framework. Risks identified as material are reported to the executive committee and senior management where they are reviewed as part of the risk management escalation process.

The Board, in conducting its annual review of the effectiveness of risk management, considers the key findings from the ongoing monitoring and reporting process, management assertions and assurance framework. Both internal and external audit reports are reviewed by the Board on a quarterly basis.

APPROAChThe management of risk is critical to the success of the Company, given its exposure to a wide variety of risks which could have a financial, operational and/or reputational impact on the Group. Effective management of risk supports the delivery of Village’s strategic objectives.

The approach to the management of risk relies on the following key actions:• identifying the key strategic risks that could have a

significant impact on the ability of the Group to achieve its strategic objectives;

• assessing the impact and likelihood of these risks;• ensuring that appropriate controls and responses are put

in place to mitigate identified risks;• monitoring the effectiveness and implementation of

controls; and• reporting regularly to the executive committee, the audit

and risk committee and the Board of directors.

Risks identifiedThe executive committee has engaged the services of an external consultant to assist with the identification of the strategic risks of Village. This was facilitated through a number of risk assessment workshops where strategic risks to be mitigated and controlled were identified at both operational and Company level.

The Board is responsible for oversight of the risk management process and is assisted in its responsibilities by the audit and risk committee, together with external consultants. The day-to-day responsibilities for risk management, and the design and implementation of appropriate processes to manage risk, reside with management.

The table below was used to categorise the inherent risk exposure of the identified risks into five different categories:

CATEgORY CATEgORY DESCRIPTION FACTOR

Extreme This risk should be terminated/insured/controlled 50 +

high This risk should be insured/controlled 35 – 50

Moderate This risk will typically be controlled (treated) 25 – 35

lowManagement will make an informed decision as to whether this risk must be controlled or absorbed by Village. The decision will be based on a ‘cost vs. benefit’ approach

15 – 25

InsignificantImpact and probability is insignificant. This risk may be tolerated, and cost of losses will be absorbed by the Company

1 – 15



The table below was used to categorise the residual risk exposure into five different categories:

CATEgORY lEVEl CATEgORY DESCRIPTION FACTOR

Priority 1Immediate action required

Management should take immediate action to reduce residual risk exposure to an acceptable level

+25

Priority 2 Action requiredManagement should implement more controls or increase the effectiveness of current controls to reduce the residual risk to a more acceptable level

17.5 – 25

Priority 3 MonitorManagement should constantly monitor the risk exposure and related control effectiveness

12.5 – 17.5

Priority 4 Acceptable The residual risk exposure is acceptable to the Company 7.5 – 12.5

Priority 5 Reduce control Management may consider reducing the cost of control 1 – 7.5

The key strategic risks identified in the previous financial year have been depicted graphically in the table below:

NO. KEY RISK IDENTIFIED

INhERENT RISK EXPOSURE

RESIDUAl RISK EXPOSURE

AlIgNED wITh TOP 10 INDUSTRY RISKS

1 health and safety accidents and incidents (operational risk) Extreme Priority 1 4

2 Cost – rand per tonne increase Extreme Priority 1 4

3 Low productivity Extreme Priority 1

4 Ageing mining infrastructure high Priority 1

5 Realised rand gold price per kilogramme high Priority 1 4

6 Political uncertainty high Priority 2 4

7 Inadequate environmental compliance high Priority 3 4

8 Theft high Priority 3 4

9 Industrial action high Priority 3 4

10 Regulatory complexity – mineral regulation – JSE, King III, Companies Act

high Priority 4 4

11 Inability to attract and retain key skills and talent required (technical and legal appointees)

Moderate Priority 4 4

12 Enterprise resource planning (ERP) systems implementation, procedures and changed processes

Moderate Priority 4 4

The audit and risk committee, with guidance from the appointed external consultants, has aligned its structured plan for implementing effective and ongoing risk management for these identified risks. Specific risk governance activities at a Board level include:• utilising the risk assessment outputs to shape Village’s strategy;• determining Village’s levels of risk tolerance for each identified risk;• reviewing and assessing risk management performance;• ensuring that combined assurance plans are developed to provide the necessary assurance on the risk profile; and• monitoring progress against the risk management plan.

In light of the strategic risks identified from the previous financial year, the audit and risk committee has mandated the internal auditors to perform specific reviews across Village operations. On a quarterly basis the results from these periodic reviews have been presented to the audit and risk committee for consideration. Further action, as applicable, was then mandated to the executive directors for resolution. The following table summarises the internal audit work performed and findings for the year under review.

MANAgINg RISK continued


7

MANAgINg RISK

INTERNAl AUDIT ACTIVITY REPORT FY2013 This report documents the internal audit reviews performed against the audit and risk committee approved Internal Audit Plan for Fy2013 and the associated results of the work performed.

REVIEw AS PER ThE APPROVED FY2013 INTERNAl AUDIT PlAN STATUS OF REVIEw REPORT RATINg

NUMBER OF ISSUES RAISED AND ASSOCIATED RISK ClASSIFICATION

PIO J K O M

Risk assessment workshop:• Blyvooruitzicht Mine

Completed Acceptable n/a

Operational expenditure and budgetary control review• Buffelsfontein Gold Mine• Tau Lekoa Mine • Blyvooruitzicht Mine

Completed Acceptable 2 2 1 0 0

Procurement review (only non-contract items covering the entire procure to pay cycle):• Tau Lekoa/shared services

(complete)• Cons Murch (in progress)

Partially complete Acceptable 1 1 4 0 0

Ad hoc review: verification of overtime (Cons Murch)

Completed Significantly weak 0 0 1 2 5

SEVERITY CATEgORY OF AUDIT FINDINgS

PIO Performance improvement opportunity

J Low

K Moderate

O high

M Critical

Tau Lekoa Gold Mine is located in the Klerksdorp goldfields in the North West Province.



MANAgINg RISK continued

INTERNAl AUDIT FOllOw-UP REVIEwS The progress made by management in addressing the findings raised by internal audit is as follows:

ENTITY REVIEw FOllOw-UP STATUS

NUMBER OF FINDINgS

Resolved Partially resolved Unresolved

Buffelsfontein Mine Accounting of the ore Completed 4 0 0

Capital project expenditure

Completed 7 1 0

Time and attendance Completed 7 1 2

Tau Lekoa Time and attendance Completed 5 1 4

Planned maintenance Completed 5 3 2

Transportation service provider

Completed 5 0 1

Buffelsfontein and Tau Lekoa

Service provider compliance

Completed 5 2 3

Cons Murch Time and attendance Completed 12 1 5

Metallurgical plant Time and attendance Completed 6 1 2

56 10 19

The orebody at Lesego Platinum’s Phosiri dome consists of both the UG2 Chromitite and Merensky Reefs.


9

MATERIAl ISSUES

MATERIAl ISSUESOUR• FlEXIBIlITY AND ShARINg BENEFITS wITh STAKEhOlDERS We, at Village, are aware that we serve a multitude of stakeholders, ranging from shareholders and employees, to our host

communities and South Africa as a whole. Adjusting or fine tuning our strategy so as to enhance our sustainable future benefits all stakeholders. We take cognisance of shifts in the world of minerals and in financial and investment markets and respond to those shifts.

• DElIVERINg A SUSTAINABlE FUTURE We work towards a sustainable future for our shareholders, employees and communities. It is a future that will be sustainable

as we extract all possible value profitably from our mature gold properties and invest strategically in growth projects across the minerals spectrum.

• SECURINg OUR lICENCE TO OPERATE We must maintain our licence to operate, which includes social and environmental compliance. As we manage our operations

profitably we provide local employment directly, and we provide it indirectly through our purchases from local suppliers. And as our operations are profitable, they are able to deliver revenues to employees through employee profit-sharing schemes. We believe this is the starting point for retaining our social licence to operate.

• A STRATEgIC AIM: DIVERSIFICATION OF OUR PORTFOlIO Our people are focused on specific sectors in our suite of assets. And, when appropriate, we shall seek and take in partners

with skills, assets or skills that can advantageously be combined with ours or where we can contribute to theirs. Product diversity is central to our aims, which provided some of the rationale underlying our investment in Continental Coal and its long-life coal resources.

Vlakvarkfontein Coal Mine is one of Continental Coal’s three operating mines in South Africa.



OF DIRECTORSBOARD

BERNARD SwANEPOEl MARIUS SAAIMAN

FERDI DIPPENAAR DAlUBUhlE NCUBE

SANDEEP gANDhI RIChARD DE VIllIERS

KhETIwE MCClAIN ROY PITChFORD

gERARD KEMP

BABA NJENJE

PhIwAYINKOSI MBUYAZI

BERNARD SwANEPOEl (52)Chief Executive Officer

BSc (Mining Eng), BCom (Hons)

Bernard was appointed as a director of Village on 11 July 2008 and subsequently as Chief Executive Officer (CEO) on 17 May 2010. he acted as joint CEO from 4 May 2012 to 14 May 2013, when he assumed the role of CEO once again. he started his career with Gengold in 1983, culminating in his appointment as general manager of Beatrix Mines in 1993. After joining Randgold in 1995 as managing director of harmony mine, Bernard became CEO of harmony from 1997 to 2007. Bernard is a non-executive board member of Sanlam and African Rainbow Minerals (ARM), a partner of To The Point Growth Specialists and a non-executive director of Continental Coal.

MARIUS SAAIMAN (42)Managing Director Platinum

BCom (Hons) (RAU), CA (SA) SAICA

Marius was appointed as Chief Financial Officer (CFO) of Village on 29 June 2011. he was subsequently appointed as joint CEO on 4 May 2012, a position which he held until 14 May 2013, when he was appointed as the Managing Director of Village Platinum. Before joining Village, Marius was CFO of Simmer and Jack Mines Limited and in early 2011 stepped in as acting CEO of Simmers. Prior to this, Marius was responsible for coverage of the resource sector as well as advising on mergers and acquisitions within the sector at Macquarie. Previous positions include investment adviser at African Global Capital, head of corporate finance and treasury at Kumba Iron Ore and vice president in the corporate finance department at Anglo American plc.

FERDI DIPPENAAR (52)Managing Director gold

BProc, BCom, MBA

Ferdi was appointed as a director of Village on 31 July 2008. he has been employed in various capacities in the mining industry since 1982, the last being the president and CEO of Great Basin Gold Limited from December 2005 to August 2012. In May 2013, Ferdi was appointed as an executive director of Village and the Managing Director of Village Gold.

DAlUBUhlE NCUBE (34)Managing Director Antimony

BSc Eng (Mining), Pr Eng, CPLD, MBA (Wits), ASAIMM, AAMMSA

Dalu started his career in the South African gold mining industry where he gained experience in shaft pillar and remnant mining. he held technical and operational management positions at various operations within harmony Gold, including a group-wide role for the management of operational improvement projects related to a strategic focus on cost per tonne reduction. he then joined To The Point Growth Specialists as a technical analyst in 2008. Dalu later played a pivotal role as part of the To The Point turnaround intervention team at Cons Murch Mine which


11

BOARD OF DIRECTORS

eventually led to the acquisition of that mine by Village in March 2011. he was appointed to the Village Board in July 2008 as a non-executive director and later as an executive director in charge of operations in May 2010, and later, in May 2013, as Managing Director of Village Antimony.

SANDEEP gANDhI (39)Chief Financial Officer

CA (SA)

Sandeep Gandhi was appointed as CFO of Village on 4 May 2012. he was previously chief accountant at Johnson Matthey (Pty) Limited and has held managerial roles at Ernst & young US, GlaxoSmithKline UK, British Airports Authority UK and PricewaterhouseCoopers.

RIChARD DE VIllIERS (59)Director of human Resources

BA (Hons), Masters in Management, Dip Employment Relations, Dip Labour Law

Richard began his career at Blyvoor and has been involved in the mining industry for the past 40 years. he previously served on the boards of directors of harmony Gold Mining Company Limited, Randgold & Exploration Company Limited, ERPM Limited and DRDGold Limited.

INDEPENDENT NON-EXECUTIVE DIRECTORSROY PITChFORD (63)FCCA, CA (Z)

Roy was president of the Chamber of Mines in Zimbabwe. his extensive mining management experience includes the CEO roles at African Minerals, Cluff Resources in Zimbabwe, Delta Gold Zimbabwe, Zimbabwe Platinum Mines (Australia-listed), and African Platinum (UK-listed). he developed and led the sale of Zimbabwe Platinum Mines and African Platinum to Impala Platinum. he is currently a non-executive director of a number of mining companies and remains involved in the establishment and development of new mining ventures.

KhETIwE McClAIN (49)BA (Fine Arts)

Khetiwe was the CEO and executive chairman of Alexkor Limited, a state-owned diamond mine in Alexander Bay, until September 2011. She is an executive director of Khusela Women Investments (Pty) Limited of which she is a founding shareholder. She also sits on the board of trustees of AECI Ltd.

gERARD KEMP (58)MSc (Mining Eng), DPLR (Unisa), MPd (Unisa), Mine Surveyor Dip

Gerard was appointed as a non-executive director of Village on 28 June 2011 and as chairman of the audit committee from May 2013. he is currently the CEO of Kaouat Iron Limited. Gerard was previously CEO of the Pamodzi Resources

Fund, and prior to that, director of business development (resources) of Rand Merchant Bank. While a gold analyst at BoE Securities, Gerard was twice rated the country’s top gold analyst. he spent 22 years in Anglo American’s gold division, where he headed the mining economics department of the West Rand region.

NON-EXECUTIVE DIRECTORSPhIwAYINKOSI MBUYAZI (42)BSc (Elec Eng) (UCT), BA (PPE) (Oxford)

Phiway’s career in the mining industry began in 1994 when he joined De Beers as an engineer. In 2002, he joined Umbono Capital Partners, a company of which he is a co-founder, and played a role in Umbono’s initiatives in serving the mining industry as corporate advisor. Phiway was CEO of Lesego Platinum and oversaw its initial exploration programme which, at the time, culminated in the declaration of a 24 million ounce (Moz) 3PGE inferred resource. While Phiway has recently become an author and a champion of South Africa’s indigenous languages, he continues to serve Umbono Capital Partners as a non-executive director in its mining and minerals investment businesses.

BABA NJENJE (54)Advanced Diploma in Health Education, Masters in Education for Primary Health Care

Baba was appointed as a non-executive director of Village on 28 June 2011. She is an executive director on the Vulisango board and holds a number of other non-executive roles.

Subsequent to year-end, the following changes were made to the Board of Directors:

Resignations

Effective 11 August 2013, the following directors resigned from the Board of Directors. The resignations were tendered in support of Village’s objective of having an appropriately-sized and configured Board of Directors and is aligned with the re-organisation taking place throughout the Company:

Roy Pitchford – Chairman

Sandeep gandhi – Chief Financial Officer

Richard de Villiers – human Resources Director

Appointments

Effective 11 August 2013, the following appointments were made:

Bernard Swanepoel (formerly the CEO and executive director), was appointed as non-executive director and Chairman;

Ferdi Dippenaar remains an executive director and assumes the role of CEO;

Marius Saaiman remains an executive director and assumes the role of interim CFO; and

Octavia Matloa was appointed as independent non-executive director.



we have slimmed down our

corporate head office to provide

renewed management energy and

focus to each of our assets“ ”BACK TO BASICS


13

FROM ThEChAIRMANlETTER

lETTER FROM ThE ChAIRMAN

We at Village have not been alone in our difficulties. Virtually all of our peers, particularly the smaller mining companies, have wrestled with similar problems. For some it has been a matter of sheer survival. But where Village has, in my view, proved its worth has been in its ability not only to survive the rigours and to excise deadwood but also to initiate its transformation into a diversified resources investment company.

Overshadowing these challenges, remains the continued loss of life at our operations. Five employees lost their lives during this year. The Board and management team extend their sincere condolences to the families and colleagues of the men who died. Village has implemented an industry first in the form of centralised safety and health monitors, who are tasked with proactively improving safety and health, through regular independent audits at all our operations.

Village, it bears repeating, is not a company blindly wedded to a single corporate strategy in a changing world. Our strategy for some years was to acquire mature mining properties that could be restored to profitability by a nimble company such as ours so as to create value to be distributed to shareholders. Part of our strategic aim was to sell these restored properties at a profit and to distribute the proceeds. We were not in the business of retaining mines. But the opportunities we sought have become fewer in a radically-changing mining environment, leading to our decision 18 months ago to embark on a strategic redirection.

Village has always been about value and we have consistently indicated to the market and to our other stakeholders that we believed it prudent to diversify away from a pure gold exposure. A strategy of turning high-cost, marginal gold operations around requires substantial flexibility, something the current South African environment does not offer, given the deep level of operations; complex and rigid labour laws; unstable union relations; high administered-cost increases and inflexible winter electricity tarif fs; and complex interactions with the regulator. These factors, overlaid with a falling gold price, justify having a diversified portfolio.

Let me start, then, with the hard decisions – the closure

during the past year of the Buffelsfontein gold mine and,

after the end of the financial year, that of Blyvooruitzicht.

Both closures were unavoidable.

The closure of Buffels and, post year-end, Blyvoor, remain

regrettable. Production at Buffels reached levels where the

remaining orebody was not sufficient to justify the costs of

developing and opening up new areas, and we had to place

the underground operations on care and maintenance.

At Blyvoor we were faced with a perfect storm over the

12 months we managed this asset. As early as September

2012, production was impacted by the unprotected strikes

throughout the gold mining sector. This, combined with a

large seismic event that destroyed some 40% of the mine’s

panels, continued rivalry between unions, the steep rise in

costs, particularly during the winter months, and the drop

in the gold price, left Village with little option but to stem a

growing cash haemorrhage.

In order to avoid misunderstanding about Village’s interest

in Blyvoor, it is worthwhile restating the facts.

On June 1, 2012 Village entered into a conditional purchase

agreement that would allow it to acquire ownership of

DRDGold’s 74% interest in Blyvoor. There were conditions

precedent, namely, the conversion of the old order mining

right to a new order mining right and, subsequently, the

consent of the Minister of Mineral Resources, under Section

11 of the Mineral and Petroleum Resources Development

Act (MPRDA), to transfer ownership from DRDGold to

Village. These two conditions remain unfulfilled. Village

did not become the legal owner of the (74% of shares)

asset, but all losses and profits were for Village’s account

under a contractual management agreement during the

management period. In terms of IFRS, it was accounted for

as a subsidiary. Essentially, Village found itself subsidising

Blyvoor’s ongoing losses by way of loans to the mine, a

situation that became increasingly untenable.

It is with mixed feelings that I report on the past year, Village Main’s fiscal 2013, and the few months that have followed it. They are mixed feelings as I shall be stepping aside to pass the chairmanship to Bernard Swanepoel at the coming annual general meeting. It has been a period in which many difficulties were faced, in which many hard decisions needed to be taken and a period in which the framework was constructed for a sound future.

ROY PITChFORD

”



lETTER FROM ThE ChAIRMAN continued

We decided that the transfer of ownership was unlikely to proceed and in August 2013, after the 2013 year-end, we decided that we would no longer throw good money after bad. We explained our decision to the mine’s board, and halted our funding. Underground operations have ceased with no possibility of them being reopened and a liquidator has been appointed.

It is unlikely that Village will be able to recover these loan funds. The issue will only be resolved once the liquidator has sold the assets of Blyvoor - if there are funds remaining after all preferential claims. Village is one of several creditors, as are the 26% BEE partners.

All employees – some 1,700 – have had their employment contracts suspended at the mine but, for the present, are still housed at the mine’s hostel and village. A decision on their future is in the hands of the liquidator.

having said that, our experiences at Buffels and Blyvoor underscore the merits of converting Village into a resources and investment company with a diversified portfolio.

Our strategy at Tau Lekoa is to harvest the mine’s remaining gold resource so as to continue generating positive cash flows. We continue to adhere to our belief that our responsibility is to create wealth to be distributed to shareholders and other stakeholders.

We remain of the opinion that regular dividends, to the extent the operations allow and that are prudent, are just reward to the capital providers. We have always indicated that, when value is created for our shareholders, we would return it to them. We did just that through the special dividend declared and the 6% of shares we bought back during the year under review and were disappointed that the dividend and the share buy-back did not create positive momentum in our share price.

With hindsight, it would certainly have created a larger safety net for Village had we not distributed all of the cash. As the custodians of the strategy of the Company, we consistently aim to create value. I remain firmly of the view that Village’s current share price does not reflect the

Company’s true value. This is, however, no different to our peers in the market, where most junior mining companies have experienced large devaluations of their share prices.

In the year under review we acquired an initial 16.34% interest in the Australian-listed Continental Coal Limited (Conti). The fact is that we believe in the fundamentals of thermal coal and in South Africa’s place in the international market. Conti is an experienced operator which has demonstrated its ability to develop new mines in the current environment.

We continue to believe in our strategy to create value for our shareholders, albeit that we have had to tweak this somewhat over the past 12 months. We will continue to harvest Tau Lekoa and to seek opportunities that will create real value over the longer term. We believe that a diversified portfolio in the form of a resources investment company can deliver everything we have been advocating.

To this end, we have restructured and slimmed down our corporate head office so as to provide renewed management energy and focus to each of the assets in the Village portfolio. Village has seen a number of changes at Board level in line with the strategy of becoming a resources investment company. As has been announced, I shall be making way for Bernard Swanepoel to take over as non-executive Chairman. This will allow Bernard the opportunity to remain involved and to guide the strategic direction of Village, without the responsibility of day-to-day management.

It remains for me to say that it has been a privilege to have served as Chairman of Village and to have been associated with executives of such calibre. I thank them all for their unfailing support during a period which has made great demands on everyone involved.

Roy PitchfordFormer Chairman26 September 2013


15

lETTER FROM ThE ChAIRMAN

The portal entrance to the Gravelotte new surface decline at Cons Murch.



It has been a period in which

many hard decisions needed to

be taken and a period in which

the framework was constructed

for a sound future… Village has

survived the rigours“ ”MEASURINg UP


17

Bernard Swanepoel, Village’s former CEO, discusses challenge, change, curbing costs and strategic progress.

EXECUTIVEOFFICER’S REVIEwChIEF

ChIEF EXECUTIVE OFFICERS’ REVIEw

QUESTION: In last year’s report you were at pains to indicate what Village was not. Can you tell us a bit more about what Village is, and how its strategy is evolving?

ANSwER: We remain about value rather than size; we aim to make smart investments, unlock value and return it to shareholders; and to develop a diversified portfolio of assets.

But, our strategy has evolved in that we are no longer a buyer of marginal or, if you will, ‘throw-away’ gold mining assets. We continue to convert Village from an operator of diversified small mines into a resources investment company. Particularly given the state of the markets, we will rather be targeting smaller companies that can generate their development financing needs internally.

QUESTION: The past year could be described as an annus horribilis for so many mining companies – was this the case for Village?

ANSwER: There were challenges that were specific to our operations and those broader ones that affected our overall operating environments.

The broader issues are well known – the commodities cycle, investors’ growing reluctance to invest in emerging markets, their stepping back from junior resources companies and America’s tactics to save its economy from recession. They were issues that hit almost everyone across the resources spectrum. This is best reflected in junior companies’ share prices.

Then there were the specific challenges that put brakes on some of our plans to convert Village into a resources investment company.

We had been negotiating to sell Consolidated Murchison, but prospective purchasers were in no hurry to buy as antimony and gold lost favour. Buffelsfontein struggled with losses resulting in its underground operations being placed on care and maintenance.

Blyvoor continued to lose money and, in August of 2013, we had no choice but to stop all financial support to the Company. This resulted in Blyvoor being placed into provisional liquidation.

On a more positive note, in the past year, our Tau Lekoa gold mine remained profitable despite gold’s weakness and the impact of inflation administered costs that are beyond our direct control.

Frankly, time and patience are needed to bring our new

strategy to fruition. And we have both.

QUESTION: You mention inflation of administered costs. Can you elaborate?

ANSwER: Among the main problems is that of electricity

and our mines are disproportionately exposed to non-

negotiable electricity tariffs. Let me give you an example.

Eskom discourages its ultimate customers from using

electricity wastefully in the winter months by levying winter

tariffs – we pay 384% more for a unit of power in the four

winter months than in the summer ones. So our mines have

to try to make profit in the eight months of summer tariffs to

cover the losses they suffer under the winter regime.

We are not alone in facing this challenge, but there is not

a single South African miner that can cut power usage just

because it’s winter. We still need to pump water, cool our

mines and hoist the ore.

QUESTION: what are your views on the share price performance?

ANSwER: The share price fell by 70% - from 150c to

45c - over the year. The share price performance has been

disappointing, particularly as we had made special strategic

distributions to shareholders by means of a share buy-back

and a 30c special dividend. Our stated policy has been to

create new value from assets that may not be attractive to

others and to distribute that value to shareholders.

That said, the travails of the platinum and gold sectors as

a whole affected us too. Some platinum juniors fell by as

much as 80% to 90%, while even some of the gold majors

shed 50%.

QUESTION: Can we talk about the specifics for each of your mines? Shall we start with Buffels?

ANSwER: Underground operations at Buffels are on care-

and-maintenance and are likely to remain in that state for

the foreseeable future. In the meantime, one-third of the

cost of pumping water at the Margaret shaft on the old

Stilfontein property is being charged to Buffels, though

the only beneficiary is AngloGold Ashanti or, at least, its

neighbouring mining operation. We will continue to pursue

a long-term sustainable solution for the current illogical

pumping arrangement.

BERNARD SwANEPOEl



ChIEF EXECUTIVE OFFICER’S REVIEw continued

We are investigating the viability of re-opening the Buffels northern treatment plant to process the mine’s own gold-bearing surface rock and residue dumps. But they are low-grade deposits and may require spending R80 to R100 million.

QUESTION: And Tau lekoa?

ANSwER: Tau Lekoa is in reasonable shape and, all being well, could remain in production for another four years, maybe five if we are lucky and are not hit by cost advances. Its underground workings are comparatively shallow, and while this helps contain costs the mine now needs to carry the full costs of South Plant and shared services.

QUESTION: how, then, is Blyvooruitzicht different?

ANSwER: Blyvoor faced a most challenging 12 months under Village management. Although Blyvoor in theory has a potentially viable orebody, its costs have escalated to such a level that the mining of underground panels is marginal at best. The fact that losses at Blyvoor accelerated post year-end forced Village to suspend all financial support to Blyvoor during August 2013. Whilst this was regrettable, it was necessary to ensure the survival of Village.

The provisional liquidator appointed by the Master of the high Court has taken over all operational control of Blyvoor.

QUESTION: And what of wage negotiations? Are your operations not seriously threatened by some of the wage demands we have seen this year, and indeed the fractious industrial relations across the industry?

ANSwER: yes. That is particularly so at our mature mines where grade and working adjustments may not be easy. The effect is to advance the date when closure becomes inevitable, something that is particularly noticeable at mines with short life expectancies. Our aim at all times is to keep our properties in profitable operation and, thereby, able to provide jobs. Excessive labour cost increases merely hasten the inevitable job losses that accompany closure. But as I remarked earlier, so too do excessive increases in administered prices, such as those of electricity, over which we have no control. having said that, we are happy with the two year agreement signed with all the unions on South Plant and Tau Lekoa.

QUESTION: what is planned for Cons Murch if prospective buyers have turned away?

ANSwER: It’s not inconceivable that Cons Murch might eventually end up in someone else’s hands. But that does not affect how we run it whilst we are the owners. Cons Murch may be a comparatively small operation, but its ore reserves are sound and sufficient for many more years of

exploitation at favourable antimony and gold prices. As for new production, we are currently developing a new decline to open up resources that can be extracted profitably at the veteran Gravelotte mine.

The challenge at Cons Murch is determining the appropriate gold by-product relationship to antimony that permits accurate pay limit calculations. That is particularly so at the Athens, Beta and Monarch shafts where ore shoots continue at depth.

Prospective buyers may have been deterred by Chinese intervention (as they have done in rare earths) in the global antimony market – an intervention based on cutting prices that has left China as the producer of more than 80% of the world’s antimony and Cons Murch trailing in second place with less than 3%. We haven’t dressed up the mine’s operations to attract buyers. We intend running the mine ourselves as a going concern. And it bears recalling that Cons Murch is one of the world’s very few producers in a reliably-stable political jurisdiction.

That said, and though Village is a signatory to the Framework Agreement on a Sustainable Mining Industry signed on 3 July 2013, regrettably an unprotected strike developed on 10 July, 2013, a few days after the close of the financial year. The strike, initially by 130 miners who occupied the underground workings of the Monarch decline shaft, eventually affected the mine’s entire 918-strong work force and halted operations for 10 days. The strike came about because of employees’ misunderstanding of their benefit entitlements under the terms of the BEE Employee Share Trust that has a 23.4% shareholding in the mine. The strike ended after the Labour Court interdicted the strikers from continuing with their unprotected action, with most of the workers returning to underground operations. Appropriate disciplinary action (including dismissal) has been taken.

QUESTION: Then there’s lesego. when might that see the light of day?

ANSwER: Lesego presents us with something of a dilemma, largely over timing.

During the past year we completed the additional drilling and analysis needed to prepare a definitive feasibility study (DFS) for the property. This initial DFS has indicated that a real internal rate of return (IRR) of 14% would be generated based on a peak funding requirement of R10.5 billion needed to produce an annual 300,000 ounces over more than 50 years from a resource containing 39 million ounces.

Whilst these investment amounts and returns demonstrate the quality of this orebody, it is highly unlikely the project could be funded in the current challenging platinum market.


19

ChIEF EXECUTIVE OFFICERS’ REVIEw

In response, Village has asked the project team to investigate alternative low investment cost scenarios mining 50,000 to 80,000 tons per month. Although levels of confidence are still comparatively low, initial indications suggest that a low volume/low investment cost option could provide an attractive option in the current platinum investment climate.

QUESTION: And the investment in Continental Coal?

ANSwER: While Conti is an Australian-registered company, its assets are entirely in southern Africa and it is in the process of obtaining a secondary listing on the Johannesburg Stock Exchange. In South Africa, it has three operating collieries currently producing something over 3Mt a year and has completed a bankable feasibility study for a fourth mine. With the opening of this fourth operation, production is targeted to rise to an annual 10Mt of thermal coal for export and local markets by 2015. In addition, Conti has three exploration prospects in Botswana and a further four in South Africa. All of Conti’s South African operating collieries are fully BEE compliant.

Our current holding in Conti is 16.34%. Including the 25 million options to be issued to us, our fully diluted holding is just below the 20% level that would have triggered a mandatory offer to all shareholders in terms of Australian Securities Exchange rules. however, those regulations permit the purchase of a further 3% equity stake every six months without triggering a mandatory full offer.

We remain committed to our strategy to diversify our assets and coal continues to be one of our preferred commodities. We will seek opportunities to increase our exposure to coal through our investment in Conti.

QUESTION: Cutting costs is a common refrain. how, in fact, is Village curbing costs?

ANSwER: At an operational level, our focus is on direct control of costs. Unlike some of the mining majors, we do not have large numbers in a head office and, therefore, have less scope for cutting overheads. In fact, we asked ourselves whether a company of Village’s size, operations and strategy required a formally-structured corporate head office which adds to the overheads of the mines it oversees. Our conclusion was that it does not. As a consequence, in May 2013, we effectively removed our ‘head office’ altogether, thereby eliminating overheads and freeing my fellow directors to focus their particular skills more closely on specific aspects of our business.

Dalu Ncube, who is a highly-experienced mining engineer with extensive practical experience of managing mature and small mines, is taking full executive and operational control at Cons Murch. While the intention remains to sell

Cons Murch, now, and under Dalu’s guidance, the aim is to manage to mine profitably. The unprotected strike in July was something of a baptism of fire for Dalu.

Ferdi Dippenaar has returned to an executive role to manage Village’s remaining gold assets. Ferdi is experienced in managing marginal gold projects and will bring that skill to bear on maximising value with the ‘final harvesting’ of our mature gold properties.

Marius Saaiman, my former joint CEO, has stepped aside from that position to focus on opportunities for Village in the platinum sector as that division’s managing director. his initiatives will include leveraging opportunities off our ownership of the world-class Lesego project.

As for me, I will focus on developing Village’s relationship with Conti Coal, of which I am a non-executive director.

QUESTION: And what might shareholders expect in FY2014?

ANSwER: Our aim is to have Tau Lekoa operations profitable by the end of the first quarter of Fy2014. Along with virtually every other South African metal miner, we are catching up with the trend of weakening commodity prices. That involves cost cutting and positioning ourselves for dealing with any further price deterioration while becoming lean enough to take full advantage of upward moves.

We have taken decisive action over the last couple of months to reduce the risks facing Village. We have placed Buffels on care and maintenance, we have successfully extracted Village from future exposure to Blyvoor losses and we have settled the unprotected labour action at Cons Murch. Village is now very well positioned to harvest the strong cash flows generated by Tau.

Unlike the past year when we distributed excess funds to shareholders, this year we shall concentrate on conserving cash to back up our diversification strategy. Personally, I would welcome an extension of our minerals portfolio into copper, in our own back yard – the Northern Cape or even Namibia. But let me emphasise, this is far from being a firm policy.

This coming year will be one of strategic progress, of curbing costs and of ensuring that our operations are optimised to deliver sustainable revenues.

Bernard SwanepoelFormer CEO26 September 2013



we have taken decisive action

over the last couple of months

to reduce the risks facing

Village… we are now positioned

to harvest the strong cash flows

generated by Tau“”

SPIT AND POlISh


21

RESOURCES AND MINERAl RESERVES MINERAl

MINERAl RESOURCES AND MINERAl RESERVES

The total gold resources for Cons Murch Mine are divided into surface (tailings dump) and underground resources. This update also includes the mineral resources and reserves of Blyvoor Mine which was acquired in June 2012. The reserves portion for Blyvoor Mine is not yet SAMREC-compliant. however, as the life-of-mine plan is currently being updated, this should lead consequently to an updated version of the mineral reserves statement.

The mineral resources and reserves were reviewed and verified independently by the following Competent Persons as defined in the SAMREC Code: Venmyn Deloitte (Pty) Limited (for Lesego Platinum), CAE Mining (for Tau Lekoa, Buffels and Blyvoor Mine).Minxcon (Pty) Limited (Minxcon) for Cons Murch tailings dumps and an independent consultant, Mr C Wilson (for Cons Murch Mine underground operations).

Brief curriculum vitae of the respective Competent Persons are provided under each respective report.

Commodities estimatedThe mineral resource and mineral reserve statements pertain to the gold (Au) mineralisation for Tau Lekoa and Blyvoor Mine, Au and uranium oxide (U3O8) mineralisation for Buffels, Au and antimony (Sb) mineralisation for Cons Murch Mine and platinum (3PGE+Au) mineralisation for the Lesego project.

Key features The following tables summarise some of the key features of this mineral resources and reserves update for Village assets, including a comparison of total underground resources and reserves year-on-year.

SUMMARY BY COMMODITY

MINERAl RESOURCES

2013

MINERAl RESOURCES

2012

% INCREASE/

(DECREASE)

MINERAl RESERVES

2013

MINERAl RESERVES

2012

% INCREASE/

(DECREASE)

Au 60.37Moz 57.36Moz 5.2 6.99Moz 3.70Moz 88.9

Sb 204,673t 206,293t (0.79) 25,420t 28,848t (11.88)

3PGE+Au 39.03Moz 39.03Moz – – – –

MINERAl RESOURCES AND MINERAl RESERVES STATEMENT FOR VIllAgE MAIN REEF ASSETS

The detailed mineral resources and reserves statement contained in this section is for all Village assets as of 30 June 2013. It is an update to last year’s statement of 30 June 2012. For the four operational assets that were reported on last year (Tau Lekoa, Buffels, Blyvoor and Cons Murch Mine) the reported mineral resources are inclusive of mineral reserves.



MINERAl RESOURCES AND MINERAl RESERVES continued

The mine design takes cognisance of the resource classification to determine the optimal siting of potential surface infrastructure and primary underground access. The phase 3 exploratory drilling programme focuses on improving the resource classification of the inferred resources within the proposed initial payback area. A portion of inferred material is included in the immediate payback area of the project. Approximately 14% of inferred material is included in the payback period for the Merensky and UG2 reefs respectively, thus 23.7 million ounces out of a total resource of 39 million ounces is included in the initial payback period.

The mining resource estimate is 78 million tonnes (Mt) at a grade of 4.66 g/t 4e and 76.9Mt at a grade of 4.85 g/t 4e for the Merensky and UG2 seams respectively (including dilution and after modifying factors have been applied). Table 1 and Table 3 below summarise the mineral reserves inventory for the Merensky and UG2 seams after all modifying factors have been applied.

Table 1: Summary for the Merensky Reserve

MERENSKY

Category

Area RD width Tonnage grade

(km2) (g/cm3) (m) (Mt) 4E (g/t) Ni (%) Cu (%)

Proved 5.02 3.22 1.21 19.56 4.31 0.21 0.10

Probable 7.41 3.23 1.20 28.82 4.75 0.21 0.11

Total reserve 12.43 3.22 1.21 48.38 4.57 0.21 0.10

Table 1: Summary for the Merensky Reserve (continued)

MERENSKY

Category

Metal Prill Splits

4E (t) Moz (4E) Ni (t) Cu (t) Pt (%) Pd (%) Rh (%) Au (%)

Proved 84.33 2.71 41,123 19,734 58.3 32.4 3.2 6.1

Probable 136.88 4.40 61,249 31,024 58.7 32.0 3.1 6.2

Total reserve 221.21 7.11 102,372 50,758 58.5 32.2 3.2 6.2

Notes: 1. Inferred material included in the mine design. 2. All material inclusive of resources. 3. Inferred resource incidental to the mine design is shown in Table 2.

Table 2: Inferred Merensky Resource

MERENSKY

Category



Inferred 7.80 3.22 1.18 29.72 4.81 0.23 0.11

Table 2: Inferred Merensky Resource (continued)

MERENSKY

Category

Metal Prill Splits


Inferred 142.86 4.59 66,886 32,468 58.2 32.3 3.1 6.4

MINERAl RESERVES STATEMENT FOR lESEgO PlATINUM PROJECT


23


Table 3: Summary for the UG2 Reserve

Ug2

Category



Proved 4.98 3.64 1.47 26.66 4.42 0.14 0.04

Probable 8.97 3.70 1.33 44.02 5.08 0.16 0.05

Total reserve 13.95 3.68 1.38 70.68 4.83 0.15 0.05

Table 3: Summary for the UG2 Reserve (continued)

Ug2

Category

Metal Prill Splits


Proved 117.82 3.79 38,308 11,937 48.9 37.8 11.3 2.0

Probable 223.75 7.19 68,921 22,535 48.2 38.3 11.2 2.2

Total reserve 341.57 10.98 107,229 34,472 48.5 38.1 11.2 2.2

Notes:1 Inferred material included in the mine design.2. All material inclusive of resources.3. UG2 mine design area limited to lowest Merensky level (2,050m below collar).4. Inferred resource incidental to the mine design is shown in Table 4.

Table 4: Inferred UG2 Resource

Ug2

Category



Inferred 1.31 3.70 1.28 6.22 5.06 0.16 0.05

Table 4: Inferred UG2 Resource (continued)

Ug2

Category

Metal Prill Splits


Inferred 31.47 1.01 9,872 3,339 47.1 39.3 10.9 2.7



The resource estimate has been prepared by MSA Group Services (MSA) in accordance with the SAMREC Code and signed

off by Venmyn Deloitte (Pty) Ltd (Venmyn) as Competent Person. MSA has reduced the overall tonnages by applying a 17%

geological loss as recommended by Venmyn as the Competent Person to account for possible losses due to factors such as

faulting, pillar losses and potholing. The resource statement remains unchanged from 2012.

AFTER gEOlOgICAl lOSS OF 17% COMBINED MERENSKY AND Ug2 ChROMITITE

Resource classificationwidth

(m)grade (g/t)

3PgE+AuTonnage

(Mt)Moz

3PgE+AuCu

tonsNi

tons

Measured 1.23 5.61 43.97 7.94 38,235 91,838

Indicated 1.23 6.05 83.65 16.26 71,659 168,353

Inferred 1.22 6.03 76.56 14.83 69,434 160,733

Total project mineral resources 5.95 204.18 39.03 179,328 420,924

MR mineral resources 1.15 5.66 80.47 14.65 101,278 204,878

UG2 mineral resources 1.27 6.13 123.71 24.38 78,050 216,046

Total project mineral resources 5.95 204.18 39.03 179,328 420,924

This resource estimate reports 39.03Moz 3PGE+Au in 204Mt of ore. The resource width of 1.23m was selected to take

account of some of the known mining parameters thus moving the resource closer to what could be expected in a reserve

statement. In addition, the resource contains combined nickel (Ni) and copper (Cu) of 600,000 tonnes.

A summarised resource estimate is given for both the Merensky Reef and UG2 Chromitite in the tables below:

SUMMARISED MERENSKY REEF MINERAl RESOURCES

Depth below surface (m)*

Resource category

Reef area (m2)

RD (g/cm3)

width (m)

grade (g/t)

3PgE+AuTonnage**

(Mt)Moz

3PgE+Au Cu (t) Ni (t)

350 – 2,050

Measured 5,124,116 3.23 1.08 5.58 18.55 3.33 23,449 48,559

Indicated 8,020,531 3.26 1.09 5.70 29.99 5.49 37,734 74,340

Inferred 8,363,845 3.24 1.08 5.67 31.92 5.82 40,095 81,980

Lesego Platinum total Merensky Reef mineral resources 5.66 80.46 14.64 101,278 204,879

Notes:

* Surface is approximated by using the proposed shaft collar elevation (750m above mean sea level (amsl)).

** Tonnage (Mt) and Moz 3PGE+Au are discounted by 17% for geological losses.

SUMMARISED Ug2 ChROMITITE MINERAl RESOURCES

Depth below surface (m)*

Resource category

Reef area (m2)

RD (g/cm3)

width (m)

grade (g/t)

3PgE+AuTonnage**

(Mt)Moz

3PgE+Au Cu (t) Ni (t)

350 – 2,350

Measured 5,259,883 3.71 1.30 5.64 25.41 4.61 14,786 43,279

Indicated 11,291,406 3.73 1.27 6.24 53.65 10.77 33,925 94,014

Inferred 9,543,687 3.73 1.26 6.28 44.64 9.01 29,339 78,753

Lesego Platinum Project total UG2 Chromitite mineral resources 6.13 123.70 24.39 78,050 216,046

Notes:

* Surface is approximated by using the proposed shaft collar elevation (750m amsl).

** Tonnage (Mt) and Moz 3PGE+Au are discounted by 17% for geological losses.


MINERAl RESOURCES STATEMENT FOR lESEgO PlATINUM PROJECT


25


IntroductionThis mineral resource and reserve update for both Buffels and Tau Lekoa mines has been necessitated by mining depletion and

other mining activities that occurred since the last update in July 2012.

The mineral resources and mineral reserves updates pertain to gold mineralisation for Tau Lekoa; and gold and uranium oxide

for Buffels.

The following are the key features from this update statement for Tau Lekoa and Buffels:

• A 1.77% year-on-year increase on total resources for Tau Lekoa (3.83Moz in 2013: 3.77Moz in 2012);

• A 40% year-on-year increase on total reserves for Tau Lekoa (1.301Moz in 2013: 0.783Moz in 2012);

• A 0.1% year-on-year decrease on total resources for Buffels (22.16Moz in 2013: 22.19Moz in 2012). Depletion for the

period June 2012 to June 2013 was applied to the measured resource; and

• A 0.357% year-on-year increase on total reserves for Buffels (1.961Moz in 2013: 1.954Moz in 2012).

TAU lEKOAMineral resource and mineral reserves tables

The following tables are a summary of the mineral resources and mineral reserves of Tau Lekoa as of 30 June 2013.

Tau Lekoa 30 June 2013 gold mineral resources

CUT-OFF TONNAgEAu

gRADE Au CONTENTSTOPE wIDTh

Category cmg/t t g/t t oz cm

Measured 200 13,688,563 7.41 10.138 325,700 146

Indicated 200 6,179,393 6.90 42.989 1,382,114 131

Measured and indicated 200 19,867,956 7.04 53.127 1,707,814 138

Inferred 200 13,392,139 4.93 66.051 2,123,602 121

Tau Lekoa 30 June 2013 gold mineral reserves

UNDERgROUND TONNAgE Au

Category t g/t kg oz

Proved 1,475,285 4.94 7,283 234,151

Probable 6,290,858 4.92 30,970 995,714

grand total 7,766,143 4.93 38,253 1,229,865

Weltevreden project 30 June 2013 gold mineral resources

CUT-OFF TONNAgEAu


Category cmg/t t g/t t ’000oz cm

Measured 200 40,000 5.70 0.23 7 140

Indicated 200 14,020,000 2.80 39.26 1,262 162

Measured and indicated 200 14,060,000 2.81 39.49 1,269 162

Inferred 200 30,230,000 2.68 79.08 2,605 140

MINERAl RESOURCES AND MINERAl RESERVES FOR TAU lEKOA MINE AND BUFFElS MINE




Jonkerskraal project 30 June 2013 gold mineral resources

CUT-OFF TONNAgEAu


Category cmg/t t g/t t ’000oz cm

Measured 200 686,173 4.05 2.78 89 142

Indicated 200 6,621,321 4.06 26.86 864 158

Measured and indicated 200 7,307,494 4.06 29.649 953 156

Inferred 200 30,890,000 2.14 66.16 2,125 140

Notes:

1. Mineral resources are stated at a 200cmg/t cut-off.

2. Mineral resources declared is stated at 100% resource potential, of which no attributable portions have been assigned or stated in the above table.

3. Minor geological losses of between 3% – 16% applied to tonnage.

4. The tonnages are stated at a relative density of 2.71t/m3.

5. Conversion from kg to oz: 1: 32.15076.

6. Milled tonnes are as delivered to metallurgical plant.

7. Columns may not add up due to rounding.

Reasons for changes in the June 2013 update versus the June 2012 update for Tau lekoa

As per the comparison table for the resource blocks, after further scrutiny from the geologists at Tau Lekoa and a better

understanding of the areas of Tau Lekoa, there are several blocks that are added which were not part of the 2012 resource

blocks, hence an increase in the indicated blocks. In addition, some blocks were depleted as being in the fault loss areas, but

on remapping of the structure, some faults were reduced, hence an increase in new blocks for 2013.

There was however, no activity on the Weltevreden project and because of the minimal activity on Jonkerskraal the resource

estimation of 30 June 2012 was applied with a depletion from 1 June 2011 to 30 June 2013.

Competent Persons sign-off

This report was compiled and signed-off by the following key technical persons and Competent Person:

gerard Evans

Manager: Geology (CAE Mining);

BSc hons Geology (Pr Sc Nat);

Gerard has four years’ experience as geology manager at CAE Mining.

Coillard howard

Group ore reserve manager (Village Main Reef);


Coillard has 10 years’ experience in the Witwatersrand gold deposits and three years in Platreef deposits. he has been a

mineral resources manager for three years and spent one year as Group mineral resource manager at Village Main Reef. Coillard

has been a member of the Geological Society of South Africa (GSSA) since 2001.

Pinkie Elizabeth letsie

Geo-stats team member (CAE Mining);

National Diploma in Geology, GDE; M Eng;

Pinkie has five years’ geological experience in Witwatersrand deposits and two and a half years’ experience in geological

evaluations. She has been a Geostatistical Association of Southern Africa (GASA) member since 2007 and a GSSA member

since 2008.


27


BUFFElSMineral resource and mineral reserves tables

The following tables are a summary of the mineral resources and mineral reserves of Buffels as at 30 June 2013.

Buffels 30 June 2013 gold mineral resources

CUT-OFF TONNAgEAu


Category cmg/t Mt g/t t ’000oz cm

Measured 200 16.75 11.67 195.45 6,284 120

Indicated 200 15.43 10.76 166.03 5,338 120

Measured and indicated 200 32.18 11.23 361.48 11,622 120

Inferred 200 22.48 14.57 327.63 10,534 125

Buffels 30 June 2013 uranium oxide mineral resources

CATEgORY (UNDERgROUND) CUT-OFF TONNAgE

U3O8 gRADE U3O8 CONTENT

STOPE wIDTh

Au g/t Mt kg/t t Mlb cm

Measured 2.00 13.50 0.228 3,078 6,786 117

Indicated 2.00 12.87 0.288 3,707 8,172 119

Measured and indicated 2.00 26.37 0.257 6,785 14,958 118

Inferred 2.00 13.98 0.423 5,905 13,018 125

Buffels 30 June 2013 gold mineral reserves

MIllED TONNAgE Au

Category Shaft Mt g/t kg ’000oz

Proved 2&4 1.34 14.2 19,026 612

5 1.10 11.66 12,857 413

6 0.16 12.42 1,987 64

7 1.43 10.91 15,613 502

8 0.41 11.71 4,770 153

Proved total 4.44 12.22 54,253 1,744

Probable 2&4 0.19 11.22 2,099 67

5 0.28 10.75 2,970 95

6 0.014 11.45 172 6

7 0.13 10.61 1,377 44

8 0.016 9.81 159 5

Probable total 0.63 10.85 6,777 217

grand total (proved and probable) 5.07 12.05 61,030 1,961

Notes:1. Underground Au reserves and resources.2. Milled tonnages refer to tonnes delivered to the metallurgical plant.3. All figures are in metric tonnes.4. Specific gravity (SG): 2,76t/m3.5. Conversion from kg to oz: 1: 32.15076.




Reasons for changes in the June 2012 update versus the June 2013 update for Buffels

The changes in the mineral resources estimate figures are attributable to a combination of the following factors:

The inferred and indicated resources are similar to those of 2012 as no mining activity took place in those areas, nor has any new information been gathered on 9, 10, 11 and 12 Shafts for 2012. There was a minor decrease on the measured resources compared to 2012 due to mining activities in those areas.



Charles Muller

Director (Minesoft);


Charles has 24 years’ experience in the mining industry.

Coillard howard



Coillard has 10 years’ experience in the Witwatersrand gold deposits and three years in Platreef deposits. he has been a mineral resources manager for three years and spent one year as Group mineral resource manager at Village Main Reef. Coillard has been a member of the Geological Society of South Africa (GSSA) since 2001.



National Diploma in Geology; GDE; M Eng;

Pinkie has five years’ geological experience in Witwatersrand deposits and two and a half years’ experience in geological evaluations. She has been a Geostatistical Association of Southern Africa (GASA) member since 2007 and a GSSA member since 2008.

Buffelsfontein Gold Mine was placed on care and maintenance during the year under review.


29


Following proper mine planning and orebody modelling, the mineral reserves statement for Blyvoor is an updated version from the 2012 reserves statement which was non-SAMREC compliant and also had been heavily discounted. The 2013 mineral reserves were estimated at 3.61Moz, compared to the non-SAMREC compliant 2012 reserves of 0.8Moz. The 2013 mineral resources and reserves statement is not SAMREC compliant.

The following tables are a summary of the mineral resources and mineral reserves of Blyvoor as at 30 June 2013.

Blyvoor 30 June 2013 gold mineral resources

CATEgORY CUT-OFF TONNAgEAu


cmg/t Mt g/t t ’000oz cm

Measured

U/g 200 38.96 7.23 282 9,062 120

Surface – – – – – –

Indicated

U/g 200 37.66 5.63 212 6,813 120

Surface – 142.89 0.31 44 1,419 –

Measured and indicated

U/g 200 76.62 6.44 494 15,876 120

Surface – 142.89 0.31 44 1,419 –

Inferred

U/g 200 133.28 3.74 498 16,025 120

Surface – 8.09 0.25 2 65 –

Mineral reserves estimate

TONNAgE Au CONTENT

Category Mt g/t t ’000oz

Proved

2013 6.33 12.08 76,5 2,458

Probable

2013 3.17 11.29 35,8 1,151

grand Total (proved and probable)

2013 9.50 11.82 112,26 3,609

Notes to the mineral resource and reserves statement.1. Underground Au reserves.2. Milled tonnages (million tonnes) refer to tonnes delivered to the metallurgical plant.3. All figures are in metric tonnes.4. Specific gravity (SG): 2,737t/m3.5. Conversion from kg to oz: 1: 32.15076.

REVIEw OF MINERAl RESOURCES AND MINERAl RESERVES FOR BlYVOOR






gerard Evans

Manager: Geology (CAE Mining);


Gerard has four years’ experience as geology manager at CAE Mining.

Coillard howard



Coillard has 10 years’ experience in the Witwatersrand gold deposits and three years in Platreef deposits. he has been a mineral resources manager for three years and spent one year as Group mineral resource manager at Village Main Reef. Coillard has been a member of the Geological Society of South Africa (GSSA) since 2001.



National Diploma in Geology; GDE; M Eng;

Pinkie has five years’ geological experience in Witwatersrand deposits and two and a half years’ experience in geological evaluations. She has been a Geostatistical Association of Southern Africa (GASA) member since 2007 and a GSSA member since 2008.

Village suspended financial assistance to Blyvooruitzicht Gold Mine post FY2013.


31


IntroductionCons Murch Mine assets are located in Gravelotte in the Limpopo province of South Africa. The operation consists of three vertical shafts and two surface declines. The mine holds a total of 1,581ha in mineral rights and 9,544ha in prospecting rights over the full extent of the economically significant part of the Murchison Greenstone Belt. The mineral resources are stated inclusive of mineral reserves and are classified separately as underground and surface resources for both gold and antimony.

Surface resources are the two tailing dumps that have been evaluated by independent consultants, Minxcon; while underground resources refer to unmined resources.

Key features of the mineral resources and reserves statement of 2013The major changes in resources and reserves over the year are as follows:• 11.88% year-on-year decrease in total mineral reserves for antimony (underground): from 28,848 tonnes in 2012 to

25,420 tonnes in 2013;• 13.52% year-on-year decrease in total mineral reserves for gold (underground): from 133,300 oz in 2012 to 115,280 oz in 2013;• 0.79% year-on-year decrease in total mineral resources for underground antimony: from 206,290 tonnes in 2012 to

204,673 tonnes in 2013; and• 4.93% year-on-year decrease in total mineral resources for underground gold: from 744,950 oz in 2012 to 709,950 oz in 2013.

Underground mineral resourcesReported to 1% (Sb) cut-off

MEASURED INDICATED TOTAl MEASURED AND INDICATED

ShaftMillion tonnes Sb%

Sb tonnes

Million tonnes Sb%

Sb tonnes

Million tonnes Sb%

Sb tonnes

Athens 0.14 0.81 1,106.10 0.75 1.97 14,686.98 0.89 1.79 15,793.08

Beta 0.04 2.65 1,167.88 0.25 2.82 7,107.89 0.29 2.79 8,275.77

Monarch 0.06 1.60 960.90 1.52 1.43 21,777.64 1.58 1.44 22,738.54

Alpha/ Gravelotte 0.09 3.14 2,838.94 0.47 2.81 13,303.97 0.56 2.87 16,142.91

grand total 0.33 1.83 6,073.82 2.99 1.90 56,876.49 3.32 1.89 62,950.30

INFERRED TOTAl MEASURED, INDICATEDAND INFERRED

ShaftMillion tonnes Sb%

Sb tonnes

Million tonnes Sb%

Sb tonnes

Athens 1.15 2.10 24,213.00 2.04 1.97 40,009.55

Beta 1.23 2.51 30,885.30 1.53 2.57 39,153.80

Monarch 1.83 1.90 34,732.00 3.41 1.68 57,478.90

Alpha/Gravelotte 1.84 2.82 51,888.00 2.40 2.83 68,030.91

grand total 6.05 2.34 141,718.30 9.38 2.18 204,673.16

MINERAl RESOURCES AND MINERAl RESERVES FOR CONS MURCh MINE




Reported to 1g/t (Au) cut-off

MEASURED INDICATED TOTAl MEASURED AND INDICATED

ShaftMillion tonnes Au g/t ’000oz

Million tonnes Au g/t ’000oz


Athens 0.14 1.54 6.54 0.75 3.41 79.08 0.88 3.12 85.62

Beta 0.04 2.40 3.29 0.25 2.49 19.52 0.30 2.48 22.81

Monarch 0.06 1.85 3.46 1.52 4.33 205.11 1.58 4.24 208.57

Alpha/ Gravelotte 0.09 0.30 0.84 0.47 0.21 3.08 0.56 0.22 3.92

grand total 0.33 1.37 14.13 2.99 3.30 306.79 3.32 3.10 320.92

INFERRED TOTAl MEASURED, INDICATEDAND INFERRED

ShaftMillion tonnes Au g/t ’000oz


Athens 1.15 2.57 95.17 2.04 2.81 177.80

Beta 1.23 2.30 90.96 1.53 2.33 110.82

Monarch 1.83 3.32 195.14 3.41 3.75 397.38

Alpha/Gravelotte 1.84 0.35 20.83 2.40 0.32 23.96

grand total 6.05 2.07 402.10 9.38 2.43 709.96

Footnotes to mineral resource statement.1. A mineral resource is a natural occurrence of material or a concentration of economic interest in or on the earth’s crust in such form, quality and

quantity that there are reasonable prospects for eventual economic extraction.2. There are three categories of a mineral resource which are measured, indicated and inferred, respectively, in the order of decreasing geoscientific confidence. 3. Mineral resources are inclusive of ore reserves. The stated content is considered in situ. Beneficiation and recovery factors have not been applied.4. There are known permitting, taxation, social, legal, environmental and political factors that may affect the estimates of the mineral resource.

Reasons for change

The year-on-year reduction in resources was due to mining depletion of resources.

Antimony ore stockpile at the Cons Murch processing plant.


33


Surface mineral resourcesTailings dump No.1

DENSITY CUT OFF VOlUME AND TONNES gRADE

Category t/m³ km³ Mt Au g/t Sb PPM Au EQUIV g/t

Measured 1.57 0.23 3.94 6.18 0.46 7,518 0.85

Tailings dump No.1 (continued)

Au CONTENT Sb CONTENT Au EQUIV CONTENT

Category t koz t t koz

Measured 2.84 91.40 46,461 5.25 168.89

Tailings dump No.2

DENSITY CUT OFF VOlUME AND TONNES gRADE

Category t/m³ km³ Mt Au g/t Sb PPM Au EQUIV g/t

Measured 1.57 0 7.47 11.73 0.5 2.37 0.85

Tailings dump No.2 (continued)

Au CONTENT Sb CONTENT Au EQUIV CONTENT

Category t koz t t koz

Measured 5.87 188.60 27,788 9.97 320.60

Footnotes to surface mineral resource statement1. Table above is stated as total tailings dam tonnages. These tables are as per Minxcon (Pty) Limited evaluation.2. The tonnages are stated at a relative density of 1.57t/m³.3. Conversion from kg to oz: 32.15076.4. Cut-off (Au equivalent): 1:19.197 Au: Sb.5. Gold price US$400,000/kg. 6. Exchange rate R9 = US$1.7. Sb price $4,222.22/tonne of 58% concentrate.8. Optimistic operating cost (including plant operating) is R66/t.9. Mine call factor 100%. Recovery: Au 70%; Sb 30%.10. Mineral resources are inclusive of mineral reserves.11. All figures are in metric tonnes.

Reasons for change

The declarations for both dumps are as per last year’s resources declaration since no slimes retreatment was done in the past financial year.



MINERAl RESOURCES AND MINERAl RESERVESCONS MURCh MINE continued

Mineral reservesUnderground Sb ore reserves

Reported to a 2.31% (Sb) cut-off

PROVED PROBABlE TOTAl PROVED AND PROBABlE

ShaftKilo

tonnes Sb%Sb

tonnesKilo

tonnes Sb%Sb

tonnesKilo

tonnes Sb%Sb

tonnes

Athens 0.00 0.00 0.00 219.84 2.70 5,935.52 219.84 2.70 5,935.52

Beta 20.05 2.62 526.03 184.23 3.04 5,605.56 204.28 3.00 6,131.59

Monarch 23.23 2.30 534.43 675.78 1.84 12,420.55 699.01 1.85 12,954.98


grand total 43.28 2.45 1,060.46 1,096.26 2.22 24,359.98 1,139.54 2.23 25,420.44

Underground gold ore reserves

Reported to a 4.10g/t (Au) cut-off

PROVED PROBABlE TOTAl PROVED AND PROBABlE

ShaftKilo

tonnes Au g/t ’000ozKilo

tonnes Au g/t ’000ozKilo

tonnes Au g/t ’000oz

Athens 0.00 0.00 0.00 219.84 2.02 13.80 219.84 2.02 13.80

Beta 20.05 2.79 1.74 184.24 2.61 14.95 204.29 2.63 16.69

Monarch 23.23 2.95 2.13 675.78 3.89 81.71 699.01 3.86 83.84


grand Total 43.28 2.88 3.87 1,096.27 3.27 111.41 1,139.55 3.25 115.28

Parameters • Operating cost R1,000/tonne• Au price R400,000/kg• Sb price $4,222.22/tonne of 58% concentrate• Au rec: 66%• Sb rec: 83%• $:R exchange rate 1:9.00• BCF: Sb = 83%; Au = 93%• Dilution at 15%

Footnotes to ore reserves statement1. An ore reserve is the economically-mineable material derived from a measured or indicated mineral resource, or both, on which beneficiation factors

have been applied.2. There are two categories of mineral reserve, that is, probable and proved reserve, with increasing level of geoscientific confidence respectively.3. There are known permitting, taxation, social, legal, environmental and political factors that may affect the estimates of the mineral resource.4. Due to rounding of figures small discrepancies may exist.5. Cons Murch mine ore reserves are reported as per SAMREC Code.6. Estimates were calculated using weighted block averages.

Reasons for changeThe year-on-year reduction in resources was due to mining depletion of resources.


35


The high decrease in probable reserves is mainly because of Beta shaft, which experienced geo-technical loss of ground (sill pillar failure in old worked-out stopes).

Competent Person statementThe reported mineral resources and reserves statement has been compiled by Mr C Wilson (BSc Geology). Mr Wilson is a member of the GSSA, and a former employee of Cons Murch Mine (Pty) Limited, a division of Village Main Reef (Pty) Limited acting on an independent auditor basis. he has sufficient experience relevant to the style of mineralisation and type of deposit under consideration (32 years Murchison Greenstone Belt) and to the activity he is undertaking, to qualify as a Competent Person as defined by the SAMREC Code. Mr Wilson consents to the inclusion of the matters based upon his information in the form and context in which it appears.

Mr Wilson was assisted by Mr VT Mashoene (BSc Geology). Mr Mashoene is a member of the Geological Society of South Africa (GSSA) and an employee of Cons Murch Mine (Pty) Limited, a division of Village Main Reef (Pty) Limited. he has sufficient experience relevant to the style of mineralisation and type of deposit under consideration (seven years Murchison Greenstone belt) and to the activity he is undertaking. Mr Mashoene consents to the inclusion of the matters based upon his information in the form and context in which it appears.

Mr C Wilson BSc (Geology) (GSSA)

Mr VT Mashoene, BSc (Geology) (GSSA)

(The Competent Person for the mineral resources statement for the surface tailings dumps is heather King of Minxcon Consultants.)

Trackless mining equipment at Cons Murch. The mine is making the transition to more mechanised mining.



In the ye

ar under revie

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an interest in Continental C

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will seek to

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37

REVIEw OF OPERATIONS

OF OPERATIONSREVIEw

• Behaviour and culture change initiatives included:• ‘Buddy-buddy’ safety initiative which focused on creating shared vigilance by pairing up each employee with another

employee, and each is tasked with caring for the safety and health of the other, thus promoting safe behaviour and culture. This is also in line with Section 22 of the Mine health and Safety Act;

• Revision of incentive schemes to give more weighting to health and safety aspects; and • Creation of an independent and centralised group of health and safety monitors who focus on compliance, general audits

and the monitoring of implementation of preventative measures. The group also serves as a secondary interface between executives and employees at the face in relation to health and safety strategies.

• Implementation of revised Group safety systems and a change in approach towards accident investigation, with a key focus on root-cause analysis and systems failure;

• Implementation of action plans to close gaps that were identified in the previous financial year, following the completion of the gap analysis carried out as part of the industry-wide culture transformation framework. These will focus on such areas as diversity management, accountability, proactive safety approaches, creating a vision for safety and health and more visible felt leadership;

• Implementation of a fall-of-ground (FOG) management strategy for the Group’s underground tabular, narrow-reef mines;• Industry leading practices implementation and monthly inter-mine audits, where the management and leading practice team

of one mine audit another mine and share knowledge on implementation and adaptability techniques; and• Continued focus on wellness programmes with a key focus on holistic employee well-being.

TAU lEKOA gOlD MINE

The following operational review highlights mine-specific operational performance including safety and health performance. In addition, the following health and safety initiatives were successfully implemented on a Group-wide basis during the year under review:

Klerksdorp

FREE STATE PROVINCE

NORTH WEST PROVINCE

Orkney

TAU LEKOA

S 26° 59’ 44”E 26° 36’ 33”



REVIEw OF OPERATIONS continued

TAU lEKOA gOlD MINE continued

lOCATION: Tau Lekoa gold mine is located close to the town of Orkney at the western extreme of the Klerksdorp goldfields in the North West Province. Contiguous to the mine are the Goedgenoeg and Weltevreden mineral properties.

DESCRIPTION: Main access is via two vertical surface shafts. Underground development is well advanced as the mine approaches its end of life, with most of the mining taking place in pre-developed blocks. The mining method is scattered breast, overhand or underhand, depending on conditions.

STRATEgY: Since Village acquired the mine in June 2011, a key focus area has been productivity improvement with an emphasis on improving face advance and reducing the cost per tonne. Initiatives have been implemented to improve mining quality and safety systems in the drive towards zero harm and making mining simpler, better and safer.

gEOlOgY: Tau Lekoa exploits the Ventersdorp Contact Reef (VCR), a gold-bearing quartz pebble conglomerate capping the uppermost angular unconformity of the Witwatersrand Supergroup. Due to the angle of unconformity, the VCR overlies the Klerksdorp Formation in the west of the property and transgresses on to younger beds eastwards, becoming almost conformable with the Mondeor conglomerates and quartzites in the east.

ORE RESERVES AND MINERAl RESOURCES:

In 2013, Tau Lekoa had total reserves of 1.30Moz and total resources of 3.83Moz.

Performance summary:

UNITS 2013 2012

yield g/t 3.88 3.38

Production kg 3,304 3,532

Cash cost R/kg 296,286 274,597

Operating profit/loss Rm 490 324

Capital expenditure Rm 94 86

Number of employees (including contractors) 3,270 2,852

Review of operations:Benefit realisation from the business optimisation project (Tau Pride Project) which was initiated in the previous financial year, peaked during the year under review. Most notably, record production was achieved in the first quarter of Fy2013. The project focused on productivity improvements and examined the concept of the ‘perfect shift’. This covered aspects such as logistics management – how to get people and material to the face as quickly and as safely as possible – and improvements in face advance. A key focus area was also process improvement and tracking of key activities during each shift to identify areas for removing bottlenecks. Effectively, Village wants employees to have a safe and predictable shift.

Tau Lekoa is a hydropower mine, using hydropower rock drills and high pressure water jetting for cleaning. The hydropower system is powered by a centralised electro-hydraulic system, which has been instrumental in improving labour productivity and is vital in assisting Tau Lekoa to achieve its business objectives. During the year under review, and as part of the Tau Pride Project, the hydropower system was effectively optimised.

Safety and healthRegrettably, Tau Lekoa had two fatal accidents during the year under review. In October 2012, Mr Motlatsi Mohaka, a winch operator, aged 52, died in a FOG related accident. In January 2013, Mr Khonzekile Selem, a team leader, aged 48, died in an electrocution related accident.


39


year-on-year improvements were realised in both the reportable injury frequency rate (RIFR) and the lost time injury frequency rate (LTIFR). The RIFR improved from 5.34 (Fy12) to 3.96 (Fy13) and the LTIFR improved from 8.89 (Fy12) to 8.86 (Fy13).

Various safety initiatives have been implemented in steep stope areas, comprising rolling rock controls, the improvement of support design to include support load indicators and the optimisation of face length to improve ground conditions. A FOG management strategy was implemented during the course of the year. In addition behaviour and culture change initiatives were also implemented during the second half of the year and this will be monitored during the next financial year.

Wellness programmes and hIV testing and counselling (hTC) campaigns take place on a quarterly basis. Fourteen active peer educators have been appointed to drive wellness awareness which encompasses hIV/Aids.

Employees and communitySelected employees have undergone business improvement training as part of the business optimisation process. Graduates of the programme have obtained business analysis tools which they will apply to Tau Lekoa and then take to other operations. Tau Lekoa’s transformation measures have continued. At the end of the financial year, historically disadvantaged South Africans (hSDSAs) comprised 80% of senior management, 70% of professionally-qualified staff and 55% of skilled employees. The operation currently has 12% women employees, and this is set to increase with the help of Village’s Group-wide women’s empowerment drive. The employment equity statistics show an improvement from the previous year and the Mining Charter targets have been exceeded.

The mine has recently embarked on a project aimed at identifying local talent in the form of future potential recruits, entrepreneurs and micro, small and medium enterprises. An Enterprise Development Centre has been established in the community where job seekers and small companies can receive training and advice.

EnvironmentConcurrent rehabilitation is taking place at the waste rock dump through a crushing contractor. Tau Lekoa’s environmental rehabilitation liability is fully funded. The financial provision has been revised and approved by the Department of Mineral Resources (DMR). Environmental liability stands at R54,678,188.

OutlookTau Lekoa’s life-of-mine is estimated at four to five years. Management focus is on sustaining productivity measures and increasing the development rate to create mining flexibility. The outlook is for improved volumes in the future, with grades being sustained at current levels.

Tau Lekoa’s management focus includes increasing the development rate to create mining flexibility.



BUFFElS gOlD MINE

lOCATION: Buffels is located in the Klerksdorp goldfields of the Witwatersrand Basin, some 160km south-west of Johannesburg.

DESCRIPTION: The mining method is conventional breast mining with scraper winch cleaning. Mining consists of pillar and remnant mining, while in the newer blocks scattered breast mining is practised. Access is created through conventional development and opening up of old areas. The ore is loaded via ore passes into hoppers and hauled by locomotive to the shaft to be hoisted to surface.

STRATEgY: Post the financial year-end, underground operations have ceased at Buffelsfontein Mine, as the operation became unprofitable.

gEOlOgY: Buffels exploits the Vaal Reef conglomerate for its gold production. The Vaal Reef occurs within the Central Rand Group of the Witwatersrand Supergroup, at the base of the Strathmore Formation. It is a composite package of conglomerate horizons displaying lateral as well as vertical variation.


In 2013 Buffels had total reserves of 1.96Moz and total resources of 22.16Moz. The uranium resource is 27.98Mlb; the uranium is not currently being extracted.


UNITS 2013 2012

yield g/t 3.63 3.15

Production kg 1,043 1,444

Cash cost R/kg 796,069 427,643

Operating (loss) Rm (656) (121.4)

Capital expenditure Rm 33 2.8

Number of employees (including contractors) 1,764 2,844

Note: Included in operating loss is an impairment of R414 million (2012: R27 million). Refer to Note 40.

Klerksdorp

Stilfontein

FREE STATE PROVINCE

NORTH WESTPROVINCE

Orkney

BUFFELS GOLD MINE


S 26° 51’ 58,9571E 26° 44’ 01,9206


41


Review of operations:Production at Buffels was negatively impacted by safety related stoppages and high levels of seismicity at the high grade number 2 shaft and at the high volume no. 7 shaft. This was exacerbated by the lack of mining flexibility and high cost structure related to, amongst others, the maintenance of pumping infrastructure. All of these factors resulted in underground operations remaining unprofitable, despite a number of management interventions. The Village Board placed operations at Buffels on care and maintenance during May 2013. This will see costs at Buffels reduce materially from historic levels to below R7 million per month, mostly related to pumping.

Safety and healthRegrettably two employees lost their lives during the year under review. In December 2012, Mr Sobantu Budaza, a stope team member, aged 42, died in a seismic-related fatal accident and in February 2013, Mr Khotso Ramokhele, a rock drill operator, aged 48 years, died in a FOG related accident. There was a year-on-year regression in RIFR from 6.31 (Fy2012) to 7.61 (Fy2013) and also in LTIFR from 13.08 (Fy2012) to 13.16 (Fy2013).

The necessary health and safety measures will continue to be implemented post the cessation of the underground operations.

Employees and communityAt the end of the financial year, hDSAs comprised 50% of senior management, 43% of professionally-qualified staff and 35% of skilled employees. The mine currently has 7.3% women employees with extra effort has been focused on this area. A great improvement has been made from the previous year but some work remains to be done to exceed the Mining Charter target.

A revised social labour and plan (SLP) submitted to the DMR was approved in April 2013.

Buffels embarked on an Agrifarm project which is designed to address needs identified with local government. The project aims to create a sustainable venture that will have commercial viability; create food security for local communities; and provide jobs and skills development so that individuals and co-operative groups are given the platform to establish and control their own economic destinies. Ownership of each farm portion will remain vested with each co-operative so that, upon completion of the support programme, individuals have the choice to pursue their own business plan or remain within the network established that shares knowledge, skills, procurement costs and customers. One of the requirements of the Department of Trade and Industry (DTI), which assists with funding, is a clear demonstration of co-operative ownership.

During May 2013 a decision was taken to place Buffels on care and maintenance. As part of this process the majority of Buffels employees were retrenched and only some 150 employees retained to ensure pumping activities are maintained.

Buffels Enterprise Development Centre (EDC): contributing to sustainable communities

The Buffels operation established a walk-in centre for job-seekers, entrepreneurs and established business to participate in capacity-building and skills development. From a sustainability perspective, the intention would be to transfer interim management of the EDC to the local economic unit of local government at the end of the five-year programme. During the programme, a service-provider will be appointed to operate the centre. Engaging an experienced programme manager to maintain day-to-day responsibility for the functioning of the EDC, as well as establishing the partnership with local government, is the foundation for sustaining the centre beyond the SLP commitment programme.

In addressing the needs identified with local government, the project has been conceived with a view to creating an incubator for the development of local micro, small and medium enterprises (SMMEs). There are two components to this, SMME skills training and SMME development, and each has a clearly-defined methodology and support programme. Services will include:• free business advice;• comprehensive diagnostic assessment for operational businesses;• access to internet research facilities;• grant-funding applications;




• access to meeting rooms in the centre;• business skills training sponsored (grant funding) throughout the year;• community newsletters featuring the sponsorship in line with Company communications strategy;• local support and network advice contacts; and• monitoring and reporting of projects co-funded by the sponsor.

SMMEs will be given skills training through workshops arranged at the EDC. Courses from certified and accredited service-providers will range from business skills to more technical courses providing advanced business skills. Courses will also include portable skills programmes where the need is identified (bricklaying, plumbing, carpentry) so that SMMEs with a single skill type can expand their business offering to the marketplace.

EnvironmentEnvironmental rehabilitation is ongoing. The total environmental liability is expected to reduce due to the conclusion of the disposal of the tailings dams owned by Mine Waste Solutions (Pty) Limited to AngloGold Ashanti, shaft closures and outside companies taking over rock crushing operations. A rehabilitation plan is being compiled and implemented to reduce the liability, which currently stands at R212.5 million (excluding Mine Waste Solution tailings). As part of the care and maintenance activities, Buffels appointed a number of consultants to assist it in preparing a mine closure plan. During this period, the environmental liability will also be reviewed.

BlYVOOR gOlD MINE

lOCATION: Blyvoor Gold Mine is situated on the north-western edge of the Witwatersrand Basin, to the south of the town of Carletonville in North West Province.

DESCRIPTION: The mine has one producing shaft, 5 Shaft.

STRATEgY: Blyvoor Gold Mine was purchased by Village in May 2012. DRDGold implemented a restructuring exercise to resize and staff the operation appropriately. Management is focusing on effective implementation of the ore reserve management strategy and improving productivity.

gEOlOgY: Blyvoor has two main gold-bearing horizons: the Carbon Leader Reef (CLR), one of the principal orebodies of the Carletonville goldfield; and the Middelvlei Reef, which is some 75m above the CLR horizon.


Total resources for both underground and surface stand at 33.39Moz. Total reserves are estimated to be 3.61Moz.

Potchefstroom

Fochville

Vereeniging

Vanderbijlpark

Carletonville

Soweto

BLYVOOR

GAUTENG

S 26° 25’ 38”E 27° 20’ 32”


43



UNITS 2013

yield g/t 4.02

Production kg 1,621

Cash cost R/kg 595,471

Operating (loss) Rm (690)

Capital expenditure Rm –

Number of employees (including contractors) 1,717

Note: Included in operating loss is an impairment of R469 million (2012: nil). Refer to Note 40.

Review of operationsVarious key events occurred at Blyvoor during the course of the financial year, including restructuring of the underground business unit. Also undertaken was a revision of the ore reserves and resources plan and redefinition of the mining plan. These measures culminated in significantly improved performance in the third quarter. Surface operations continued to deliver consistent performance during the year. however, flexibility challenges negatively impacted on the performance of the underground operations towards the end of the financial year. Losses from underground operations increased substantially during Q4 2013 and it became clear that Village could no longer support these losses. The revised operational plan prepared by management required additional capital injection to provide the required flexibility for underground operations to return to profitability. Village was not willing to make further investments in Blyvoor given the risks associated with the operations.

Safety and healthBlyvoor achieved a milestone of 2.5 million fatality free shifts in the second quarter of the year under review. Regrettably, after that achievement, a fatal accident occurred in December 2012, when Mr Njozana Nombindlela, a rock drill operator, aged 36, died in a seismic-related accident.

Significant safety improvement was realised in terms of reduction in injury frequency rates. The LTIFR reduced from 20.72 in Fy2012 to 13.48 in Fy2013 and the RIFR reduced from 5.64 in Fy2012 to 5.24 in Fy2013.

Group-wide safety initiatives such as the FOG management strategy and the Buddy-Buddy system were rolled out during the year and the effectiveness of these initiatives will continue to be monitored in the coming year.

Employees and communityAt the end of the financial year, hDSAs comprised 29% of senior management, 65% of professionally-qualified individuals and 44% of skilled personnel.

Blyvoor made good progress in revising its SLPs as well as finalising its community development projects. All of these, however, have been placed on hold post the granting of the provisional winding up order on 6 August 2013.

EnvironmentThe environmental management programme (EMP) with rehabilitation liability has been revised and submitted to the DMR for approval. The rehabilitation liability stands at R114.9 million. Concurrent rehabilitation is ongoing.

growth and outlookGiven that Blyvoor was placed under provisional liquidation post year-end, there are no specific plans for these operations. The ability of Village to recover any of its loan claims is largely dependent on the ability of the appointed liquidator to dispose of the Blyvoor assets.




SOUTh gOlD PlANT

lOCATION: South Gold Plant is located South of Buffels Gold Mine, 160km south west of Johannesburg.

DESCRIPTION: The South Gold Plant is a carbon-in-pulp plant with capacity of around 180,000 tonnes of ore per month. The bulk of the plant’s production comes from Tau Lekoa, Blyvoor and Buffels mines.

STRATEgY: For the second successive year, South Gold Plant continued to be managed and controlled as a stand-alone, independent business unit, with its own full capacity management team. Optimisation strategies were effectively implemented.

Review of operationsSouth Gold Plant continued to deliver consistent performance; with sustained improvements in plant recoveries (an average of 95%) and cost efficiencies. These will continue to be priority focus areas, including further cost saving initiatives in the coming year.

Safety and healthSouth Plant continued with its good safety performance with zero fatalities, zero reportable injuries and two lost time injuries during the year under review. Focus will continue on the implementation of additional safety measures and systems improvement as part of the journey towards zero harm.

Employees As of year-end, the plant employed a total of 208 people.

Klerksdorp

Stilfontein

FREE STATE PROVINCE

NORTH WESTPROVINCE

Orkney

SOUTHGOLD PLANT

S 26° 51’ 58,9571E 26° 44’ 01,9206


45

CONS MURCh

lOCATION: Cons Murch is located near Gravelotte, 50km from Phalaborwa, in Limpopo Province.

DESCRIPTION: The mine produces antimony, with gold as a by-product, from its three operating shafts, Athens, Monarch and Beta. Two tailings dumps have been evaluated for their potential by independent consultants.

STRATEgY: Village took control of Cons Murch in March 2011 and currently owns 76.6% of the mine. The remaining 23.4% of the issued share capital is held by a BBBEE employee share trust. The beneficiaries are all existing Cons Murch employees. The mining strategy is primarily focused on creating mining flexibility and improving employee production and cost efficiencies, as the mine makes the transition to more mechanised mining.

gEOlOgY: The mine is situated in the Antimony Line of the Archaean Murchison Greenstone Belt.


In 2013, Cons Murch had: • total mineral reserves for underground antimony of 25,420 tonnes and total mineral reserves for

underground gold of 115,280oz;• total mineral resources for underground antimony of 204,673 tonnes and total mineral resources

for underground gold of 709,950oz; and• total surface mineral resources for gold of 280,000oz and total surface mineral resources for

antimony of 74,249 tonnes following the evaluation of tailings dump No.2.


UNITS 2013 2012

yield g/t 1.5 1.4

Production (antimony concentrate) tonnes 5,326 4,540

Production (gold) Kg 308 294

Cash cost R/tonne 1,152 1,215

Operating (loss)/profit Rm (4) 12

Capital expenditure Rm 39 55.7

Number of employees (including contractors) 1,073 976


Polokwane

LIMPOPO PROVINCE

Tzaneen

Gravelotte

Hoedspruit

MPUMALANGA PROVINCE

CONS MURCH

S 23° 54.049 E 30° 41.296



Review of operationsNotwithstanding the impact of the safety-related stoppages in the fourth quarter, Cons Murch delivered an improved performance year-on-year in both gold and antimony production. This was on the back of higher volumes mined in the trackless mechanised sections, related to a ramp-up in production in the shaft-deepening projects at Monarch and Athens shafts. An optimised ore reserve management system also ensured an increase in average mining grades and consequently better yields and saleable product.

Some returns started being realised from the capital expenditure incurred in the previous financial year. Sustainability will be ensured by mining development to open up more work areas, thereby improving mining flexibility so as to sustain future production levels. Various production improvement and skills transfer initiatives will be rolled over into the next financial year. Their primary focus will be on improving mining efficiencies and employee productivity, as the mine makes the transition to more mechanised mining. Mechanised mining methods have become possible as the reef becomes increasingly wider at depth (up to 4m). Furthermore, higher grade reef zones in the mechanised sections will contribute to mining efficiencies.

Safety and healthCons Murch continues to be the safest mine in the Village Group because of the nature of the mining method and its relatively shallow workings. As of financial year-end, the mine had achieved a 19 months fatality-free period. LTIFR also continued to improve year-on-year, from to 4.8 in Fy2012 to 4.4 in Fy2013.

Wellness and lifestyle programmes, which were started in Fy2012 continued in the year under review and they have proved to be effective in promoting holistic wellbeing nature for employees with neighbouring residents also participating in these programmes.

EnvironmentCons Murch has updated the Environmental Management Programme and is awaiting approval from the DMR. There is ongoing rehabilitation as mining progresses. A liability assessment for rehabilitation funding has been carried out and stands at R52,958,008.

growth and outlookDevelopment of the Gravelotte new surface decline project continued with intersection of key indicators (reef pockets) during the second half of the year under review. The surface decline is targeting a shallower orebody, mainly for antimony. It is anticipated that gold reef development will commence during October 2013 and that Gravelotte will contribute to antimony production from early 2014.

Progress was also made on the surface tailings recovery project, following the resource declaration of the two main dumps in the previous financial year. In the year under review, detailed technical studies and designs were completed, which form part of the initial stages of a DFS. The reports indicate that the project is both technically and financially viable.

Labour relations at Cons Murch have stabilised post the strike experienced during July 2013. Village expect production to return to levels of around 500 tonnes of antimony and 30kg of gold per month, prior to the impact of production from Gravelotte.



47


lESEgO PlATINUM

lOCATION: The Lesego Platinum project is situated near Lebowakgomo, on the Eastern Limb of the BIC.

DESCRIPTION: Village controls a 78% interest in the Lesego project with the IDC owning the remaining 22%. Lesego Platinum has a management agreement in place with BBBEE partner, Umbono, to manage the pre-feasibility process and oversee the exploration work currently underway.

STRATEgY: Lesego continued to develop its platinum project in 2013 by improving the confidence of the resource and completing its DFS.

gEOlOgY: The orebody consists of both the UG2 Chromotite and the Merensky Reef, which occur as distinct layers of contrasting rock type to the surrounding rocks. They are part of a three- to six-kilometre layered package known as the Rustenburg Layered Suite, which forms part of the BIC.


Lesego has a total project mineral resource of 39.03Moz 3PGE+Au.

ReviewLesego continued to develop its platinum project in 2013 by improving the confidence of the resource and completing its DFS.

Additional drilling (a total of 72,578m from 50 boreholes and 246 reef intersections), assays and analysis by the competent

person (Venmyn Deloitte) resulted in Lesego declaring a SAMREC compliant resource of 204Mt at an average 4 PGM grade

of 5.95g/t over an average seam width of 1.2m. The confidence levels have improved with 62% of the orebody re-categorised as

Measured and Indicated Resources with the balance remaining in the Inferred Resource category. The orebody starts at a depth

of 350m below surface and while it remains open at depth, for the purposes of the Venmyn resource definition, it was cut off at

a Merensky ore depth of 2,050m below surface.

Modimolle

Pretoria

Krugersdorp

Rustenburg

Johannesburg

Middelburg

Emnotweni

Mokopane

Polokwane

Groblersdal

LESEGO PLATINUM

S 24° 24’ 54”E 29° 44’ 41”




On the basis of this resource declaration, DRA Mining completed the DFS defining a long hole open stoping method for extracting the ore on the steeper dipping sub vertical sections of the orebody (to a depth of approximately 1,200m) and switching to a conventional mining method on the deeper, shallow dipping portion of the resource.

Early access to the orebody will be achieved by sinking the ventilation shaft to 800m and using this, initially, as a production shaft to access the shallow section of the orebody. Sinking of the main production shaft will continue to 1,700m below surface and once completed will allow Lesego to ramp up to a steady state production output of 300k tonnes per month.

Ore will be processed via a concentrator on site and the concentrate will be toll smelted and refined into the precious group metals, nickel and copper.

Over the 67-year life of mine it will produce 11Moz of platinum, 7.7Moz of palladium, 1.6Moz of rhodium, 0.7Moz of gold, 222Kt of nickel and 108Kt of copper.

The DFS results in a real IRR of 14.6% and a net present value of R4.45 million, and will require a peak funding capital requirement of R10.1 billion. While these investment amounts and returns are in line with market expectations, it is highly unlikely that it can be funded in the current challenging platinum market.

As a result, the Lesego executive team was tasked to evaluate alternative low investment cost scenarios and 50,000 to 80,000 tonne per month exploitation options were considered. While studies are still at a relatively low level of confidence, initial indications suggest that a low volume/low investment cost option could provide an attractive alternative for Village and its shareholders in the current platinum investment climate.

Employees and communityLesego’s SLP has been finalised and submitted to the DMR with the Mining Right Application.

Local economic development projects have been identified and will be submitted as part of the SLP. An initiative to assist schools in the area is underway. The renovation of Gwaragwara School using local labour and resources from Knotokwane, the mine’s nearest neighbour, was completed. Community engagement is ongoing.

EnvironmentEnvironmental rehabilitation is being carried out in line with the prospecting right requirements. Now that drilling has been completed, the drilling boreholes have been rehabilitated.

Lesego Platinum is a world-class platinum project.


49


gROUP TRANSFORMATION REPORTVillage is committed to the ethical conduct of business and to the nine areas of the Mining Charter. These are:• reporting;• ownership;• housing and living conditions;• procurement and enterprise development;• employment equity;• human resource development;• mine community development;• sustainable development and growth; and• beneficiation.

The Mining Charter was designed to facilitate economic transformation by enabling meaningful economic participation by hDSAs.

Transformation in the South African mining sector is governed by the MPRDA, the Mining Charter and the BBBEE Act 2007 (The Codes of Good Practice) issued by the DTI. Transformation includes the realignment of existing shareholding and directorships, the increase of hDSAs in management and other employee categories, the establishment of a significant BBBEE supplier base and partnerships with local communities to encourage entrepreneurial initiatives.

Village has established a sustainability, social, ethics and transformation committee to monitor and promote these aspects within the Company. The committee is responsible for the transformation strategy, including the drafting, monitoring and the implementation of the Company’s transformation policies.

hOUSINg AND lIVINg CONDITIONSVillage believes that human dignity and privacy for mineworkers are prerequisites for enhanced productivity and transformation in the mining industry. Previously, employees stayed in same-sex hostels, but now an option of receiving a living-out allowance has been provided. For those employees choosing to live in hostel accommodation, Village is renovating the hostels to include both family units and single rooms. Accommodation currently varies at the different operations: Cons Murch has adequate accommodation, which is currently being upgraded; Buffels is currently upgrading and Blyvoor will be moving employees out of the hostels into family units and single units. At Tau Lekoa, Village encourages employees to make use of the living out allowance as investing in accommodation is problematic given the short life of operations. Tau Lekoa will also use some of the accommodation which becomes available at Buffels, as the two are in close proximity.

The Group has agreements with NUM, other unions and associations and is committed to the following:• an improved standard of accommodation for mineworkers and the promotion of home ownership for all employees; and• the equal treatment of employees from Southern African Development Community (SADC) countries working on Village mines

as South African employees, with regard to the provision of accommodation.

Accommodation forums at mine level play a special role in implementing the agreements and developing appropriate accommodation options. Forum member capacity will be built through training. This will enable members to acquire the necessary skills to participate meaningfully in the planning and ongoing development of accommodation strategies at mine level. The forum will also be involved in training employees in issues relating to accommodation and the various options available to them.

PROCUREMENT AND ENTERPRISE DEVElOPMENTProcurement is broken down into three levels, namely spending on:• capital goods;• services; and• consumables.




Village undertakes to give hDSAs preferred supplier status where possible. The Company is committed to redressing the commercial imbalances resulting from past discrimination based on race, gender or disability of hDSAs in the mining industry.

% SPEND ON BBBEE ENTITIES AT JUNE 2013

MININg ChARTER

TARgET 2013BUFFElS

gOlD MINE TAU lEKOABlYVOOR

gOlD MINE CONS MURCh

Capital goods 20 42 70 50 8

Services 50 64 50 46 39

Consumables 25 50 38 59 53

Lesego Platinum, although still in a prospecting phase on site, endeavours to use local service providers where at all possible. This includes contractor services such as security, small plant and machinery hire, as well as sourcing accommodation, yard and office space and food locally. A project was undertaken using locally sourced contractors to repair a road into one of the local villages. With regard to the big-budget bankable feasibility study (BFS) items such as diamond drilling, contracts (in excess of R60 million), BEE ratings are strong considerations. Currently in excess of 50% of the total BFS spend has gone to black service providers.

AChIEVEMENT OF PREFERENTIAl PROCUREMENT OBJECTIVESThe definition of a BBBEE entity is an entity of which a minimum of 25% + one vote of share capital is directly owned by hDSAs as measured in accordance with the flow-through principle.

The following plans are in place to help Village achieve its objectives in this area:• commitment to a progression of procurement from BBBEE entities over a three to five year time frame;• encouraging the establishment of joint ventures between BBBEE entities and approved established businesses which have

clearly shown commitment to black economic empowerment. This should facilitate transfer of skills and access to technology for hDSAs;

• encouraging suppliers to formally subscribe to a process of hDSA transformation and following up with suppliers on this process;

• implementing a process of vendor accreditation and compliance assurance;• ensuring that there are no unnecessarily restrictive quality standards which would exclude potential hDSAs;• where appropriate and possible, dividing contracts or projects into smaller components to enable emerging BBBEE entities

to qualify; and • setting targets to measure progress in implementing the hDSA policy. The key items are:

• reporting on the preferential procurement spend over a specific period;• the number of contracts awarded to BBBEE entities;• ensuring and encouraging the co-operation of line management in implementing and measuring the award of contracts to

BBBEE entities;• assisting BBBEE entities to overcome obstacles they might face in securing contracts with the Group;• exploring innovative ways of increasing hDSA participation for the mutual benefit of both parties without waiving

requirements; and• ensuring that the effectiveness of the preferential procurement policy is assessed continuously, thereby ensuring aims and

objectives are being achieved.

Village reserves the right to verify a supplier’s hDSA status at any time. Any supplier or potential supplier that misrepresents its hDSA status to be accepted as an accredited Village’s supplier may be delisted as a Village supplier or not registered as an approved Village vendor in the future.

The control and management of Village’s vendor database will be scrutinised to ensure consistency, supplier stabilisation and hDSA compliance throughout the Group.


51


EMPlOYMENT EQUITYVillage has a formal plan in place to achieve its employment equity targets by 2014. The plan includes:• appointment of hDSAs;• commitment to working towards a reflection of national demographics, with realistic gender representation;• training and development of hDSAs;• promotion of hDSAs;• retention of hDSAs; and• reasonable accommodation of hDSAs.

Minimum targets for all new recruitments and promotions are 80% hDSAs in management and 20% women.

Village and its operations are involved in various women empowerment programmes. These include the Techno-Girl programme, which is a partnership between the Department of Basic Education, Department of Women, Children and People with Disabilities, UNICEF and Uwezo Consultants. The programme provides vocational work experience and career guidance for female high school learners from grades 9 to 12. Village facilitates the visit of learners to its mines for a week during school holidays, a total of three weeks per year.

CORPORATE SOCIAl RESPONSIBIlITYVillage strives to earn the trust of all of those stakeholders with whom the Group interacts – be they employees, the communities where it operates, the governments that host the operations or any other persons or parties with whom the Group engages in the sustainable development of mineral resources.

The four pillars of ethics, employees, community and environment, health and safety, guide Village in its approach to corporate social responsibility. Regional business units and management groups are accountable for compliance, according to regional and local priorities.

EThICSVillage strives to act as a responsible corporate citizen and to lend the Company’s expertise to help engage in constructive public dialogue and informed debate on issues of importance to the Company, the mining industry and the communities in which the Company operates.

EMPlOYEESVillage is committed to developing the full potential of employees. Village respects and values each employee and observes the fundamental tenets of human rights, safety and non-discrimination in the workplace.

Village fairly compensates employees for their contributions, provides meaningful performance feedback to them and offers them professional development and training opportunities. Village encourages accountability and employee involvement in issues affecting the workplace to help improve safety and work conditions, as well as efficiency and business. The Group recognises that best practices in this important area continues to evolve and that, correspondingly, Village must learn and evolve as well.

COMMUNITYVillage considers social, cultural, environmental, governmental and economic factors when evaluating project development opportunities. In the communities in which Village operates, the Company interacts with various stakeholders to facilitate long-term and beneficial resource development. Village gives priority to building partnerships in entrepreneurial endeavours and commits to providing financial support to organisations through charitable donations, budgets and policies.

The employment of indigenous peoples and local community members is also a priority. Village respects the interests of all members of the communities in which it conducts business and encourages open and constructive dialogue and interaction with them.



hUMAN RESOURCE DEVElOPMENTThe following are key aspects of human resource development within the Group:• identification of employees in the organisation with potential for development;• creation of an environment conducive to workshop or learning session attendance;• recognition of the adult and basic education training (ABET) programme as one of the key building blocks for the future;• provision of applicable portable training skills;• specific programmes to be in place for training and provision of updates for scarce and critical skills to the operations; • learnerships and apprenticeship programmes; and• succession planning for junior, middle and senior management involving:

• identification of all levels of people and skills;• identification of non-discriminatory competency tools for future growth and career progression, like job shadowing; and• agreement on and definition of mentoring processes, including:• the appointment and training of mentors – foremen, shift bosses, senior management; and• the provision of an appropriate platform/environment for mentoring to take place.

Village wants to create career opportunities for young people through high-impact work experience and internship programmes. The Group has sought young people with potential among its employees’ dependents – unemployed university graduates, national diploma holders and matriculants with maths and science. The recruitment priority process is: employees; employees’ dependants; recommended candidates; open market.

STAKEhOlDER ENgAgEMENTVillage interacts with local residents of the communities in which it operates, governments, non-governmental organisations, international agencies and other interested groups to facilitate long-term and beneficial resource development.

The Group respects the interests of all members of the communities in which it conducts business and encourages open and constructive dialogue and interaction with them. The Group takes responsibility for listening carefully, being responsive and providing information that is accurate, appropriate and timely.


Continental Coal’s Delta Processing Plant.


53


Village is committed to inclusive community engagement activities to earn the trust of those it interacts with in the sustainable development of mineral resources.

The Group’s community engagement and sustainable development programmes are designed to achieve two primary objectives:• to acquire and maintain broad stakeholder support for the Company’s operations; and• to ensure that affected stakeholders gain net positive benefits from mine development and operations.

In meeting these two objectives, Company community engagement and sustainable development programmes serve to achieve clear and unambiguous business benefits to the Company, including:• to earn a ‘social licence’ to operate – to earn the support of, and maintain constructive relations with, communities

surrounding operations, and other key stakeholders;• to create strategic advantage – by establishing a reputation for sustainable community development programmes, Village can

open up new business opportunities in other areas. For example, a good track record could make it easier for the Company to ‘sell’ expansion into other areas; and

• to address specific business issues – such as the lack of local skills for employment, work-related health problems associated with hIV/Aids in the community, and the need to build goodwill among local and national authorities.

Village’s community engagement and sustainable development programmes also serve to:• reduce social risk by alerting Village to potential concerns of local communities;• facilitate strong relations with local, regional and national authorities, which can aid business expansion;• maintain strong ties with local businesses and contractors;• support the recruitment of local employees;• support the development of communities where employees may reside;• enhance employee satisfaction; and• improve the overall reputation of the Company.

Cons Murch Mine supplies water to the local municipality and local farmers, and runs a clinic on site which is utilised by the community.



CORPORATE gOVERNANCE

The Board of Village is committed to the highest principles of corporate governance and professional ethical conduct. This approach underpins the Group’s relationships with all its stakeholders, and is supported by management systems, structures, appropriate policies and practices, and internal controls. The Company’s internal control mechanisms are being implemented to ensure compliance as far as is possible and on an incremental basis, with the recommendations of King III, and with the Companies Act of 2008.

KEY COMPlIANCE DEVElOPMENTS DURINg ThE YEARThe following actions have been taken during the year to comply with King III and the Companies Act:• an ethics policy has been developed and approved and the Company’s ethics performance is being assessed, monitored and

disclosed in terms of the policy; and• the evaluation of the Board, its committees and individual directors was performed during Fy2013 and is an ongoing

annual practice.

The Company’s risk management plan has been designed by the internal auditors and the implementation thereof is currently being monitored by the internal audit function. Risk assessments are performed on a regular basis and frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks. The Board also ensures that management consider and implement appropriate risk responses.

BOARD COMPOSITIONThe Board comprises 11 directors, six of whom are executive; two are non-executive and three are independent directors. The Board deems that this structure is appropriate, given the Company’s current stage of development; nevertheless the structure is subject to review from time to time. The Board charter ensures that no one individual or group of individuals on the Board has unfettered decision-making powers and it provides for a clear division of responsibilities between the executives responsible for running the Company’s business affairs and the leadership of the Board.

The Board is chaired by an independent non-executive director, in accordance with King III recommendations. The nominations and governance committee considers and approves appointments to the Board.

In terms of the Company’s memorandum of incorporation, directors are required to retire by rotation as follows:• at each annual general meeting (AGM), one third of the directors for the time being, or if their number is not three or a

multiple of three, the number nearest to one third, but not less than one third, will retire from office, provided that, if a director is appointed as managing director or as an employee of the Company in any other capacity, he or she will not, while he or she continues to hold that position or office, be subject to retirement by rotation and he or she will not in such case, be taken into account in determining the rotation or retirement of directors;

• the directors to retire in every year will be those who have been longest in office since their last election. The retirement from office of those directors who were elected on the same day will be determined by lots, unless the directors agree amongst themselves; and

• a retiring director may be re-elected, provided he/she is eligible for election.

The following changes were made to the Board during the financial year:

Three managing directors were appointed:

Marius Saaiman (formerly the Joint CEO) was appointed as Managing Director of the Village Platinum division.

Dalu Ncube (currently an executive director) was appointed as Managing Director of the Village Antimony division.

Ferdi Dippenaar was appointed as Managing Director of the Village Gold division. Ferdi was previously a non-executive director of Village Main Reef Ltd, and, since filling the new role, has also been appointed as an executive director of Village Main Reef Ltd.

The role of Joint Chief Executive Officer was previously held by Bernard Swanepoel and Marius Saaiman. Since the appointment of Marius as Managing Director of the Platinum division, the role of CEO will be held only by Bernard.

Further information on the directors, including brief biographies, may be found on pages 10 and 11.


55


BOARD MEETINg ATTENDANCEAttendance of Board meetings

NAME 16 AUg 2012 29 NOV 2012 12 FEB 2013 9 MAY 2013

Roy Pitchford (Chairman) P P P P

Marius Saaiman P P P P

Richard de Villiers P P P P

Dalubuhle Ncube P P P P

Bernard Swanepoel P P P P

Ferdi Dippenaar P P P P

Khetiwe McClain P P P P

Gerard Kemp P P P P

Baba Njenje P P P P

Phiway Mbuyazi P P P P

Sandeep Gandhi P P P P

KeyP = Present

From the above table it is clear that Village Board members take this responsibility seriously and we thank them for attending

all meetings and for their valued contributions during the year.

BOARD ChARTERThe Company’s Board charter has been revised to align with the Companies Act, 71 of 2008 (the Act) as amended and the

recommendations of King III, and has been approved by the Board.

The charter confirms the Board’s commitment to the principles of good corporate governance, and sets out the members’

fiduciary duties. It furthermore confirms the Board’s primary function as being responsible for determining the Company’s

strategic direction and to exercise prudent control over the Company and its affairs. The responsibilities of individual directors

are detailed to ensure that directors are aware of their responsibilities and the roles they are required to fulfil. The charter also

specifies the composition and size of the Board, Board assessments, development and procedures, the role of the Company

secretary and the frequency and proceedings of Board meetings.

The Board has approved an annual work plan that ensures that all governance and compliance-related issues will appear

on the Board agenda during an annual cycle. Inter alia, this includes the annual assessment of the directors, Board and

Board committees.

BOARD SUB-COMMITTEESThe Board remains accountable and responsible at all times for the performance and affairs of the Company. however, it

delegates certain functions to Board committees to assist it in properly discharging its duties. In terms of the Act, the audit

and risk committee and a social and ethics committee are mandatory for the Company; although such committees are strictly

not Board sub-committees, they are dealt with here for ease of reporting and reference.

The chairman of each committee reports at every scheduled meeting of the Board, and minutes of committee meetings are

provided to the Board. The committees are constituted predominantly of non-executive directors. Each committee functions

in accordance with the provisions of the committee mandate as approved by the Board. The directors and the members of the

Board committees are supplied with full and timely information that enables them to properly discharge their responsibilities.

All directors have unrestricted access to all Company information. The chairman of each committee is also required to attend



CORPORATE gOVERNANCE continued

AGMs to answer questions raised by shareholders. Committee memberships and charters are revised annually to ensure compliance with King III, as well as the Companies Act.

The established committees are:

Audit and risk committeeThe committee is not considered to be a Board committee as it is a statutorily mandated committee. however, it does report to the Board for information purposes but is not subject to Board authority in terms of how it performs its functions.

The composition of the committee meets the requirements of the Act and consists of a minimum of three non-executive directors, acting independently. In accordance with its approved mandate, the committee meets at least four times a year and is primarily responsible for:• accounting policies and procedures;• the review of the Company’s internal financial controls and financial risk management systems;• financial reporting practices;• the appointment of and relationship with the internal and external auditors, including setting the principles for recommending

the use of external auditors for non-audit services; and• the identification and monitoring of significant risks to the business.

The committee is required to ensure the integrity of the Company’s integrated reporting and to oversee the Company’s move towards achieving combined assurance. A report from the chairman of the committee may be found on pages 68 to 69 of the Annual Report.

The committee is also responsible for the oversight of financial risk management throughout the Company. Appropriate policies and measures will be implemented as warranted by the operations of the business. Further, the committee has assessed and positively endorsed the experience and expertise of the chief financial officer. The audit partner attends meetings of the committee by invitation. The internal and external auditors also have unrestricted access to the chairman of the committee as well as the Board.

The internal audit plan is presented for approval to the committee at the initiation of the financial year. Internal financial and operational controls are implemented to mitigate key risks identified by management in order to safeguard Company assets and effectively manage working capital and liabilities. These controls, together with specific disciplines, processes and areas within the Company’s operation, are identified for possible audits based on high risk, qualitative and quantitative considerations. The internal audit plan is reviewed throughout the course of the year in order to make provision for changing risks within the organisation. Regular follow-up reviews are performed by internal auditors and reported back to the committee in order to ensure that internal audit recommendations are implemented.

The committee met six times during the financial year.

NAME15 AUg

201220 SEP

20129 OCT 2012

12 NOV 2012

11 FEB 2013

8 MAY 2013

Ferdi Dippenaar (chairman) – executive director P P P P P P

Khetiwe McClain – independent non-executive director P A P P P P

Gerard Kemp – independent non-executive director P P A P P P

KeyP = PresentA = Absent

The following changes were made in terms of King III and the committee charter membership requirements:• Ferdi Dippenaar resigned as chairman and member of the audit and risk committee with effect from 14 May 2013. Ferdi is now

appointed as an executive director and also as a managing director of the Village Gold division with effect from 14 May 2013;• Gerard Kemp (independent non-executive director) has subsequently been appointed as chairman of the audit and risk committee

with effect from 14 May 2013; and• Roy Pitchford (independent non-executive director) has subsequently been appointed as a member of the audit and risk committee

with effect from 14 May 2013.


57


Sustainability, social, ethics and transformation committeeThe Company’s sustainability, social, ethics and transformation (SSET) committee should comprise no fewer than three

directors or prescribed officers of the Company, provided that at least two members are non-executive directors. The functions

of the committee are, among other things, to monitor the Company’s activities against relevant legislative and regulatory

requirements and codes of best practice relating to social and economic development (including human rights, corruption and

BEE), good corporate citizenship, the environment, health and public safety, consumer relationships (including advertising and

public relations), labour and employment and to draw matters within its remit to the board’s attention and also to report to

shareholders at each AGM. The committee met four times during the financial year.

NAME14 AUg

201212 NOV

201211 FEB

20138 MAY 2013

Khetiwe McClain (chairperson) – independent non-executive director P P P P

Richard de Villiers – executive director P P P P

Gerard Kemp – independent non-executive director P P P P

Key

P = Present

Remuneration committeeThe function of the committee is to:

• develop remuneration policies and practices for executive directors, senior management and the Group in general;

• review and measure annual bonuses against individual and corporate performance targets, both financial and sustainability

related;

• consider and recommend for approval by the Board the remuneration of the CEO and executive directors;

• regularly review incentive schemes to ensure their continued contribution to shareholder value;

• approve salary increases for non-bargaining employees and mandates for negotiations with trade unions, where appropriate;

• ensure adequate succession plans for the executive and senior management;

• ensure adequate consideration of policies for the Group in respect of hIV/Aids management, skills development and

employment equity; and

• ensure compliance with all statutory and best practice requirements regarding labour and industrial relations.

The committee met four times during the year.

NAME15 AUg

201212 NOV

201211 FEB

20139 MAY 2013

Khetiwe McClain (chairman as of 16 August 2012) – independent non-executive director

P P P P

Ferdi Dippenaar – executive director P P P P

Roy Pitchford – independent non-executive director P P P P

Key

P = Present

Khetiwe McClain (independent non-executive director) has been appointed as chairman of the committee with effect from

16 August 2012.

Roy Pitchford resigned as chairman after chairing the meeting held on 15 August 2012.

Ferdi Dippenaar was an independent non-executive director and has since been appointed as an executive director and managing

director, Village Gold division, with effect from 14 May 2013.

The committee currently comprises two independent non-executive directors and one executive director as per the

charter requirements.




Safety, health and environment committeeThis committee assists the Board in fulfilling its governance responsibilities with regard to the management of safety, health and environment (ShE) by ensuring, among others, that the Company has implemented effective policies and plans to enhance the Company’s ability to achieve its strategic objectives.

The committee also oversees that disclosure and communication between the Board, the audit and risk and SSET committees regarding risk management processes and activities pertaining to safety, health and environment are comprehensive and adequately facilitated. While the committee has specific duties relating to risk governance, the audit and risk committee was retained in terms of some aspects of risk management, including financial reporting risks, internal financial controls and fraud, and information technology risks relating to financial reporting.

Other duties of the committee include overseeing the performance of the Company against its set ShE targets and objectives, and considering reports relating to substantive ShE risks and liabilities that could potentially be faced by the Company.

The committee met four times during the financial year.

NAME14 AUg

20128 NOV 2012

11 FEB 2013

8 MAY 2013

Baba Njenje (chairperson) – non-executive director P P P P

Dalubuhle Ncube – executive director P P P P

Phiway Mbuyazi – non-executive director P P P P

Key

P = Present

Nominations and governance committeeThe nominations and governance committee has responsibility for, inter alia, considering appropriate appointments to the Board and succession planning, taking into account the required balance of executive, non-executive and independent directors on the Board and its sub-committees. In addition the committee is responsible for: • regularly reviewing the composition of the sub-committees; ensuring they are aligned with the strategic direction and

requirements of the Group;• ensuring that they comprise the requisite mix of skills, expertise, diversity and other qualities; and • meeting the requirements of sound corporate governance.

NAME15 AUg

201212 NOV

201211 FEB

20139 MAY 2013

Roy Pitchford (chairman) – independent non-executive director P P P P

Khetiwe McClain – independent non-executive director P P P P


Key

P = Present

Investment committeeThis is an ad hoc committee comprising at least three directors, a minimum of two of whom are independent non-executive directors. The committee serves to evaluate potential transactions and to recommend same to the Board.

NAME16 AUg

201212 NOV

201211 FEB

20139 MAY 2013

Roy Pitchford (chairman) – independent non-executive director P P P P

Ferdi Dippenaar – executive director P P P P


Key

P = Present


59


Ferdi Dippenaar was appointed as a non-executive director, and has since been appointed as an executive director and managing director of the Village Gold division, with effect from 14 May 2013.

ACCESS TO ThE COMPANY SECRETARYThe directors have access to the advice and services of the company secretary, who plays an active role in the corporate governance of the Company. They are entitled, at the Company’s expense, to seek independent professional advice about the affairs of the Company regarding the execution of their duties as directors.

APPROPRIATENESS OF ThE FINANCIAl DIRECTORIn terms of the JSE Listings Requirements, the audit and risk committee has satisfied itself as to the appropriateness of the expertise and experience of the financial director.

REAPPOINTMENT OF ThE EXTERNAl AUDITORSThe audit and risk committee confirms that the skill, independence, audit plan, reporting and overall performance of the external auditors are acceptable and recommends the reappointment of PricewaterhouseCoopers Inc for the following financial year.

CORRUPTION AND FRAUDThe Company has adopted a zero tolerance stance on fraud and corruption throughout the Group. The expectation is that stakeholders, employees, business partners, contractors and associates conduct themselves with the greatest level of integrity and in line with the Company’s code of ethics. Executives and line management are responsible for the implementation of the code of ethics and the enforcement thereof. A whistleblower line was re-launched during the financial year.

KINg IIIThe Company is committed to ensuring compliance with King III requirements, recommendations and best practices. A list of compliance with the relevant principles can be viewed on the Company’s website at www.villagemainreef.co.za.

DEAlINg IN SECURITIES AND ClOSED-PERIOD TRADINgThe Company observes a closed period from the end of the relevant accounting period to the announcement of the quarterly, interim or year-end results. During this time, neither directors nor employees may deal, either directly or indirectly, in the shares of the Company or its listed subsidiaries. Certain employees, by virtue of the positions they hold or the information they have access to, are also prohibited from trading during certain periods. All directors’ dealings require the prior approval of the Chairman, and the Group secretary retains a record of all such share dealings and approvals.

STAKEhOlDER RElATIONSThe Company maintains dialogue with its key financial audiences, especially institutional shareholders and analysts. The investor relations team manages the dialogue with these audiences and presentations take place at the time of publishing interim and final results. The Company adopts a proactive stance in timely dissemination of appropriate information to stakeholders through print and electronic releases and the statutory publication of the Company’s financial performance. Bravura Equity Services is the appointed JSE sponsor and assists the Company in ensuring that all disclosures pursuant to the JSE Listings Requirements are effected correctly and timeously.

The Board encourages shareholders to attend its AGM where shareholders have the opportunity to put questions to the Board, including the chairmen of the Board committees.

gOINg CONCERN STATEMENTThe directors are of the opinion that the business will remain a going concern in the year ahead and that it has adequate resources to continue operations. Information about this is contained in the directors’ report in the annual financial statements on page 78.



ThE gOVERNANCE OF INFORMATION TEChNOlOgYThe Board is ultimately responsible for information technology (IT) governance.

This responsibility includes:• To ensure promotion of an ethical IT governance culture and awareness and of a common IT language;• To ensure that an IT internal control framework is adopted and implemented; and• To receive independent assurance on the effectiveness of the IT internal controls.

The management of the IT function across all Village operations is outsourced to a third party.

The IT steering committee consists of members of management and representatives of the outsourced partner. The steering committee meets once a quarter and is responsible for:• Implementation of structures, processes and mechanisms for the IT governance framework;• Monitoring and evaluation of significant IT investments and expenditure;• Overseeing the value delivery of IT;• Ensuring information assets are managed effectively; and• Management of information including information security, information management and information privacy.

The IT charter and policies were approved by the audit committee on 8 May 2013. The five key strategic objectives identified through the business requirement sessions and which form the framework for the IT charter and policies are:• Implementation of IT infrastructure that is reliable and stable to improve performance and sustainability;• Implementation of a standardised ERP solution which will enhance controls and standardise financial reporting within

the Group;• Implementation of the IT charter and policies and other related IT governance to adhere to the minimum requirements as a

listed organisation;• Cost reduction; and• Implementation of the necessary IT infrastructure to ensure business continuity and IT security.

The IT steering committee is responsible for the successful implementation and monitoring of progress against the approved strategy. The progress is measured at the quarterly steering committee meetings and feedback provided quarterly to the audit and risk committee meetings.

During Fy2013, Village successfully implemented SAGE X3, an ERP solution, across all mines. Financial reporting within the Group has improved by 40% and has also been standardised. In addition, internal controls have been enhanced across the Village Group. The outsourced partner continues to improve per formance and sustainability of the implemented information infrastructure.

REMUNERATION POlICY AND STRATEgYThe Company is engaged in the business of gold and antimony mining. Many of its assets are old mines that have been extensively depleted. The Company seeks to increase the potential yield and the value of these assets by means of improved and innovative mining techniques. As a consequence, the Company places its reliance primarily on its human capital, since the quality of its assets depends mainly on the effectiveness of its employees. Since remuneration of employees is a key component of building the quality of its human capital, the Company seeks to devise and establish a remuneration policy that will actively assist in attracting and retaining top-quality employees, and stimulate them to deliver top-quality performance.

Strategic objectivesThe following are strategic objectives for remuneration:• attracting to the Company appropriately skilled and motivated people by offering competitive packages;



61


• assisting in bringing out the best that the Company’s employees have to offer by use of appropriate incentives; and• ensuring retention of the Company’s employees and maintenance of, or increase in, their levels of skill, motivation and

commitment by ensuring that packages are properly and regularly reviewed and that short-term incentives and long-term incentives in the form of cash bonus schemes and in the form of equity participation schemes are in place.

Mechanisms to fulfil these objectives include:• regularly reviewing and linking guaranteed pay to competitive norms;• linking increments in guaranteed pay to both increasing skills capabilities and performance level;• adopting a total package approach to remuneration structure (total cost to Company); • providing performance incentives, both for the short and long term, which appropriately reward employees for value created

at individual business unit and Company levels; and• offering special recognition awards (to encourage innovation and actions), above and beyond regular guaranteed and incentive

pay, that are designed to reward.

Village has implemented two share schemes to employees, the forfeitable share plan (FSP) and the share appreciation right scheme (SARS). The FSP is an equity-settled share-based payment and is measured at fair value at date of grant. These costs are expensed as services and are rendered over the vesting period, based on the estimate of the awards that will eventually vest, and adjusted for the effect of non-market based vesting conditions. The SARS is regarded as cash-settled share-based payments for valuation purposes. At each reporting date the expected cost is revalued by marking-to-market for the vested period of the liability. The changes in the mark-to-market liability are expensed. however, should this award be deemed as an equity-settled incentive, then the initial valuation at grant date will remain the same for subsequent reporting dates. The recognition of expenses would then be similar to that for the FSP award. The fair value of the FSP and SARS is valued independently. The value of the FSP grant is similar to the value of the Village ordinary share. The value of the SARS grant is determined using the Black-Schöles option valuation model. The significant inputs into the model are: vesting period and conditions, risk-free interest rate, volatility, price of grant and dividend yield.

The Village FSP and SARS provide selected employees of the employer companies, including executive directors, the opportunity of receiving shares and the benefit of share price growth in the Company, respectively, thereby providing participants with an incentive to advance the Group’s interests. The plan shall be applicable to awards made on or after the approval of the plan by shareholders of the Company and is subject to certain performance conditions.

Where imposed for a specific award, or part thereof, as soon as reasonably practicable after the end of the performance period in relation to such an award, the remuneration committee will review the performance condition as specified in the award letter and determine the extent to which it has been satisfied.

Where the remuneration committee is satisfied that the performance condition has been fulfilled, it will calculate the number of shares that vest for each participant and shall notify the participant of this fact accordingly.

Where the remuneration committee is satisfied that the performance condition has not been fulfilled, the forfeitable awards subject to the performance condition will not vest and will lapse immediately. The participant will be notified of such fact accordingly and of the reason that the performance condition was not fulfilled.

An award will vest on the later of:• the date specified in the award letter to be the vesting date; and• the date on which the remuneration committee determines that the performance condition has been satisfied (where

applicable), provided that the participant remains employed by or remains a salaried office holder of an employer company.

Where the award is subject to a performance condition, the award will vest to the extent that the remuneration committee determines that the performance condition and any other conditions imposed have been satisfied.



REMUNERATION REPORT

Executive remuneration policiesVillage’s executive remuneration policies are designed, within the framework of Village’s reward strategy, to attract, motivate, reward and retain the calibre of executives needed to run the Company successfully, while aligning their interests with those of shareholders (over the short, medium and long term) and the strategy of the Company.

The guiding strategy is to ensure that executive directors are fairly rewarded for their individual contribution to the Group’s operating and financial performance in line with its corporate objectives and business strategy, and that this reward is aligned with industry and market benchmarks.

The policies conform to the best practice guidelines contained in the King Report on Governance for South Africa 2009 (King III), and international guidelines. The policies are reviewed on an annual basis to ensure that they remain appropriate and aligned with current best practice.

Policy on guaranteed payVillage has adopted a total cost of employment (TCOE) philosophy for all salaried employees (which incorporates basic pay, car allowance, pension, medical aid and other optional benefits). TCOE packages do not include annual cash incentives or long-term incentives. In essence, this means that salary and bonus increases expressed as a percentage are based on TCOE as opposed to the cash element only.

The guaranteed packages for executives of the Village Group are deliberately structured to be at or below the lower quartile of the market.

Policy on performance managementVillage has a formal framework for performance management that is linked to and supports the cash incentive bonus scheme. For executives, performance is linked to strategic delivery and defined financial targets over a six-month period. Thus, performance is reviewed every second quarter and payments of the cash bonus made accordingly.

Policy on variable payVillage has adopted a pay mix policy that is strongly oriented towards the philosophy that the performance-based pay of senior executives should form a greater portion of their expected total compensation than guaranteed pay, and furthermore that, within the performance-based pay of the most senior executives, the orientation should be towards rewarding long-term sustainable performance (through long-term and/or share based incentives), more so than operational performance (through annual cash incentives).

To promote this,• total guaranteed pay (TGP) levels of the senior executives will be maintained at levels at or below the lower quartile of

the market;• annual incentive cash bonuses will match, percentage wise, accepted market benchmarks, but as they are calculated off a

lower base of guaranteed pay will also be well below par for the market; and• awards in terms of the long-term (share-based) incentive will be commensurately larger, so as to make up the deficiency (in

relation to market benchmarks) of total target compensation and ensure that Village’s remuneration levels remain competitive.

The mix of fixed and variable pay, and the strong orientation in variable pay towards the long term, is thus designed to meet Village’s operational needs and strategic objectives, based on targets that are stretching, verifiable and relevant.

Awards/grants will be governed by Village’s pay mix reward strategy in which, inter alia, the ‘target reward’ or incentive reward is set for defined categories of executives and senior management.

Note:Target reward is defined as the present value of the future reward outcome of an award/grant, given the targeted future performance of the Company and of its share price. It should not be confused with the term ‘fair value’ which is used when establishing the accounting cost for reflection in a company’s financial statements. Neither should it be confused with the term ‘face value’ which is used to define the current value of the underlying share at the time of allocation/award/grant.


63

REMUNERATION REPORT

Policy on incentive bonusesSenior managerial employees at operations will be highly incentivised to achieve agreed performance and production targets

in the form of quarterly cash bonus schemes based on the operation’s generation of profit. Essentially they will be ‘profit share

schemes’. They will be paid and calculated quarterly and will contain a carry-over portion in order to minimise manipulation of

results. Each member of the senior management team will receive a share of the profit based on their cost to Company, and the

schemes will have a collective component and an individual component dependent on their achievement of certain individual

performance targets.

Corporate office employees and executive directors will be incentivised with generous share incentive schemes (long-term

incentives) and bi-annual (December and June) cash incentives (short-term incentives) which will be based on the achievement

of agreed Company objectives and individual performance criteria. The cash bonus schemes will be paid up to a maximum of

50% of the individual’s annual cost to Company.

The main elements of all scorecards have been:

• safety: due regard to the health and safety of employees; a culture of care and accountability for the safety and health of

employees; working safely; abiding by Company operating standards; thorough investigation of all incidents, and appropriate

measures taken; close monitoring of safety statistics; acceptable performance within industry and DMR standards.

• operational performance: agreed plans and targets; appropriate and timeous steps taken to remove any bottlenecks and

resolve problems; specific restructuring and performance interventions to be successfully completed.

• financial performance: generate free cash; reduce losses; strong balance sheet; working capital management; contain

corporate overheads.

• human resources: union and labour relations; participative management; sound remuneration policy; employment equity;

improved demographics.

The mix and the metrics vary, depending on the role. These elements are reviewed bi-annually and refreshed and updated by

the remuneration committee.

long-term, share-based incentivesIn December 2010, shareholders approved three share plans:

• a share appreciation right scheme (SARS) – Share Appreciation Right Plan 2010;

• a forfeitable share plan (FSP) – Forfeitable Share Plan 2010; and

• a bonus share plan (BSP) – Deferred Bonus Plan 2010

however, a number of shortcomings were identified in these schemes, and, after due consideration, it was decided to make no

further offers under the SARS or BSP, but to concentrate on the continued implementation of the FSP.

Under the FSP, executives and selected managers of the Company and its subsidiaries may be offered annually forfeitable

shares, in a weighted combination of different categories:

• awards of performance units;

• matching grants of restricted units; and

• elective deferral of restricted units.

Although all units are essentially forfeitable shares, they differ in that the performance units will vest only to the extent that

the Company’s performance warrants it, whereas the restricted units are effectively granted in recognition of an individual’s

past performance and/or bonus deferral and are then not tied additionally to future Company performance. No awards have

been made in the two latter categories thus far.

Award/grants will be governed by Village’s pay mix reward strategy and it is envisaged that the combined, weighted

implementation of the above FSP elements will allow Village to remain competitive in annual and share-based incentives,

reward long-term sustainable Company performance, act as a retention tool, and ensure that executives share a significant

level of personal risk with the Company’s shareholders.



Performance unitsAnnual awards of forfeitable shares (in the form of performance units) will be made to executives. They will vest on the third anniversary of their award, to the extent that the Company has met specified performance criteria over the intervening period. The number of shares that will vest will depend on whether the Company’s performance over the intervening three-year period has been on target, an under performance, or an over performance, against the target(s) set at award date. Any performance units not vesting will be forfeited.

The Board will dictate the performance criteria for each award. Performance metrics that will be considered for an award will include both absolute measures (for example, targeted growth in headline earnings per share – hEPS) and comparative measures (for example, total shareholder in relation to a peer group).

The appropriateness of the performance criteria is reviewed at each allocation date, to ensure that it considers the current best practice and market conditions. Performance criteria in relation to any allocation made will not be varied post allocation. Village undertook a review of the disclosed performance criteria of a number of JSE-listed companies in the gold and platinum sectors and based on this review, determined the relevant performance criteria for the 2013 allocation of performance units.

The decision made in 2012 to use targeted total share return (TSR) was maintained with slight modifications to align Village’s approach to current market practice. This is illustrated below.

2013 performance criteriaThe performance condition is defined in terms of a performance curve that identifies the percentage of those forfeitable shares with performance conditions that will be forfeited should the ultimate target not be achieved.

• The performance benchmark was set with reference to Village’s relative performance to a selected benchmark of industry peers. The industry peer group for this purpose includes Sibanye Gold Limited, Pan African Resources plc, GoldOne Limited and Eastern Platinum Limited;

• The TSR achieved by Village over the three-year period from allocation will be measured against the TSR achieved by the peer group. In order for any of the performance units to vest, Village will have to achieve at least the same performance as achieved by the peer group;

REMUNERATION REPORT continued

TSR performance condition

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

5.0% 7.5% 10% 12.5% 15% 17.5% 20.0% 22.5% 25.0% 27.5% 30.0%Per

cent

age

forf

eite

d fo

r un

der-p

erfo

rman

ce

TSR over three year performance period (compounded annual)

Percentage of award forfeited

Ultimate target 100% vesting

Stretch target 33% vesting

Threshold


65

REMUNERATION REPORT

• Additional performance units will vest on a pro-rata basis based on outperformance against the selected peer group, with all performance units vesting if Village achieves a TSR for its shareholders that exceeds the TSR achieved by the peer group by 10% or more.

No retesting against the performance criteria will be allowed. Any performance units which do not vest at the end of the three-year period will be for feited.

Any dividends declared by the Company on the for feitable shares awarded to a participant that are subject to performance conditions, will remain restricted in the individuals restricted brokers account at SA Stockbrokers, until such time as all performance conditions in relation to the award are met, and will lapse in the event that such performance conditions are not met.

The awards of the performance unit category of forfeitable shares closely align the interests of shareholders and executives by rewarding superior shareholder and financial performance in the future.

2012 targeted performance criteria The performance condition is defined in terms of a performance curve that identifies the percentage of those forfeitable shares with performance conditions that will be forfeited should the ultimate target not be achieved.

• the ultimate target is defined in terms of the Company’s TSR over a three-year performance period commencing from the award date, and is set at 25%;

• in defining the performance curve, a stretch target, at which two thirds of the forfeitable shares with performance conditions are forfeited, is set in a similar manner at a TSR of 15%;

• in further defining the performance curve a threshold, at which all of the forfeitable shares with performance conditions are forfeited, is set in a similar manner at a TSR of 10%; and

• for TSR performances achieved between any two of these three points, a pro-rated forfeiture will apply as depicted in the performance curve above.

Restricted unit element(no awards have been made in terms of this category)

On an annual basis, executives, senior managers and key talent may receive a grant of the restricted unit category of forfeitable shares. The value of restricted units granted will be linked to the annual cash bonus scheme, in one of, or a combination of:• matching, according to a specified ratio, the annual cash incentive accruing to the executive; and/or• an elective deferral of a portion of an individual’s bonus calculation and its immediate conversion into restricted units and

matching with additional restricted units. (Note: these restricted units could be more handsomely matched with either additional restricted units or additional performance units). As the individual is effectively opting to put an element of the cash bonus that would otherwise accrue to him at risk, this sub-element of the FSP may be referred to as a ‘co-investment plan’.

It is recommended that restricted units will vest after three years, but this may vary according to the grant methodology adopted and will be forfeitable only if employment is terminated. however, the Company may reserve the right to invoke a claw back clause at the time of grant, again depending on the grant methodology adopted.

The restricted unit element provides for share-based retention to those executives who, through their performance on an annual basis or their desire to defer and ‘invest’ a portion of their cash bonus, have demonstrated their value and commitment to the Company.

The salient features of the FSP are included in Note 38 of the financial statements.

Total cost to company concept

While the Company is required to report on any other benefits, termination of service contracts, pension and medical aid, it should be noted that as the Company rewards executive directors, corporate staff and senior managers in terms of the total cost to company as reported and outlined above, the Company does not offer any additional benefits of this nature.



REMUNERATION REPORT continued

Non-executive directors’ feesThe Board applies principles of good corporate governance relating to directors’ remuneration and also keeps abreast of changing trends. Governance of directors’ remuneration is undertaken by the remuneration committee.

The remuneration of non-executive directors is determined by the Company’s shareholders in the AGM, acting pursuant to a recommendation of the Board acting, in turn, pursuant to a recommendation of the remuneration committee.

The remuneration committee takes cognisance of market norms and practices, as well as the additional responsibilities placed on Board members by new legislation and corporate governance principles.

The fees of non-executive directors are recommended by the remuneration committee, confirmed by the executive director component of the Village Board, and approved in advance by shareholders at the AGM.

Village’s policy on remuneration for non-executive directors is that this should be:• fee based;• market related (having regard to the median fees paid and number of meetings attended by non-executive directors of

companies of similar size and structure to Village and operating in similar sectors); and• not linked to share price or Village performance.

The Company pays for all travel and accommodation expenses incurred by directors to attend Board meetings and visits to Company businesses. These expenses, payable to the non-executive directors, are governed by a formal travel and expenses policy approved by the Board.

No non-executive director has an employment contract with the Company, although non-executive directors are required to conclude service agreements with the Company which set out the duties and responsibilities expected of them as non-executive directors.

Village non-executive directors do not receive bonuses or share options, recognising that this can create potential conflicts of interest which can impair the independence which non-executive directors are expected to bring to bear in decision-making by the Board.

A full disclosure of the non-executive directors’ emoluments is contained on page 76 of this report.

Disclosure of directors’ emoluments The tables containing this disclosure are provided on pages 74 to 76 of this report.


67

DIRECTORS’ RESPONSIBIlITY AND APPROVAl OF ThE ANNUAl FINANCIAl STATEMENTS

DIRECTORS’ RESPONSIBIlITY AND APPROVAl OFThE ANNUAl FINANCIAl STATEMENTS

The directors are responsible for the preparation, integrity and fair presentation of the Village Group and Company annual financial statements and other related financial information included in this report. In presenting the accompanying annual financial statements, IFRS and the Companies Act have been complied with.

The Village Group and Company consistently adopt appropriate and recognised accounting policies and these are supported by reasonable and prudent judgements and estimates on a consistent basis.

The directors have reviewed the Group and Company’s cash flow forecast for the 12 months to 30 June 2014 and, in the light of this review and the current financial position, they are satisfied that the Group has or has access to adequate resources to continue in operational existence for the foreseeable future. The going concern basis has been adopted in preparing the annual financial statements. The directors have no reason to believe that the Village Group and Company will not be a going concern in the foreseeable future based on forecasts and available cash resources. The annual financial statements support the viability of the Village Group and the Company.

The external auditors are responsible for independently reviewing and reporting on the Group and Company’s financial statements. These annual financial statements have been audited by an independent auditing firm, PricewaterhouseCoopers Inc, which was given unrestricted access to all financial records and related data including minutes of all meetings of shareholders, the Board of directors and committees of the Board. The directors believe that all representations made to the independent auditors during the audit were valid and appropriate.

The directors acknowledge that they are ultimately responsible for the system of internal financial control established by the Group and place considerable importance on maintaining a strong control environment. To enable the directors to meet these responsibilities, the Board sets standards for internal control aimed at reducing the risk of error or loss in a cost-effective manner. The standards include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties to ensure an acceptable level of risk. These controls are monitored throughout the Group and all employees are required to maintain the highest ethical standards in ensuring the Group’s business is conducted in a manner that in all reasonable circumstances is above reproach. The focus of risk management in the Group is on identifying, assessing, managing and monitoring all known forms of risk across the Group. While operating risk cannot be fully eliminated, the Group endeavours to minimise it by ensuring that appropriate infrastructure, controls, systems and ethical behaviour are applied and managed within predetermined procedures and constraints.

The directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the financial statements. however, any system of internal financial control can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The audited annual financial statements for the year ended 30 June 2013 were compiled under the supervision of Mr Sandeep Gandhi CA(SA), the CFO for the period under review, and Marius Saaiman CA(SA), Interim CFO.

The annual financial statements were approved by the Board on 26 September 2013 and were signed on its behalf by:

Bernard Swanepoel Ferdi Dippenaar Marius SaaimanChairman CEO CFO

DEClARATION BY COMPANY SECRETARYIn terms of section 88(2)(e) of the Companies Act 71 of 2008 as amended, I certify that the Company has lodged with the Companies and Intellectual Properties Commission, all such returns and notices for the year ended 30 June 2013 as required, and that all such returns and notices are, to the best of my knowledge and belief, true, correct and up to date.

Charlene VenterCompany secretary 26 September 2013



AUDIT AND RISK COMMITTEE REPORTfor the year ended 30 June 2013

INTRODUCTIONThe audit and risk committee presents its report for the financial year ended 30 June 2013. The audit and risk committee is an independent statutory committee, whose duties are delegated to it by the Board. The committee has conducted its affairs in compliance with a Board-approved terms of reference, and has discharged its responsibilities contained therein.

OBJECTIVES AND SCOPEThe overall objectives of the committee are:• to assist the Board in discharging its duties relating to the safeguarding of assets and the operation of adequate systems

and control processes;• to control reporting processes and the preparation of financial statements in compliance with the applicable legal and

regulatory requirements and accounting standards;• to provide a forum for the governance of risk, including control issues and developing recommendations for consideration by

the Board• to review the Company’s internal financial controls and financial risk management systems;• to oversee the internal and external audit appointments and functions; and• to perform duties that are attributed to it by the Companies Act, the JSE and King IIl committee performance.

During the year the committee:• received and reviewed reports from both internal and external auditors concerning the effectiveness of the internal control

environment, systems and processes;• reviewed the reports of both internal and external audit findings and their concerns arising out of their audits and requested

appropriate responses from management;• made recommendations to the Board of directors regarding the corrective actions to be taken as a consequence of audit findings;• considered the independence and objectivity of the external auditors and ensured that the scope of their additional services

provided did not impair their independence;• reviewed a documented assessment, including key assumptions, prepared by management on the going concern status of

the Company, and accordingly made recommendations to the Board; • reviewed and recommended for adoption by the Board, the financial information that is publicly disclosed, which included the

Integrated Annual Report for the year ended 30 June 2013 and the interim results for the six months ended 31 December 2012;• considered the effectiveness of the internal audit and audit plan and monitored adherence of the internal audit to its annual

plan; and• satisfied itself that the internal audit function is efficient and effective and carried out its duties in an independent manner

in accordance with a Board-approved internal audit charter. The committee is satisfied that it has fulfilled its obligations in respect of its scope of responsibilities.


69

AUDIT AND RISK COMMITTEE REPORT

MEMBERShIPThe membership of the committee comprised solely of independent non-executive directors. In addition, the CEOs, the CFO, internal audit partner, and the external auditors are also permanent invitees to the meeting. Details of membership of the committee can be found on page 56 and the attendance record of the members is also available on page 56. The effectiveness of the Committee is assessed every two years. As required by the Act, the committee is to be elected by shareholders at the forthcoming AGM.

EXTERNAl AUDITThe committee has satisfied itself through enquiry that the auditor of Village Main Reef is independent as defined by the Act. No material non-audit services were provided by the external auditors during the year under review. The committee has reviewed the performance of the external auditors and nominated, for approval at the AGM, PricewaterhouseCoopers Inc as the external auditor for the 2013 financial year. Mr Dion Shango is the designated auditor and, in terms of the rotation requirements of the Act, 2013 will be his third year as designated auditor of the Company. The committee confirms that the auditor and designated auditor are accredited by the JSE.

INTEgRATED ANNUAl REPORTThe audit and risk committee has evaluated the Integrated Annual Report, incorporating the annual financial statements, for the year ended 30 June 2013. The audit and risk committee has also considered the sustainability information as disclosed in the Integrated Annual Report and has assessed its consistency with operational and other information known to audit and risk committee members. The committee has also considered the external assurance providers report and is satisfied that the information is reliable and consistent with the financial results. The annual financial statements have been prepared using appropriate accounting policies, which conform to International Financial Reporting Standards. The committee has therefore recommended the Integrated Annual Report for approval to the Board. The Board has subsequently approved the report and the annual financial statements, which will be open for discussion at the AGM.

gerard KempChairman of the audit and risk committee26 September 2013


ANNUAL REPORT 201370

FINANCIAL STATEMENTS

CONTENTSDirectors’ report 71

Independent auditor’s report 79

Consolidated and separate statement of financial position 80

Consolidated and separate statement of comprehensive income 81

Consolidated and separate statements of changes in equity 82

Consolidated and separate statements of cash flows 85

Notes to the annual financial statements 86

Glossary of terms 151

Corporate information IBC

6950_13_Village MR_IR_FINS_ES60.indd 70 2013/09/27 8:54 PM

71

DIRECTORS’ REPORT

DIRECTORS’ REPORT

The directors present the annual report of Village Main Reef Limited for the year ended 30 June 2013.

GENERAL REVIEWVillage Main Reef Limited (formerly known as Village Main Reef Gold Mining Company (1934) Limited), a company incorporated in the Republic of South Africa, is an operational mining company with exposure to precious metals, coal and antimony. Village’s gold exposure is through its 100% owned Tau Lekoa Gold Mining Company, which owns and operates the Tau Lekoa gold mine outside of Orkney; its wholly-owned subsidiary Nicolor, which operates the old Buffels South Gold plant, where all the underground gold material of the Group is processed; a 74% interest in the Blyvoor Gold Mine, a gold producer from both underground and surface sources located in the Carletonville area; as well as its 100% interest in the Buffelsfontein Gold Mine that was placed on care and maintenance during the current financial period. Village further owns a 76% interest in Cons Murch, one of the largest producers of antimony outside of China, and a 78% interest in Lesego Platinum, a world-class platinum project that completed a definitive BFS during the period under review. Its shares are listed on the JSE Limited, South Africa, with VIL as share code.

During the year, Village acquired a 16.34% interest in Continental Coal Limited, an Australian Listed company with very attractive coal assets all located in South Africa, for a total consideration of R80 million. The consideration was settled from Village’s available cash resources.

Post year-end, Village experienced labour actions at its Cons Murch operations that lasted for 10 days. During this period, employees at Cons Murch illegally occupied the decline Monarch shaft and prevented other employees from going to work. The illegal strike ended and production was normalised.

Also, on 30 July 2013, the Village Board suspended all financial support to Blyvoor. Blyvoor was subsequently placed in provisional liquidation and a liquidator was appointed. Village should have no additional financial exposure to Blyvoor.

SHARE CAPITALAll shares rank pari passu in all respects.

Share capital

Authorised

As at 30 June 2012

5,000,000,000 ordinary shares of 12.5 cents each R625,000,000

As at 30 June 2013

5,000,000,000 ordinary shares of 12.5 cents each R625,000,000

IssuedStated capital

R’000Total

R’000

As at 30 June 2012

1,008,694,473 ordinary shares of 12.5 cents each 1,699,322 1,699,322

As at 30 June 2013

1,040,697,474 ordinary shares of 12.5 cents each 1,699,322 1,699,322



DIRECTORS’ REPORT continued

MAJOR SHAREHOLDERS (as at 30 June 2013)

ShareholderNumber of shares

directly heldPercentage

of shares

Umbono Financial Services (Pty) Limited 115,949,517 11.14

Xelexwa Investment Holdings (Pty) Limited 73,982,168 7.11

RMB Investments and Advisory (Pty) Limited 68,278,817 6.56

Ergo Mining Operations (Pty) Limited 65,714,286 6.31

Buffelsfontein Gold Mines Limited (Treasury Stock) 60,522,537 5.82

Minex Projects (Pty) Limited 56,810,657 5.46

JCI Investment Finance (Pty) Limited 37,225,626 3.58

To The Point Growth Specialists Investments (Pty) Limited 24,276,222 2.33

DRDGold Limited 20,000,000 1.92

LS Sank 16,206,561 1.56

Total 538,966,391 51.79

PUBLIC/NON-PUBLIC SHAREHOLDERS

Number of shareholdings

% of total shareholders Number of shares

% of total issued share

capital

Non-public shareholders 13 0.13 346,676,575 33.31

Directors 8 0.08 66,946,131 6.43

Related holdings 2 0.02 84,798,759 8.15

Simmer and Jack Mines Share Trust 1 0.01 5,000,000 0.48

Empowerment 2 0.02 189,931,685 18.25

Public shareholders 10,281 99.87 694,020,899 66.69

Total 10,294 100.00 1,040,697,474 100.00

SHAREHOLDER ANALYSISNumber of shares Number of holders

0 – 1,000 3,620

1,001 – 10,000 3,833

10,001 – 100,000 2,306

100,001 – 1,000,000 460

>1,000,000 75

Total 10,294


73

DIRECTORS’ REPORT

INTERESTS OF DIRECTORS (as at 30 June 2013)

Director

Beneficialindirectinterest

Beneficialdirect

interest/own name

owned

Beneficialdirect

interest –FSP (4)

Totalnumber of

shares held% of issued

share capital

Bernard Swanepoel 22,320,978 (1) 6,451,021 17,478,323 46,250,322 4.44

Marius Saaiman 4,250,000 (3) 1,750,000 18,051,986 24,051,986 2.31

Phiway Mbuyazi 16,232,529 (2) 160,638 16,393,167 1.58

Ferdi Dippenaar 12,287,260 12,287,260 1.18

Dalubuhle Ncube 1,082,612 2,274,049 3,356,661 0.32

Richard de Villiers 682,398 2,695,192 3,377,590 0.32

Sandeep Gandhi 15,253 (5) 10,000 1,115,349 1,140,602 0.11

Baba Njenje 20,710,200 (6) 20,710,200 1.99

Gerard Kemp 130,500 130,500 0.01

Roy Pitchford 466,794 466,794 0.04

Total 63,528,960 10,733,963 53,902,159 128,165,082 12.32

(1) 19,420,978 Held indirectly through To The Point (Pty) Limited; 2,900,000 held indirectly through the Zack Swanepoel Trust.

(2) Held indirectly through Umbono Financial Services (Pty) Limited.

(3) Held indirectly through Saaiman Family Trust.

(4) Held by way of FSP allocations. For further detail, see pages 74 to 75 of this report.

(5) Held indirectly through C Gandhi.

(6) Held indirectly through Vulisango Holdings (Pty) Limited.

THE BOARD OF DIRECTORSNo changes occurred in the composition of the Board during the year under review. Changes to the Board of Directors subsequent to year-end, have been disclosed on page 11.

Name of director Date of appointment Date of resignation

Bernard Swanepoel Appointed 11 July 2008 n/a

Dalubuhle Ncube Appointed 11 July 2008 n/a

Ferdi Dippenaar Appointed 31 July 2008 n/a

Roy Pitchford Appointed 21 June 2010 n/a

Khetiwe McClain Appointed 21 June 2010 n/a

Phiway Mbuyazi Appointed 21 June 2010 n/a

Richard de Villiers Appointed 18 March 2011 n/a

Marius Saaiman Appointed 28 June 2011 n/a

Baba Njenje Appointed 28 June 2011 n/a

Gerard Kemp Appointed 28 June 2011 n/a

Sandeep Gandhi Appointed 4 May 2012 n/a

SERVICE CONTRACTSAs at the date of this report, the CEO, CFO, managing directors: platinum, antimony and gold, and executive director: human resources, are the only executive directors. The executive directors have entered into service contracts with a maximum notice period of one calendar month. The non-executive directors do not have service contracts.




DIRECTORS’ OPTIONSThe table below reflects share option entitlements accruing to directors and the transactions that occurred during the year:

HELD AT 1 JULY 2012 MOVEMENTS MOVEMENTS HELD AT 30 JUNE 2013

Name of director SchemeNumber of

instruments

Issue price per instrument

(cents)

Maximum performance

units

On par performance

unitsRetention

sharesNumber of

instruments


(cents)

Maximum performance

units

On par performance

UnitsRetention

sharesCancelled/

lapsed ExercisedExercise price per instrument

Gross proceed from exercise

Number of instruments

Issue priceper instrument Vesting date Expiry date

Bernard Swanepoel Share appreciation rights 3,000,000 117 – – – – – – – – – – – – 3,000,000 117 11/07/2012 30/06/2014

Bernard Swanepoel Forfeitable share rights 2,000,000 117 – – – – – – – – – 2,000,000 134 2,680,000 – – N/a N/a

Bernard Swanepoel Forfeitable share rights 5,711,571 158 5,711,571 1,903,857 – – – – – – – – – – 5,711,571 158 N/a N/a

Bernard Swanepoel Forfeitable share rights – – – – – 1,232,246 117 1,232,246 – – – – – – 1,232,246 117 22/05/2015 N/a

Bernard Swanepoel Forfeitable share rights – – – – – 10,534,506 54 5,746,094 2,873,047 1,915,365 – – – – 10,534,506 54 27/6/2016 N/a

Marius Saaiman Share appreciation rights 4,000,000 117 – – – – – – – – – – – – 4,000,000 117 11/07/2012 30/06/2014

Marius Saaiman Forfeitable share rights 1,000,000 117 – – – – – – – – – 1,000,000 134 1,340,000 – – N/a N/a

Marius Saaiman Forfeitable share rights 4,681,983 158 4,681,983 1,440,610 360,153 – – – – – – – – – 4,681,983 158 22/05/2015 N/a

Marius Saaiman Forfeitable share rights – – – – – 1,082,743 117 1,082,743 – – – – – – 1,082,743 117 22/05/2012 N/a

Marius Saaiman Forfeitable share rights – – – – – 12,287,260 54 6,702,142 3,351,071 2,234,047 – – – – 12,287,260 54 27/06/2016 N/a

Ferdi Dippenaar Forfeitable share rights – – – – – 12,287,260 54 6,702,142 3,351,071 2,234,047 – – – – 12,287,260 54 27/06/2016 N/a

Dalubuhle Ncube Share appreciation rights 1,000,000 117 – – – – – – – – – – – – 1,000,000 117 11/07/2012 30/06/2014

Dalubuhle Ncube Forfeitable share rights 800,000 117 – – – – – – – – – 800,000 134 1,072,000 – – N/a N/a

Dalubuhle Ncube Forfeitable share rights 1,870,135 158 1,870,135 545,456 233,767 – – – – – – – – – 1,870,135 158 22/05/2015 N/a

Dalubuhle Ncube Forfeitable share rights – – – – – 403,914 117 – – – – – – – 403,914 117 22/05/2015 N/a

Richard de Villiers Share appreciation rights 1,500,000 117 – – – – – – – – – – – – 1,500,000 117 11/07/2012 30/06/2014

Richard de Villiers Forfeitable share rights 800,000 117 – – – – – – – – – 800,000 134 1,072,000 – – N/a N/a

Richard de Villiers Forfeitable share rights 2,205,429 158 2,205,429 643,250 275,679 – – – – – – – – – 2,205,429 158 22/05/2015 N/a

Richard de Villiers Forfeitable share rights – – – – – 489,763 117 – – – – – – – 489,763 117 22/05/2015 N/a

Sandeep Gandhi Forfeitable share rights 918,014 158 918,014 267,754 114,752 – – – – – – – – – 918,014 158 22/05/2015 N/a

Sandeep Gandhi Forfeitable share rights – – – – – 197,355 117 – – – – – – – 197,355 117 22/05/2015 N/a

Further detail as to the performance conditions related to FSP shares awarded during 2013 is contained on pages 64 and 65 of this report.


75

DIRECTORS’ REPORT

DIRECTORS’ OPTIONSThe table below reflects share option entitlements accruing to directors and the transactions that occurred during the year:

HELD AT 1 JULY 2012 MOVEMENTS MOVEMENTS HELD AT 30 JUNE 2013

Name of director SchemeNumber of

instruments


(cents)

Maximum performance

units

On par performance

unitsRetention

sharesNumber of

instruments


(cents)

Maximum performance

units

On par performance

UnitsRetention

sharesCancelled/

lapsed ExercisedExercise price per instrument

Gross proceed from exercise

Number of instruments

Issue priceper instrument Vesting date Expiry date

Bernard Swanepoel Share appreciation rights 3,000,000 117 – – – – – – – – – – – – 3,000,000 117 11/07/2012 30/06/2014

Bernard Swanepoel Forfeitable share rights 2,000,000 117 – – – – – – – – – 2,000,000 134 2,680,000 – – N/a N/a

Bernard Swanepoel Forfeitable share rights 5,711,571 158 5,711,571 1,903,857 – – – – – – – – – – 5,711,571 158 N/a N/a

Bernard Swanepoel Forfeitable share rights – – – – – 1,232,246 117 1,232,246 – – – – – – 1,232,246 117 22/05/2015 N/a

Bernard Swanepoel Forfeitable share rights – – – – – 10,534,506 54 5,746,094 2,873,047 1,915,365 – – – – 10,534,506 54 27/6/2016 N/a

Marius Saaiman Share appreciation rights 4,000,000 117 – – – – – – – – – – – – 4,000,000 117 11/07/2012 30/06/2014

Marius Saaiman Forfeitable share rights 1,000,000 117 – – – – – – – – – 1,000,000 134 1,340,000 – – N/a N/a

Marius Saaiman Forfeitable share rights 4,681,983 158 4,681,983 1,440,610 360,153 – – – – – – – – – 4,681,983 158 22/05/2015 N/a

Marius Saaiman Forfeitable share rights – – – – – 1,082,743 117 1,082,743 – – – – – – 1,082,743 117 22/05/2012 N/a

Marius Saaiman Forfeitable share rights – – – – – 12,287,260 54 6,702,142 3,351,071 2,234,047 – – – – 12,287,260 54 27/06/2016 N/a

Ferdi Dippenaar Forfeitable share rights – – – – – 12,287,260 54 6,702,142 3,351,071 2,234,047 – – – – 12,287,260 54 27/06/2016 N/a

Dalubuhle Ncube Share appreciation rights 1,000,000 117 – – – – – – – – – – – – 1,000,000 117 11/07/2012 30/06/2014

Dalubuhle Ncube Forfeitable share rights 800,000 117 – – – – – – – – – 800,000 134 1,072,000 – – N/a N/a

Dalubuhle Ncube Forfeitable share rights 1,870,135 158 1,870,135 545,456 233,767 – – – – – – – – – 1,870,135 158 22/05/2015 N/a

Dalubuhle Ncube Forfeitable share rights – – – – – 403,914 117 – – – – – – – 403,914 117 22/05/2015 N/a

Richard de Villiers Share appreciation rights 1,500,000 117 – – – – – – – – – – – – 1,500,000 117 11/07/2012 30/06/2014

Richard de Villiers Forfeitable share rights 800,000 117 – – – – – – – – – 800,000 134 1,072,000 – – N/a N/a

Richard de Villiers Forfeitable share rights 2,205,429 158 2,205,429 643,250 275,679 – – – – – – – – – 2,205,429 158 22/05/2015 N/a

Richard de Villiers Forfeitable share rights – – – – – 489,763 117 – – – – – – – 489,763 117 22/05/2015 N/a

Sandeep Gandhi Forfeitable share rights 918,014 158 918,014 267,754 114,752 – – – – – – – – – 918,014 158 22/05/2015 N/a

Sandeep Gandhi Forfeitable share rights – – – – – 197,355 117 – – – – – – – 197,355 117 22/05/2015 N/a

Further detail as to the performance conditions related to FSP shares awarded during 2013 is contained on pages 64 and 65 of this report.




DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 30 JUNE 2013Board and committees – Village Main Reef Limited

Board fees(R)

Attendance fees(R)

Basic salary(R)

Travel allowance

(R)Cash bonus

(R)

Retention bonus

(R)

Transaction bonus

(R)

Total remuneration

(R)

Executive directors – – – –

Richard de Villiers – – 1,368,600 300,000 257,580 – – 1,926,180

Ferdi Dippenaar (2) – – 371,303 – – – – 371,303

Dalubuhle Ncube – – 1,803,507 102,000 220,614 – – 2,126,121

Marius Saaiman – – 2,535,738 – 296,217 – 2,276,250 (1) 5,108,205

Bernard Swanepoel – – 2,268,027 – – – 2,276,250 (1) 4,544,277

Sandeep Gandhi – – 1,545,000 – 178,875 – – 1,723,875

Total – – 9,892,175 402,000 953,286 – 4,552,500 15,799,961

Non-executive directors

Ferdi Dippenaar (2) 201,667 220,000 – – – – – 421,667

Phiway Mbuyazi 141,667 116,800 – – – – – 258,467

Khetiwe McClain 248,333 231,500 – – – – – 479,833

Roy Pitchford 256,667 244,475 – – – – – 501,142

Gerard Kemp 220,000 206,700 – – – – – 426,700

Baba Njenje 151,667 138,900 – – – – – 290,567

Total 1,220,000 1,158,375 – – – – – 2,378,375

Total 1,220,000 1,158,375 9,892,175 402,000 953,286 – 4,552,500 18,178,336

(1) In line with the agreed remuneration philosophy and approved remuneration framework, a transaction bonus relating to the successful conclusion of the First Uranium disposal of 0.75% was allocated to the two directors.

(2) Ferdi Dippenaar was an independent non-executive director until 14 May 2013, when he was appointed as the managing director of Gold. He has therefore been disclosed under both executive and non-executive directors above.

COMPANY SECRETARYMs Charlene Venter, appointed during May last year, remained as the in-house full-time company secretary of Village. Contact details of the company secretary are provided on the inside back cover of this report.

FINANCIAL RESULTSThe total comprehensive attributable loss to shareholders for the year ended 30 June 2013 amounted to a loss of R742 million (2012: profit of R291 million). Headline earnings per share from continuing operations was a profit of 37.83 cents (2012: 51.59 cents profit per share) based on the weighted average number of shares in issue during the year. For more information regarding the financial position of the Company, the reader is referred to note 31 of the annual financial statements.


77

DIRECTORS’ REPORT

SPONSORSJava Capital (Pty) Limited acted as the Company sponsor with effect from 1 June 2011. The services of Java were terminated post year-end, and Bravura Equity Services (Pty) Ltd was appointed as Company sponsor with effect from 1 September 2013.

AUDITORSPricewaterhouseCoopers Inc will continue in office in accordance with section 90 of the Companies Act, 2008.

CHANGES TO ACCOUNTING POLICIESNo accounting policies were changed during the financial year under review.

MATERIAL AND OTHER RESOLUTIONSDetails of special resolutions and other resolutions of a significant nature passed by the Company and its subsidiaries during the year under review, requiring disclosure in terms of the Listings Requirements of the JSE, were as follows:• approval of the provision of financial assistance in terms of section 45 of the Companies Act (Village Main Reef Limited);• approval of the establishment of a ZAR1,000,000,000 domestic medium term note programme (Village Main Reef Limited);• approval to enter into and perform its obligations under the ZAR1,000,000,000 domestic medium term note programme

ancillary agreements to be concluded by the Company from time to time and on the terms and conditions contained in the Programme Documents (Buffelsfontein Gold Mines Limited);

• approval to enter into general share repurchase programme (Village Main Reef Limited);• approval to oppose the certification of a class action relating to mineworkers who allegedly have silicosis and mineworkers

who allegedly died as a result of silicosis (Village Main Reef Limited, Buffelsfontein Gold Mines Limited and Blyvooruitzicht Gold Mining Company Limited);

• general authority was granted to the directors of the Company to issue equity securities (including the grant or issue of options or convertible securities that are convertible into existing class of equity securities) for cash (or the extinction of a liability, obligation or commitment, restraint, or settlement of expenses) on such terms and conditions as the directors may from time to time in their sole discretion deem fit (Village Main Reef Limited);

• Village or any of its subsidiaries are authorised to acquire ordinary shares in Village, subject to the provisions of the Companies Act and the JSE listings requirements (Village Main Reef Limited);

• approval of the amendment of the Company’s memorandum of incorporation (Village Main Reef Limited);• approval to the pledge by Simmer and Jack Investments (Pty) Limited to and in favour of Lexshell 820 Investments (Pty)

Limited of all the shares which may be held by Simmer and Jack Investments (Pty) Limited in Buffelsfontein Gold Mines Limited (Buffelsfontein Gold Mines Limited and Temotuo rehabilitation company NPC);

• approval to enter into the Tau Lekoa sale of business agreement, contract mining and processing agreement, the South Plant sale of business agreement and any other agreements (Buffelsfontein Gold Mines Limited);

• approval of the redemption of a redeemable preference share from Metorex (Cons Murch Mine (Pty) Limited);• approval of the entering into of the South Plant sale agreement and the toll treatment agreement and any other agreement

or document necessary for the implementation of the South Plant sale agreement and the toll treatment agreement (Nicolor (Pty) Limited);

• approval of the Tau Lekoa sale of business agreement, the contract mining and processing agreement, the toll treatment agreement and any other agreement or document necessary for the implementation of the transaction agreements, including the Section 11 application (Tau Lekoa Gold Mining Co (Pty) Limited);

• approval of a change of name form Newshelf 1258 (Pty) Limited to Village Main Reef Gold Investments 03 (Pty) Limited as well as the replacement of the Company’s existing memorandum of incorporation (VMR Gold Investments 03 (Pty) Limited); and

• approval of the repurchase of shares, waiver of the provisions of section 48(8)(b) of the Companies Act, alteration of the Company’s authorised share capital, change of the Company’s name to Village Main Reef Gold Investments 04 (Pty) Limited and substitution of the Company’s memorandum of incorporation (VMR Gold Investments 04 (Pty) Limited).




MATERIAL CONTRACTSNo material contracts other than in the ordinary course of business have been entered into during the period under review.

DIVIDENDS No dividends have been declared by the Village Board since 30 June 2012.

EVENTS SUBSEQUENT TO STATEMENT OF FINANCIAL POSITION DATEOn 10 July 2013, Village informed its shareholders that an unprotected strike commenced at its Cons Murch mine. The strike ended on 20 July 2013, with the help of the South African Police, labour unions and management. No production of antimony or gold was possible during this period.

On 30 July 2013, the Village Board informed the Blyvoor Board via the news service of the JSE that it would no longer financially support the operations of Blyvoor. Blyvoor, through its Board, successfully obtained a provisional winding-up order from the South Gauteng High Court on 6 August 2013. A provisional liquidator was appointed on 8 August 2013 and all operations at Blyvoor ceased from 9 August 2013. Village is the single, largest, concurrent creditor but has no further exposure to Blyvoor. Blyvoor will be accounted for as a discontinued operation in FY2014.

SUBSIDIARIESDetails of the Group’s interest in its subsidiaries are set out in note 10 to the annual financial statements on page 118.

GOING CONCERNAs at 30 June 2013, the Group’s assets exceeded its liabilities and it had adequate cash and cash equivalent assets to pay its debts as and when they become due in the ordinary course of business for the next 12 months.


79

INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITOR’S REPORTTO THE SHAREHOLDERS OF VILLAGE MAIN REEF LIMITED

We have audited the consolidated and separate financial statements of Village Main Reef Limited set out on pages 80 to 150, which comprise the statements of financial position as at 30 June 2013, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe Company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITYOur responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINIONIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Village Main Reef Limited as at 30 June 2013, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

OTHER REPORTS REQUIRED BY THE COMPANIES ACTAs part of our audit of the consolidated and separate financial statements for the year ended 30 June 2013, we have read the Directors’ Report, the Audit and Risk Committee’s Report and the Company Secretary’s Certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

PricewaterhouseCoopers Inc. Director: TD ShangoRegistered Auditor SunninghillDate: 27 September 2013



CONSOLIDATED STATEMENT OF FINANCIAL POSITIONat 30 June 2013

GROUP COMPANY

Notes30 June 2013

R’00030 June 2012

R’00030 June 2013

R’00030 June 2012

R’000

ASSETSNon-current assetsProperty, plant and equipment 3 1,447,557 2,274,359 533 474 Investment property 4 24,957 17,312 – –Investment in rehabilitation trust funds 5 200,303 160,101 5,229 4,966 Intangible assets 6 60,401 83,063 – 10,000 Financial assets 7 34,259 30,310 – –Reimbursive assets 9 115,009 106,338 – –Investment in subsidiaries 10 – – 895,474 1,045,474Total non-current assets 1,882,486 2,671,483 901,236 1,060,914Current assetsFinancial assets 7 1,906 418,576 1,906 422,292Loans to Group companies 20 – – 171,245 12,400Trade and other receivables 11 135,762 217,296 23,236 45,434Inventories 12 98,636 127,712 – –Cash and cash equivalents 13 207,314 294,736 172,674 234,309Total current assets 443,618 1,058,320 369,061 714,435Non-current assets held-for-sale 14 275 8,620 – – Total assets 2,326,379 3,738,423 1,270,297 1,775,349

EQUITY AND LIABILITIESEquityStated capital 16 636,500 636,500 1,699,322 1,699,322Treasury shares 16 (73,316) – – –Retained earnings 400,381 1,122,691 (476,630) (264,586)Fair value reserve 16 – 20,187 –- – Non-distributable reserve 16 18,180 8,595 18,180 8,595 Transactions with non-controlling interest 16 29,252 29,252 – –Non-controlling interest 16 (180,044) (12,745) – – Total equity 830,953 1,804,480 1,240,872 1,443,331Non-current liabilitiesFinancial liabilities 17 11,595 172,734 10,506 9,977Deferred tax liability 18 151,889 246,357 – –Provision for environmental rehabilitation 19 101,039 404,511 5,367 5,367Total non-current liabilities 264,523 823,602 15,873 15,344Current liabilitiesFinancial liabilities 17 13,988 170,590 – –Loans from Group companies 20 – – 7,067 8,482Trade and other payables 21 735,011 605,689 6,485 5,584Retirement benefit obligations 22 2,900 3,368 – –Provision for environmental rehabilitation 19 442,482 – – –Shareholders for dividends – 302,608 – 302,608Bank overdraft 13 36,522 28,086 – –Total current liabilities 1,230,903 1,110,341 13,552 316,674

Total liabilities 1,495,426 1,933,943 29,425 332,018Total equity and liabilities 2,326,379 3,738,423 1,270,297 1,775,349


81

ANNUAL FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEfor the 12 months ended 30 June 2013

GROUP COMPANY

Notes30 June 2013

R’00030 June 2012

R’00030 June 2013

R’00030 June 2012

R’000

Revenue 23 2,550,187 1,904,408 – –Cost of sales (2,284,790) (1,393,599) – –

Gross profit/(loss) 265,397 510,809 – –Other income 19,693 34,526 6,239 51,451Operating, administrative and general expenses (133,652) (135,577) (26,809) (48,915)Impairment of assets 28 (524,757) – (201,714) –

Operating profit/(loss) 24 (373,319) 409,758 (222,284) 2,536Investment revenue 25 44,690 49,402 39,253 44,247Restructuring costs 26 (32,767) 9,018 (1,485) –Fair value adjustments 27 (23,796) 35,187 (27,512) 35,187Gain on bargain purchase – 27,371 – –Recycling of FCTR on disposal of investment in associate 16 – 32,462 – –Finance cost 29 (30,440) (6,629) (16) (300)Profit/(loss) from continuing operations (415,632) 556,569 (212,044) 81,670Loss from discontinued operations 15 (566,878) (241,958) – –Profit/(loss) before taxation (982,510) 314,611 (212,044) 81,670Taxation 30 92,901 355 – –Profit/(loss) for the period (889,609) 314,966 (212,044) 81,670Other comprehensive income that will be recycled through profit and loss:Fair value adjustments to available-for-sale investments 7 (17,086) 8,041 – –Recycling of fair value reserve 7 (3,101) – – –Share of associate’s foreign currency translation reserve 16 – (32,462) – –Total comprehensive income/(loss) for the period (909,796) 290,545 (212,044) 81,670

Profit/(loss)attributable to:Owners of the parent (722,310) 315,600 (212,044) 81,670Non-controlling interest (167,299) (634) – –Profit/(loss) for the period (889,609) 314,966 (212,044) 81,670

Total comprehensive income attributable to:Owners of the parent (742,497) 291,179 (212,044) 81,670Non-controlling interest (167,299) (634) – –Total comprehensive income for the period (909,796) 290,545 (212,044) 81,670

Basic loss per share attributable to owners of the parentFrom continuing operations (cents per share) 31 (16.19) 61.36 (22.09) 8.99From discontinued operations (cents per share) 31 (59.05) (26.63) – –Total basic earnings/(loss) per share 31 (75.24) 34.73 (22.09) 8.99Diluted earnings/(loss) per share attributable to owners of the parentFrom continuing operations (cents per share) 31 (16.19) 60.93 (22.09) 8.93From discontinued operations (cents per share) 31 (59.05) (26.44) – –Total diluted earnings/(loss) per share attributable to owners of the parent 31 (75.24) 34.49 (22.09) 8.93



CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITYfor the year ended 30 June 2013

As at 30 June 2013

GROUP

Statedcapital R’000

TreasurysharesR’000

Retainedearnings

R’000

Fair valuereserve

R’000

Transactions with non-controlling

interestR’000

Non-distributable reserve

R’000

Equity attributableto the ownersof the parent

R’000

Non-controlling

interestR’000

Total equityR’000

Balance as at 1 July 2012 636,500 – 1,122,691 20,187 29,252 8,595 1,817,225 (12,745) 1,804,480

Profit/(loss) for the period – – (722,310) – – – (722,310) (167,299) (889,609)

Change in fair value of assets held-for-sale – – – (20,187) – – (20,187) – (20,187)

Share options expensed during the year – – – – – 9,585 9,585 – 9,585

Shares repurchased – (73,316) – – – – (73,316) – (73,316)

Balance as at 30 June 2013 636,500 (73,316) 400,381 – 29,252 18,180 1,010,997 (180,044) 830,953

Note 16 16 16 16 16

As at 30 June 2012

GROUP Notes


Retainedearnings

R’000

Fair valuereserve

R’000

Foreign currency translation

reserveR’000


interestR’000


R’000


R’000

Non-controlling

interestR’000

Total equityR’000

Restated balance as at 1 July 2011 486,500 1,109,699 12,146 32,462 – – 1,640,807 44,714 1,685,521

Profit/(loss) for the period – 315,600 – – – – 315,600 (634) 314,966

Release of FCTR to the statement of comprehensive income – – – (32,462) – – (32,462) – (32,462)

Other comprehensive income – – 8,041 – – – 8,041 -- 8,041

Non-controlling interest acquired in business combination – – – – – – -- (81,644) (81,644)

Inflow of IDC loan drawdown – – – – 29,252 – 29,252 24,819 54,071

Dividend declared – (302,608) – – – – (302,608) -- (302,608)

Share options expensed during the year – – – – – 8,595 8,595 -- 8,595

Share capital issued during the year 150,000 – – – – – 150,000 -- 150,000

Balance as at 30 June 2012 636,500 1,122,691 20,187 – 29,252 8,595 1,817,225 (12,745) 1,804,480

Note 16 16 16 16 16


83


As at 30 June 2013

GROUP


TreasurysharesR’000

Retainedearnings

R’000

Fair valuereserve

R’000


interestR’000


R’000


R’000

Non-controlling

interestR’000

Total equityR’000

Balance as at 1 July 2012 636,500 – 1,122,691 20,187 29,252 8,595 1,817,225 (12,745) 1,804,480

Profit/(loss) for the period – – (722,310) – – – (722,310) (167,299) (889,609)

Change in fair value of assets held-for-sale – – – (20,187) – – (20,187) – (20,187)

Share options expensed during the year – – – – – 9,585 9,585 – 9,585

Shares repurchased – (73,316) – – – – (73,316) – (73,316)

Balance as at 30 June 2013 636,500 (73,316) 400,381 – 29,252 18,180 1,010,997 (180,044) 830,953

Note 16 16 16 16 16

As at 30 June 2012

GROUP Notes


Retainedearnings

R’000

Fair valuereserve

R’000

Foreign currency translation

reserveR’000


interestR’000


R’000


R’000

Non-controlling

interestR’000

Total equityR’000

Restated balance as at 1 July 2011 486,500 1,109,699 12,146 32,462 – – 1,640,807 44,714 1,685,521

Profit/(loss) for the period – 315,600 – – – – 315,600 (634) 314,966

Release of FCTR to the statement of comprehensive income – – – (32,462) – – (32,462) – (32,462)

Other comprehensive income – – 8,041 – – – 8,041 -- 8,041

Non-controlling interest acquired in business combination – – – – – – -- (81,644) (81,644)

Inflow of IDC loan drawdown – – – – 29,252 – 29,252 24,819 54,071

Dividend declared – (302,608) – – – – (302,608) -- (302,608)

Share options expensed during the year – – – – – 8,595 8,595 -- 8,595

Share capital issued during the year 150,000 – – – – – 150,000 -- 150,000

Balance as at 30 June 2012 636,500 1,122,691 20,187 – 29,252 8,595 1,817,225 (12,745) 1,804,480

Note 16 16 16 16 16



CONSOLIDATED AND SEPARATE STATEMENTS OF CHANGES IN EQUITY continuedfor the year ended 30 June 2013

As at 30 June 2013

COMPANY


Accumulated profit/(loss)R’000


R’000Total equity

R’000

Balance as at 1 July 2012 1,699,322 (264,586) 8,595 1,443,331

Profit/(loss) for the period – (212,044) – (212,044)

Share options expensed during the year – – 9,585 9,585

Balance as at 30 June 2013 1,699,322 (476,630) 18,180 1,240,872

Note 16

As at 30 June 2012

COMPANY

StatedcapitalR’000

Accumulatedloss

R’000


R’000Total equity

R’000

Balance as at 1 July 2011 1,549,322 (43,648) – 1,505,674

Total comprehensive income for the period

– 81,670 – 81,670

Share options expensed during the year – – 8,595 8,595

Dividend declared – (302,608) – (302,608)

Share capital issued during the year 150,000 – – 150,000

Balance as at 30 June 2012 1,699,322 (264,586) 8,595 1,443,331

Note 16


85


CONSOLIDATED AND SEPARATE STATEMENTS OF CASH FLOWSfor the year ended 30 June 2013

GROUP COMPANY

Notes30 June 2013

R’00030 June 2012

R’000June 2013

R’00030 June 2012

R’000

Cash generated from/(utilised in) operations 32 604,418 465,675 18,273 (109,434)Finance cost (2,729) (6,946) (16) (300)Investment income 14,359 49,287 12,703 44,247Tax paid 33 (8,202) – (6,711) –Cash flow generated from/(utilised in) continuing operations’ operating activities 607,846 508,016 (24,249) (65,487)Cash flow (utilised in) discontinued operations’ operating activities

32 (341,668) (214,287) – –

Total cash flow from/(utilised in) operating activities 266,178 293,729 (24,249) (65,487)Cash flow from investing activitiesPurchase of property, plant and equipment (193,269) (210,707) (385) (3,380)Proceeds on disposal of property, plant and equipment and investment property 6,185 5,950 – –Payment of dividend (302,608) – (302,608) –Proceeds from Mine Waste Solution Notes 392,874 – 392,874 –Investment in Continental Coal (79,840) – – –Receipt of dividend from First Uranium 26,286 – 26,286 –Proceeds from disposal of FIU shares – 205,061 – 205,061Payment on behalf of subsidiaries – (16,111) – (235)Repayment from FIU – 409 – 409Additional investment in Lesego Platinum Mining Limited – – – (17,456)Cash and cash equivalents acquired in business combinations – 8,270 – –Cash flow (utilised in)/from continuing operations’ investing activities (150,372) (7,128) 116,167 184,399Cash flow (utilised in)/from discontinued operations’ investing activities (76,083) (24,896) – –Total cash flow (utilised in)/from investing activities (226,455) (32,024) 116,167 184,399Cash flow from financing activitiesLoans received from Cons Murch – – – 11,000Repayment of Simmer and Jack loan – – – (20,000)Repayment of Aberdeen liability – – – –Repayment of Deutsche Bank loan 2 (133,088) (92,765) – –Repayment of Deutsche Bank loan 1 – (44,332) – –Repayment of finance lease liability (2,026) (840) (77) –Repayment of retirement fund obligation (467) (355) – –Settlement of call options for Cons Murch – (4,906) – (4,906)Increase in IDC funding for Lesego – 54,071 – –Increase in loan to Group companies – – (201,974) –Cash flow (utilised in)/generated from continuing operations financing activities (135,581) (89,127) (202,051) (13,906)Cash flow (utilised in)/generated from discontinued operations’ financing activities – (73,128) – –Total cash flow (utilised in)/generated from financing activities (135,581) (162,255) (202,051) (13,906)Net increase/(decrease) in cash and cash equivalents (95,858) 99,450 (61,635) 105,006Cash and cash equivalents at the beginning of the period 266,650 167,200 234,309 129,303

Cash and cash equivalents at the end of the period 13 170,792 266,650 172,674 234,309



NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 30 June 2013

1. SIGNIFICANT ACCOUNTING POLICIES1.1 General information

Village is a mining company with operating assets in three gold operations: Buffelsfontein, Blyvoor and Tau Lekoa; an antimony and gold producer in Cons Murch; and a gold-processing plant at Buffelsfontein. Village also has a very exciting brownfields platinum project, Lesego Platinum.

1.2 Presentation of financial statements

Statement of compliance

The financial statements have been prepared in compliance with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and the requirements of the Companies Act of South Africa. The financial statements are a true and fair reflection of the Company’s financial and cash flow position.

Basis of measurement

The financial statements have been prepared on the historical cost basis, except for the following:• certain financial assets and financial liabilities are measured at fair value;• liabilities for share-based payment arrangements are measured with a Black-Schöles option valuation model; and• derivative financial instruments are measured at fair value.

These accounting policies are consistent with the previous annual financial statements.

1.3 Basis of preparation

1.3.1 Basis of consolidation

The consolidated financial statements of Village Main Reef Limited have been prepared in accordance with IFRS and International Finance Reporting Interpretations Committee (IFRIC) interpretations. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of land and buildings, available-for-sale financial assets, and financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies.

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. This is generally accompanied by a shareholding of more than one half of the voting rights. In assessing control, potential voting rights that are presently exercisable or convertible, are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences, until the date that control ceases. Subsidiaries are recognised at cost less impairment losses in the Company’s separate accounts. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments.

Associates are entities in which the Company has significant influence but not control or joint control. A holding of 20% or more of the voting power (directly or through subsidiaries) will indicate significant influence unless it can be demonstrated otherwise. In the consolidated financial statements, the Group uses the equity method to account for the investment in associate. Under the equity method of accounting, the equity investment is initially recorded at cost and is subsequently adjusted to reflect the Company’s share of the net profit or net loss of the associate. When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

Accounting policies of associates have been changed, where necessary, to ensure consistency with the policies adopted by the Group.


87


Intra-group balances and any unrealised gains and losses or income and expenses arising from intra-group transactions

are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with

associates are eliminated to the extent of the group’s interest in equity. Unrealised losses are eliminated in the same

way as unrealised gains, but only to the extent that there is no evidence of impairment.

1.3.2 Acquisition method

The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred

for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity

interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting

from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets

acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair

values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest

in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition

date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the identifiable

net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired

in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income.

The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For

purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired

of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling

interests are also recorded in equity.

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its

fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount

for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset.

In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted

for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously

recognised in other comprehensive income are reclassified to profit or loss.

1.3.3 Going concern

The directors have a reasonable expectation that the Group has adequate resources and cash flows to continue in

operational existence for the foreseeable future. The Group, therefore, continues to adopt the going concern basis in

preparing its consolidated financial statements.

1.4 Investment property

Investment properties are those which are held either to earn rental income or for capital appreciation or for both.

Investment property is recognised as an asset when, and only when, it is probable that the future economic benefits

that are associated with the investment property will flow to the enterprise, and the cost of the investment property

can be measured reliably.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement. Costs

include those incurred initially or incurred subsequently to add to, or to replace a part of, or service a property. If a

replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced

part is derecognised.

Subsequent to initial measurement, investment property is measured at fair value. A gain or loss arising from a change

in fair value is included in net profit or loss for the period in which it arises.



NOTES TO THE ANNUAL FINANCIAL STATEMENTS continuedfor the year ended 30 June 2013

1. SIGNIFICANT ACCOUNTING POLICIES continued

1.5 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits associated with the item will flow to the Group; and

• the cost of the item can be measured reliably.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred

subsequently to add to, replace part of, or service it. If a replacement cost is recognised in the carrying amount of an

item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

Property, plant and equipment is carried at cost less accumulated depreciation and any impairment losses.

The residual value and the useful life of each asset are reviewed at each financial year-end.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the

item shall be depreciated separately.

The depreciation charge for each year is recognised in profit or loss.

The gain or loss arising from the derecognising of an item of property, plant and equipment is included in profit or loss when

the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is

determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

Depreciation is provided on all property, plant and equipment other than freehold land, to write down the cost, less

residual value, on a straight-line basis over its useful life as follows:

Item Average useful life

Plant and equipment Proven and probable reserves

Buildings 20 years

Furniture and fittings 6 years

Motor vehicles 5 years

Computer equipment and software 3 years

Mining assets (life-of-mine)

The useful lives are determined by the life-of-mine model.

• Mining assets are stated at cost less accumulated amortisation and impairments.

• All separately identifiable equipment (e.g. winders, compressors, substations, silos, conveyors and surface,

underground and trackless equipment, etc.) is depreciated over the estimated useful life of the asset.

• Depreciation is first charged on new mining ventures from the date on which production reaches commercial quantities.

Mine infrastructure (proven and probable reserves)

Mine infrastructure costs include expenditure incurred to develop new orebodies, to define further mineralisation in

existing orebodies and to expand the capacity of the mine.

Costs include preproduction expenditures incurred during the development of the mine to the extent that it provides

access to gold deposits and has future economic benefit.


89


Costs also include borrowing costs capitalised during the construction period where such costs are financed by borrowings. Any revenue derived prior to the project reaching commercial levels of production is capitalised.

Mine infrastructure costs are depreciated using the units-of-production method based on proven and probable mineral reserves. These reserves are reassessed annually.

Exploration (proven and probable mineral reserves)

• The Group’s accounting policy for exploration and evaluation expenditure results in certain items of expenditure being capitalised for an area of interest when it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically-viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to profit or loss.

• Costs on greenfield sites, being those where the group does not have any mineral deposits which are already being mined or developed, are expensed as incurred until management is able to demonstrate that future economic benefits are probable, which generally will be the establishment of proven and probable reserves at this location.

• Costs incurred on exploration work in support of production where an area is in the ‘working cost’ stage as opposed to the ‘capital’ stage are expensed.

1.6 Intangible assets

The new order prospecting right covering 9,544,7556 hectares of various farms in Phalaborwa under the Protocol Number 0035/2007 was recognised as an intangible asset that will generate future economic benefits for Cons Murch in the 2014 financial year.

Mining rights

Intangible assets are tested for impairment on an annual basis. The mining right has been classified as having a finite life. (Refer to note 6). Mining rights are amortised using the units of production method, based on the proven and probable mineral reserves.

1.7 Leases

A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership.

A lease is classified as an operating lease if it does not substantially transfer all the risks and rewards incidental to ownership.

Finance leases – lessee

Finance leases are recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property, plant and equipment or, if lower, the present value of the minimum lease payments.

The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation.

The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.

The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.




Operating leases – lessee

Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease accrual.

1.8 Non-current assets held-for-sale

Non-current assets are classified as held-for-sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition.

Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

Non-current assets held-for-sale are measured at the lower of its carrying amount and fair value less costs to sell. A non-current asset is not depreciated while it is classified as held-for-sale, or while it is part of a disposal group classified as held-for-sale.

1.9 Financial instruments

1.9.1 Financial assets

Initial recognition

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial assets and financial liabilities are recognised on the Group’s statement of financial position when the Group becomes party to the contractual provisions of the instrument.

Classification

The Group classifies its financial assets in the following categories: at fair value through profit or loss, loans and receivables, and available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if expected to be settled within 12 months; otherwise, they are classified as non-current.

In the current financial year, Village’s investment in Continental Coal Limited of R34.2 million and FIU listed investments of R1.9 million were classified at fair value through profit and loss.

(b) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These include trade and other receivables, deposits and staff advances. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.


1.7 Leases continued


91


(c) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of it within 12 months of the end of the reporting period.

In the current year, Village’s unlisted investment in Rand Mutual shares, amounting to R17,000 was classified as available-for-sale.

Recognition and measurement

Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss.

Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables are subsequently carried at amortised cost using the effective interest rate method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within profit or loss in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of other income when the group’s right to receive payments is established.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognised in other comprehensive income. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement as ‘gains and losses from investment securities’. Interest on available-for-sale securities calculated using the effective interest rate method is recognised in the income statement as part of other income. Dividends on available-for-sale equity instruments are recognised in the income statement as part of other income when the group’s right to receive payments is established.

1.9.2 Financial liabilities

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest rate method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down.

In this case, the fee is deferred until the drawdown occurs. To the extent that there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

When general and/or specific borrowings are utilised to fund qualifying capital expenditure, such borrowing costs that are attributable to the capital expenditure are capitalised from the point at which the capital expenditure and related borrowing costs are incurred until completion of construction.

The following liabilities have been classified as fair value through profit and loss, borrowings amounting to Rnil (2012: R333.3 million) and cash settled share option liability of R10.1 million (2012: R9.9 million).





1.9 Financial instruments continued

1.9.3 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

1.9.4 Assets carried at amortised cost

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the Group uses to determine that there is objective evidence of an impairment loss include:• significant financial difficulty of the issuer or obligor;• a breach of contract, such as a default or delinquency in interest or principal payments;• the group, for economic or legal reasons relating to the borrower’s financial difficulty, granting to the borrower a

concession that the lender would not otherwise consider;• it becomes probable that the borrower will enter bankruptcy or other financial reorganisation;• the disappearance of an active market for that financial asset because of financial difficulties; or• observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of

financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the portfolio, including:• adverse changes in the payment status of borrowers in the portfolio; and• national or local economic conditions that correlate with defaults on the assets in the portfolio.

The Group first assesses whether objective evidence of impairment exists.

For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated income statement. If a loan or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income.

1.9.5 Assets classified as available-for-sale

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the consolidated statement of comprehensive income. Impairment losses recognised in the statement of comprehensive income on equity instruments are not reversed through the consolidated statement of comprehensive income. If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring


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after the impairment loss was recognised in profit or loss, the impairment loss is reversed through the statement of

comprehensive income.

1.10 Inventories

Inventories are measured at the lower of cost and net realisable value.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of

completion and the estimated costs necessary to make the sale.

The cost of inventories, including ore stockpiles and work-in-progress, comprises all costs of production and other costs

incurred in bringing the inventories to their present location and condition.

The cost of inventories of items that are not ordinarily interchangeable and goods or services produced and segregated

for specific projects are assigned using specific identification of the individual costs.

The cost of inventories is valued at the lower of cost using the weighted average cost formula and net realisable value.

When inventories are sold, the carrying amounts of those inventories are recognised as an expense in the period in

which the related revenue is recognised. The amount of any writedown of inventories to net realisable value and all

losses of inventories is recognised as an expense in the period the writedown or loss occurs. The amount of any reversal

of any writedown of inventories, arising from an increase in net realisable value, is recognised as a reduction in the

amount of inventories recognised as an expense in the period in which the reversal occurs.

1.11 Impairment of assets

At each statement of financial position date the Group assesses whether there is any indication that an asset may be

impaired. If any such indication exists, the Group estimates the recoverable amount of the asset.

If it is not possible to estimate the recoverable amount of the individual asset, the recoverable amount of the cash

generating unit to which the asset belongs is determined.

The recoverable amount of an asset or a cash-generating unit is the higher of its fair value less cost to sell and its value

in use.

If the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset is reduced to

its recoverable amount. That reduction is an impairment loss.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately

in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

An impairment loss is recognised for cash-generating units if the recoverable amount of the unit is less than the carrying

amount of the units. The impairment loss is allocated to reduce the carrying amount of the assets of the unit in the

following order:

• first, to reduce the carrying amount of any goodwill allocated to the cash-generating unit; and

• second, to the other assets of the unit, pro rata on the basis of the carrying amount of the asset in the unit.

An entity assesses at each reporting date whether there is any indication that an impairment loss recognised in prior

periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the

recoverable amounts of those assets are estimated.

The increased carrying amount of an asset other than goodwill attributable to a reversal of an impairment loss does not

exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in

prior periods. A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation

other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is

treated as a revaluation increase.





1.11 Impairment of assets continued

In the current financial year management performed an impairment test on all its assets. The outcome was to impair the Blyvoor and Buffels PPE as well as the mine management agreement at Cons Murch. Refer to Note 3 and Note 28 for details.

1.12 Investment in subsidiaries and associates

Subsidiaries

The cost of an investment in a subsidiary is the aggregate of:• the fair value, at the date of exchange; of assets given, liabilities incurred or assumed, and equity instruments issued

by the Company; plus • any costs directly attributable to the purchase of the subsidiary.

An adjustment to the cost of a business combination contingent on future events is included in the cost of the combination if the adjustment is probable and can be measured reliably.

1.13 Trade and other receivables

Trade and other receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

1.14 Loans to/(from) Group companies

These include loans to or from holding companies, and subsidiaries and are recognised initially at fair value plus direct transaction costs.

Subsequently these loans are measured at amortised cost using the effective interest rate method, less any impairment loss recognised to reflect irrecoverable amounts.

On loans receivable an impairment loss is recognised in profit or loss when there is objective evidence that it is impaired. The impairment is measured as the difference between the investment’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Impairment losses are reversed in subsequent periods when an increase in the investment’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

1.15 Trade and other payables

Trade and other payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer).

Should payment be due after one year, then the liability is classified as non-current.

1.16 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially and subsequently recorded at fair value. In the consolidated statement of financial position, bank overdrafts are shown within current liabilities.


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1.17 Bank overdraft and borrowings

Bank overdraft and borrowings are initially measured at fair value, and are subsequently measured at amortised

cost, using the effective interest rate method. Any difference between the proceeds net of transaction costs and the

settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s

accounting policy for borrowing costs in note 1.9.2.

1.18 Taxation

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in

respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities and assets for the current and prior periods are measured at the amount expected to be paid to

or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted

by the statement of financial position date.

Deferred tax assets and liabilities

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets

against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by

the same taxation authority on either the same taxable entity or different taxable entities where there is an intention

to settle the balances on a net basis.

The tax expense for the period comprises current and deferred tax. Tax is recognised in profit or loss, except to the

extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is

also recognised in other comprehensive income or directly in equity, respectively.

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax

liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction,

affects neither accounting profit nor taxable profit or loss.

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable

profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not

recognised when it arises from the initial recognition of an asset or liability in a transaction that at the time of the

transaction, affects neither accounting profit nor taxable profit or loss.

A deferred tax asset is recognised for the carry forward of unused tax losses to the extent that it is probable that future

taxable profit will be available against which the unused tax losses can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset

is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted

by the statement of financial position date.

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except

to the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, directly in other comprehensive income; or

• a business combination.

Current and deferred taxes are charged or credited directly to other comprehensive income if the tax relates to items

that are credited or charged, in the same or a different period, directly to other comprehensive income.





1.19 Share capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

If the Group reacquires its own equity instruments, those treasury shares are deducted from equity. No gain or loss is recognised in profit or loss of the purchase, sale, issue or cancellation of the group’s own equity instruments. Consideration paid or received shall be recognised directly in equity.

1.20 Share-based payments

In terms of the new option scheme, which pertains to options granted to employees after October 2010, these costs are charged to the statement of comprehensive income on a pro rata basis of a third of the allocated options over the three-year vesting period.

During the 2011 financial year, Village abolished the former share option scheme and replaced it with a Forfeitable Share Plan (FSP) and a Share Appreciation Rights Scheme (SARS). These plans are discussed in more detail in note 38 to the financial statements. The vesting period for the shares offered under these plans is 12 months and any grants are therefore charged to the statement of comprehensive income during this period.

1.21 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), is recognised in the period in which the service is rendered and is not discounted.

The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of non-accumulating absences, when the absence occurs.

The expected cost of profit-sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

Employee benefit trust

The carrying value of shares held by the employee benefit trust are recorded as treasury shares, shown as a reduction in retained earnings within shareholders’ equity.

Defined-contribution plans

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The Group has no further obligations once the contributions have been paid.

Payments to defined-contribution retirement plans are charged as an expense as they fall due.

Payments made to industry-managed state planned retirement benefit schemes are dealt with as defined-contribution plans where the Group’s obligation under the schemes is equivalent to those arising in a defined-contribution retirement plan.

Other post-employment obligations

Some Group companies provide post-retirement healthcare benefits to their retirees. The entitlement to these benefits is usually conditional on the employee remaining in service up to retirement age and the completion of a minimum


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service period. The expected costs of these benefits are accrued over the period of employment. Actuarial gains and

losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in

other comprehensive income in the period in which they arise.

Provisions are recognised when:

• the Group has a present obligation as a result of a past event;

• it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

• a reliable estimate can be made of the obligation.

The amount of a provision is the present value of the expenditure expected to be required to settle the obligation.

Provisions are not recognised for future operating losses.

After their initial recognition contingent liabilities recognised in business combinations that are recognised separately

are subsequently measured at the higher of:

• the amount that would be recognised as a provision; and

• the amount initially recognised less cumulative amortisation.

Contingent assets and contingent liabilities are not recognised. Contingencies are disclosed in note 35.

1.23 Provision for environmental rehabilitation

An obligation to incur restoration, rehabilitation and environmental costs arises when environmental disturbance is

caused by the development or ongoing production of a mining property. Such costs arising from the decommissioning of

plant and other site preparation work, discounted to their net present value, are provided for and capitalised at the start

of each project, as soon as the obligation to incur such costs arises. These costs are charged against profits over the

life of the operation, through the depreciation of the asset and the unwinding of the discount on the provision. Costs for

restoration of subsequent site damage which is created on an ongoing basis during production are provided for at their

net present values and charged against profits as extraction progresses.

Changes in the measurement of a liability relating to the decommissioning of plant or other site preparation work that

result from changes in the estimated timing or amount of the cash flow, or a change in the discount rate, are added to,

or deducted from, the cost of the related asset in the current period. If a decrease in the liability exceeds the carrying

amount of the asset, the excess is recognised immediately in profit and loss. If the asset value is increased and there

is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with

the accounting policy above.

1.24 Investment in Rehabilitation Trust Fund and reimbursive asset

The Group makes contributions to controlled funds that were established to meet the cost of some of its decommissioning,

restoration and environmental rehabilitation liabilities. The use of these funds is limited to the rehabilitation of the mines

as directed by the trustees with the DMR’s approval.

The investment in the rehabilitation trust funds consists of investments maintained in respect of the following:

• Buffelsfontein Mine: the Buffelsfontein Trust Fund has been accounted in line with trust balance confirmations

received from the DMR in respect of the relinquished DRDGold investments during the acquisition of Buffelsfontein

out of the provisional liquidation of the Buffelsfontein Mine during 2005;

• Village rehabilitation obligations: the investments in the Village trust have been established and are carried at cost

of the Company; and

• Blyvoor Rehabilitation Fund: this relates to monies currently invested primarily in low-risk interest-bearing debt

securities which may be used only for environmental rehabilitation purposes of the Blyvoor Mine.





1.24 Investment in Rehabilitation Trust Fund and reimbursive asset continued

The Buffelsfontein trust funds are currently still under the control of the DMR while full control is exercised over the

Village and Blyvoor trust funds through the board of trustees. Details of the trusts are disclosed in note 5.

The reimbursive assets relate to Buffelsfontein’s right to transfer the environmental rehabilitation liability that is

associated with the Buffelsfontein mine’s 11 tailings dams that have been disposed to First Uranium. These rights

are subject to consents that are being awaited from the DMR and which will crystallise upon the awarding thereof.

The value of the reimbursive right associated with the Buffelsfontein tailings dams are linked to the environmental

rehabilitation assessments related to those tailings dams which are being assessed annually.

1.25 Revenue

Revenue from the sale of goods is recognised when all the following conditions have been satisfied:

• the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

• the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor

effective control over the goods sold;

• the amount of revenue can be measured reliably;

• it is probable that the economic benefits associated with the transaction will flow to the Group; and

• the costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue for the Group comprises the sale of gold and antimony. Revenue is stated at the invoice amount and is

exclusive of value added taxation.

Revenue is measured at the fair value of the consideration received or receivable and represents the amounts receivable

for goods and services provided in the normal course of business, net of trade discounts and volume rebates, and value

added tax.

Interest is recognised, in profit or loss, using the effective interest rate method.

Royalties are recognised on the accrual basis in accordance with the substance of the relevant agreements.

Dividends are recognised, in profit or loss, when the Group’s right to receive payment has been established.

Rental income arising from operating leases is recognised on a straight-line basis over the lease terms on ongoing

leases.

1.26 Translation of foreign currencies

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary

economic environment in which the entity operates (the functional currency). The consolidated financial statements are

presented in rands, which is the Group’s presentation currency.


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Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit and loss, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges. Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the income statement within ‘finance income or cost’. All other foreign exchange gains and losses are presented in the income statement within profit or loss.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in amortised cost are recognised in profit or loss, and other changes in carrying amount are recognised in other comprehensive income.

Translation differences on non-monetary financial assets and liabilities, such as equities held at fair value through profit or loss, are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets, such as equities classified as available-for-sale, are included in other comprehensive income.

1.27 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.

All inter-segment transfers are carried out at arm’s length prices.

The accounting policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.

1.28 Operating profit and loss

Included in operating profit and loss is depreciation on property, plant and equipment, audit fees, profit on sale of property plant and equipment, employee costs and foreign exchange gains and losses and major non-operational expenses.

1.29 Standards and interpretations not yet effective

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been early adopted by the Group.

Management anticipates that all of the pronouncements will be adopted in the Group’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Group’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s financial statements.

Standards, amendments and interpretations to existing standards that are not yet effective have not been early adopted by the Group.





1.29 Standards and interpretations not yet effective continued

The following standards, amendments and interpretations to existing standards have been published but are not effective and the Group has not early adopted them:

Standard, amendments, interpretations

Effective for financial periods beginning

on or after

IAS 19 (Amendment) Employee Benefits 1 January 2013

IAS 27 (Revised) Separate Financial Statements 1 January 2013

IAS 28 (Revised) Investments in Associates and Joint Ventures 1 January 2013

IAS 32 (Amendment) Offsetting of Financial Assets and Financial Liabilities 1 January 2014

IFRS 1 (Amendment): First-time Adoption of International Financial Reporting Standards – Guidance on Government Loans

1 January 2013

IFRS 7 (Amendment): Financial Instruments: Disclosures – Offsetting of Financial Assets and Financial Liabilities

1 January 2013

IFRS 9: Financial Instruments 1 January 2015

IFRS 10 Consolidated Financial Statements 1 January 2013

IFRS 11 Joint Arrangements 1 January 2013

IFRS 12 Disclosure of Interests in Other Entities 1 January 2013

IFRS 13 Fair Value Measurement 1 January 2013

IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine 1 January 2013

Annual Improvements 2009 -2011 Cycle 1 January 2013

Amendments to IFRS 10: Consolidated Financial Statements, IFRS 11: Joint Arrangements and IFRS 12: Disclosure of Interests in Other Entities

1 January 2013

Amendments to IFRS 10, IFRS 12 and IAS 27: Investment entities 1 January 2014

IFRIC 21 Levies 1 January 2014

Amendments to IAS 36: Recoverable Amount Disclosures for Non-Financial Assets 1 January 2014

Amendments to IAS 39: Novation of Derivatives and Continuation of Hedge Accounting 1 January 2014

Amendments to IAS 39: Novation of derivatives and continuation of hedge accounting

(effective for financial periods beginning on/after 1 January 2014)

Early adoption is permitted. The amendments will not result in the expiration or termination of the hedging instrument if: • as a consequence of laws or regulations, the parties to the hedging instrument agree that a CCP, or an entity (or

entities) acting as a counterparty in order to effect clearing by a CCP (‘the clearing counterparty’), replaces their original counterparty; and

• other changes, if any, to the hedging instrument are limited to those that are necessary to effect such replacement of the counterparty. These changes include changes in the contractual collateral requirements, rights to offset receivables and payables balances, and charges levied.


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2. SIGNIFICANT JUDGEMENTSThe estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods, if the revision affects both current and future periods.

Judgements made by management in the application of IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment are discussed in the respective areas. The accounting policies set out below have been applied consistently by all entities in the Group to all periods presented in these consolidated financial statements.

The preparation of the financial statements in conformity with IFRS requires the Group’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances.

The resulting accounting estimates may differ from actual results. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

Valuation and depreciation of mining assets

The value in use of mining assets is generally determined utilising discounted future cash flows. Management also considers such factors as the market capitalisation of the Group, the quality of the individual orebody and country risk in determining the value in use.

The calculation of the units-of-production rate of amortisation could be impacted to the extent that actual production in the future is different from current forecast production based on proven and probable mineral reserves. This would generally result from the extent that there are significant changes in any of the factors or assumptions used in estimating mineral reserves. These factors could include:• changes in proved and probable mineral reserves;• differences between actual commodity prices and commodity price assumptions;• unforeseen operational issues at mine sites;• changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates;

and• changes in mineral reserves could similarly impact the useful lives of assets depreciated on a straight-line basis,

where those lives are limited to the life of the mine.

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value-in-use calculations and fair value less cost to sell. These calculations require the use of estimates and assumptions. It is reasonably possible that the gold price assumption may change which may then impact the Group estimated life-of-mine determinant and may then require a material adjustment to the carrying value of property, plant and equipment.

The Group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable by comparing expected future cash flows to these carrying values. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows of each group of assets. Expected future cash flows used to determine the value in use of property, plant and equipment are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including reserves and production estimates, together with economic factors such as spot and future gold prices, discount rates, foreign currency exchange rates, estimates of costs to produce reserves and future capital expenditure.




2. SIGNIFICANT JUDGEMENTS continued

Valuation of financial instruments

The estimated fair value of financial instruments is determined at discrete points in time based on the relevant market information. Fair value is calculated with reference to market rates using industry valuation techniques and appropriate models.

If the value of the financial instruments can not be obtained from an active market, the group has established fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models refined to reflect the issuer’s specific circumstances. See note 17.

Financial assets and liabilities

At 30 June 2013, Village had no financial assets or liability that required significant judgement. The financial liability relating to the Deutsche Bank forward gold purchase agreement was settled on 30 April 2013. The premier liability was recorded as nil as production at Buffels has ceased. The financial assets relating to Mine Waste Solution Convertible Rands Notes were fully settled during July 2012.

Taxation

Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will have an impact on the income tax and deferred tax provisions in the period in which such determination is made.

Share-based payment transactions

The Group issues equity-settled share-based-payments to employees. Equity-settled share-based payments are measured at fair value (excluding the effect of non-market-based vesting conditions) at the grant date. The fair value determined at the grant date of the equity-settled share-based payments is expensed as services rendered over the vesting period, based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non-market-based vesting conditions.

The fair value of options granted is determined using the Black-Schöles option valuation model. The significant inputs into the model are: vested period and conditions, risk-free interest rate, volatility, price of grant and dividend yield. (Refer to note 38 for details on the employee share incentive and option scheme).

Inventory

Stockpiles, gold in process, ore on leach pad and product inventoriesGold in process in certain plants is estimated based on the plant call factor calculation. Costs that are incurred in or benefit the production process are accumulated as stockpiles, gold in process, ore on leach pads and product inventories. Net realisable value tests are performed at least annually. Stockpiles of gold in process are measured by estimating the number of tonnes added and removed from the stockpile, the number of contained gold ounces based on assay data, and the estimated recovery percentage based on the expected processing method. Stockpile tonnages are verified by periodic surveys. Although the quantities of recoverable metal are reconciled by comparing the grades of ore to the quantities of gold actually recovered (metallurgical balancing), the nature of the process inherently limits the ability to precisely monitor recoverability levels. As a result, the metallurgical balancing process is constantly monitored and engineering estimates are refined based on actual results over time.

Allowance for slow-moving, damaged and obsolete inventoryAn allowance for inventory that has not moved in a 12-month period is provided for in full. Any inventory that is physically identified as damaged is written off when discovered.


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Contingencies

Contingencies will only realise when one or more future events occur or fail to occur. The exercise of significant judgement and estimates of the outcome of future events are required during the assessment of the impact of such contingencies.

Ore reserves

At the end of each financial year, the estimate of proved and probable ore reserves is updated. Depreciation of mining assets is prospectively adjusted, based on these changes. Reserves are estimates of the amount of product that can be economically and legally extracted from the group’s properties. In order to calculate reserves, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates.

Estimating the quantity and/or grade of reserves requires the size, shape and depth of orebodies or fields to be determined by analysing geological data such as drilling samples. This process may require complex and difficult geological judgements and calculations to interpret the data.

Factors affecting the determination of proven and probable reserves are:• the grade of mineral reserves which may vary significantly from time to time, i.e. differences between actual grades

mined and resource model grades;• differences between actual commodity prices and commodity price assumptions;• unforeseen operational issues at mine sites; and• changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates.

Because the economic assumptions used to estimate reserves change from period to period, and because additional geological data is generated during the course of operations, estimates of reserves may change from period to period. Changes in reported reserves may affect the Group’s financial results and financial position in a number of ways, including the following:• asset carrying values may be affected due to changes in estimated future cash flows;• depreciation, depletion and amortisation charged in the statement of comprehensive income may change where such

charges are determined by the units-of-production basis, or where the useful economic lives of assets change; and• decommissioning, site restoration and environmental provisions may change where changes in estimated reserves

affect expectations about the timing or cost of these activities.

Environmental rehabilitation provision

Provisions for environmental rehabilitation are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

The discounted net present value of the rehabilitation liabilities for Buffelsfontein, Blyvoor, Tau Lekoa and Cons Murch has been determined by Ms Lufuno Mugovhani, who holds a Bachelor of Environmental Science. Ms Mugovhani has been appointed as the Group environmental officer.

All discount rates used to determine the net present values of the mines over their respective life of mine periods were determined and authorised by management of the Village Group.

All costs are seen to increase in line with a consumer price inflation rate of 5.7% which was determined by management as the average of the next five years forecast.

See details of assumptions under note 19.




GROUP GROUP

2013

Land and buildings

R’000

Plant andequipment

R’000

Furnitureand fittings

R’000

Motorvehicles

R’000

Mining assetsR’000

Computerequipment and

softwareR’000

Explorationcost

R’000Total

R’000

3. PROPERTY, PLANT AND EQUIPMENTCost as at 1 July 2012 271,936 205,584 37,953 7,710 1,661,309 11,835 462,126 2,658,453

Accumulated depreciation and impairment losses as at 1 July 2012 (16,525) (44,515) (22,700) (811) (290,768) (8,775) – (384,094)

Carrying value as at July 2012 255,411 161,069 15,253 6,899 1,370,541 3,060 462,126 2,274,359

Depreciation (10,226) (24,443) (5,033) (1,389) (133,841) (4,010) – (178,942)

Additions – 11,228 – 211 192,519 16,868 14,573 235,399

Disposals – – – (14) – – – (14)

Impairment (127,886) (48,962) (9,741) (1,975) (687,466) (7,215) – (883,245)

Carrying value as at 30 June 2013 117,299 98,892 479 3,732 741,753 8,703 476,699 1,447,557

Cost as at 30 June 2013 271,936 216,812 37,953 7,921 1,853,828 28,703 476,699 2,893,852

Disposals – – – (14) – – – (14)

Accumulated depreciation and impairment losses as at 30 June 2013 (154,637) (117,920) (37,474) (4,175) (1,112,075) (20,000) – (1,446,281)


2012

Cost as at 1 July 2011 138,118 131,600 34,280 4,657 1,242,125 8,661 398,874 1,958,315


Carrying value as at 1 July 2011 126,445 103,599 16,349 3,974 1,050,914 1,079 398,874 1,701,234

Depreciation (4,852) (16,514) (4,769) (128) (99,557) (1,193) – (127,013)

Additions – 22,661 3,673 – 169,265 3,174 63,252 262,025

Additions by business combination 133,818 51,323 – 3,053 249,919 – – 438,113

Carrying value as at 30 June 2012 255,411 161,069 15,253 6,899 1,370,541 3,060 462,126 2,274,359

Cost as at 30 June 2012 271,936 205,584 37,953 7,710 1,661,309 11,835 462,126 2,658,453

Accumulated depreciation and impairment losses as at 30 June 2012 (16,525) (44,515) (22,700) (811) (290,768) (8,775) – (384,094)


ASSETS PLEDGED AS SECURITY

• Motor vehicles have a carrying value of R2 million (2012: R2.7 million)• Property, plant and equipment held under finance leases

The Group leases various vehicles and machinery under non-cancellable finance lease agreements. The lease term was three years and the average effective borrowing rate was 11.5%. The Group’s obligations under finance leases are secured by the lessor’s charge over the leased assets. Refer to note 35 for the minimum lease payments due.


105


GROUP GROUP

2013

Land and buildings

R’000

Plant andequipment

R’000


R’000

Motorvehicles

R’000



softwareR’000

Explorationcost

R’000Total

R’000

3. PROPERTY, PLANT AND EQUIPMENTCost as at 1 July 2012 271,936 205,584 37,953 7,710 1,661,309 11,835 462,126 2,658,453


Carrying value as at July 2012 255,411 161,069 15,253 6,899 1,370,541 3,060 462,126 2,274,359

Depreciation (10,226) (24,443) (5,033) (1,389) (133,841) (4,010) – (178,942)

Additions – 11,228 – 211 192,519 16,868 14,573 235,399

Disposals – – – (14) – – – (14)

Impairment (127,886) (48,962) (9,741) (1,975) (687,466) (7,215) – (883,245)


Cost as at 30 June 2013 271,936 216,812 37,953 7,921 1,853,828 28,703 476,699 2,893,852

Disposals – – – (14) – – – (14)

Accumulated depreciation and impairment losses as at 30 June 2013 (154,637) (117,920) (37,474) (4,175) (1,112,075) (20,000) – (1,446,281)


2012

Cost as at 1 July 2011 138,118 131,600 34,280 4,657 1,242,125 8,661 398,874 1,958,315


Carrying value as at 1 July 2011 126,445 103,599 16,349 3,974 1,050,914 1,079 398,874 1,701,234

Depreciation (4,852) (16,514) (4,769) (128) (99,557) (1,193) – (127,013)

Additions – 22,661 3,673 – 169,265 3,174 63,252 262,025

Additions by business combination 133,818 51,323 – 3,053 249,919 – – 438,113


Cost as at 30 June 2012 271,936 205,584 37,953 7,710 1,661,309 11,835 462,126 2,658,453

Accumulated depreciation and impairment losses as at 30 June 2012 (16,525) (44,515) (22,700) (811) (290,768) (8,775) – (384,094)


2013R’000

2012R’000

Cost – capitalised finance leases 3,575 3,575

Accumulated depreciation (1,585) (802)

Total 1,990 2,773

• Included in additions to mining assets is R40.9 million relating to the increase in the decommissioning asset as a result of a change in estimate in Blyvoor provision for environmental rehabilitation.

• Impairments amounting to R883 million (2012: R0) have been included in line ‘Impairment’. The impairment relates to Buffelsfontein Gold Mine assets of R414 million and Blyvoor Mine assets of R469 million. The impairment, relating to Buffelsfontein Gold Mine is included in the loss from discontinued operations in the statement of comprehensive income.




COMPANY COMPANY

2013

Land and buildings

R’000

Plant andequipment

R’000


R’000

Motorvehicles

R’000



softwareR’000

Explorationcost

R’000Total

R’000

Cost as at 1 July 2012 – – 1,676 392 – 2,119 – 4,187

Accumulated depreciation and impairment losses as at 1 July 2012 – – (1,313) (392) – (2,008) – (3,713)

Carrying value as at July 2012 – – 363 – – 111 – 474

Depreciation – – (171) (20) – (135) – (326)

Additions – – – 92 – 293 – 385

Carrying value as at 30 June 2013 – – 192 72 – 269 – 533

Cost as at 30 June 2013 – – 1,676 484 – 2,412 – 4,572

Accumulated depreciation and impairment losses as at 30 June 2013 – – (1,484) (412) – (2,143) – (4,039)


2012

Cost as at 1 July 2011 – – 1,313 392 – 2,067 – 3,772

Accumulated depreciation and impairment losses as at 1 July 2011 – – (774) (274) – (1,827) – (2,875)

Carrying value as at 1 July 2011 – – 539 118 – 240 – 897

Depreciation – – (539) (118) – (181) – (838)

Additions – – 363 – – 52 – 415

Carrying value as at 30 June 2012 – – 363 – – 111 – 474

Cost as at 30 June 2012 – – 1,676 392 – 2,119 – 4,187



3. PROPERTY, PLANT AND EQUIPMENT continued

IMPAIRMENT OF ASSETS:Buffelsfontein MineOn 14 May 2013, Village announced the intention to cease underground operations at the Buffelsfontein Mine. By 30 June 2013 all operations at Buffelsfontein Gold Mines were ceased and placed on care and maintenance. Buffelsfontein Gold Mines Limited is a separately identifiable cash-generating unit. Buffelsfontein Gold mines Limited is reported in the North-West Segment.

An amount of R414 million on the property, plant and equipment items was impaired under IAS 36: Impairment of assets, as the cash generating unit (Buffels) is seen to have no value in use as the operations have been ceased, and there is no active market to determine a fair value on the assets.


107


COMPANY COMPANY

2013

Land and buildings

R’000

Plant andequipment

R’000


R’000

Motorvehicles

R’000



softwareR’000

Explorationcost

R’000Total

R’000

Cost as at 1 July 2012 – – 1,676 392 – 2,119 – 4,187

Accumulated depreciation and impairment losses as at 1 July 2012 – – (1,313) (392) – (2,008) – (3,713)

Carrying value as at July 2012 – – 363 – – 111 – 474

Depreciation – – (171) (20) – (135) – (326)

Additions – – – 92 – 293 – 385


Cost as at 30 June 2013 – – 1,676 484 – 2,412 – 4,572



2012

Cost as at 1 July 2011 – – 1,313 392 – 2,067 – 3,772

Accumulated depreciation and impairment losses as at 1 July 2011 – – (774) (274) – (1,827) – (2,875)

Carrying value as at 1 July 2011 – – 539 118 – 240 – 897

Depreciation – – (539) (118) – (181) – (838)

Additions – – 363 – – 52 – 415


Cost as at 30 June 2012 – – 1,676 392 – 2,119 – 4,187



Blyvooruitzicht MineAt 30 June 2013, the declining gold price, rising costs and a series of recent infrastructure challenges at Blyvooruitzicht Mine (Blyvoor), indicated that the operation was impaired. Village assessed Blyvoor for impairment as a single cash-generating unit at 30 June 2013. The value in use and fair value less cost-to-sell of the Blyvoor cash generating use was negative. This led to an impairment of property, plant and equipment amounting to R469 million being recognised in the statement of comprehensive income in the line item ‘Impairment of assets’. Blyvoor is a reportable segment classified under the Gauteng Blyvoor segment in note 40. Blyvoor was placed in provisional liquidation on 6 August 2013 and will be reported as a discontinued operation in FY2014.




GROUP COMPANY

2013R’000

2012R’000

2013R’000

2012R’000

4. INVESTMENT PROPERTYInvestment property 24,957 17,312 – –

Reconciliation of investment property

Opening balance 17,312 28,859 – –

Transfer to held-for-sale (refer to note 14) – (9,604) – –

Transfer from held-for-sale (refer to note 14) 8,345 645

Disposals (535) (437) – –

Fair value adjustments (165) (2,151) – –

Closing balance 24,957 17,312 – –

The investment properties consist of residential houses in Stilfontein. The residential houses are let out for commercial rental purposes. During the current financial year, investment income amounting to R3.1 million (2012: R3.2 million) was earned. This has been included in the statement of comprehensive income in ‘other income’. Direct operating expenses amounting to R0.1 million (2012: R0.1 million) were incurred on rented property. This has been included in the statement of comprehensive income under operating expenses.

Furthermore, during the current financial year R8.3 million (2012: R0.6 million) of residential property previously classified as non-current assets held-for-sale, was transferred to investment property as it no longer met the criteria, in terms of IFRS5, to be classified as such.

These properties have been occupied by employees of Buffelsfontein Gold Mine, who are responsible for care and maintenance at the mine site. Care and maintenance is expected to continue into the foreseeable future, hence it is no longer expected that these properties will be sold within 12 months of the year ended 30 June 2013. In terms of IFRS 5, the criteria to recognise these properties as non-current assets held-for-sale were no longer met.

The re-classification has not had an impact on the current or prior period’s results.

The valuations were performed by independent external professional valuators based on market evidence in the respective areas. Mr DT van Staden of Messrs van Staden, Voster and Nysschen; and Aida, Klerksdorp, have recent experience in location and category of the investment property being valued.

The following considerations and assumptions were made in the valuation:• The state and age of the property and its location and specific zoning conditions have been assessed by the valuator.• Properties subjected to commercial rentals have escalated with rental escalating ranging between 8% and 10%.• The current market conditions are reviewed regularly.• The direct sales comparison method is regarded as the most accurate method to determine market value.


109


GROUP COMPANY

2013R’000

2012R’000

2013R’000

2012R’000

5. INVESTMENT IN REHABILITATION TRUST FUND Buffelsfontein Gold Mines Rehabilitation Trust Fund

Reconciliation of Buffels Trust Fund


Interest earned on funds 11,157 – – –


Blyvooruitzicht Gold Mine

Reconciliation of Blyvoor Trust Fund


Interest received 1,666 146 – –


Village Main Reef Nature Conservation Trust

The Village Main Reef Nature Conservation Trust was created to provide for the estimated cost of pollution control and rehabilitation at the end of the life of the mine, in respect of the Company’s past mining activities in accordance with statutory requirements. The Company did not make any contributions in the current year to the Trust fund. 5,229 4,996 5,229 4,996

Reconciliation of Village Rehabilitation Trust Fund

Opening balance 4,966 4,705 4,966 4,705

Interest earned on investments 263 261 263 261

Closing balance 5,229 4,966 5,229 4,966

Cons Murch Mine

Reconciliation of Cons Rehabilitation Trust Fund

Transfer made from reimbursive asset 25,000 – – –

Interest earned from funds 2,116 – – –

Closing balance 27,116 – – –

Total investment in rehabilitation trust fund 200,303 160,101 5,229 4,966

Buffelsfontein Gold Mines Limited

With the provisional liquidation process by DRDGold Limited (DRDGold) of Buffelsfontein Gold Mine Limited in 2005, the DMR issued a directive, whereby the then Buffelsfontein Rehabilitation Trust Funds were ‘ring fenced’ for the specific rehabilitation of Buffels and the funds were then transferred by DRDGold to a DMR-designated trust fund for this purpose. The directive also provided that, should the new owners establish a new trust, these funds could either be transferred back to the new trust or remain in the DMR’s trust fund.

A new Buffelsfontein Environmental Rehabilitation Trust was established during 2006 and since then, we have been in discussions with the DMR to transfer these funds back into the newly-established Trust. During September 2012, Village successfully concluded negotiations with the DMR in relation to the Buffelsfontein Environmental Rehabilitation Trust funds, and the DMR agreed to transfer the funds to the relevant Trust.




5. INVESTMENT IN REHABILITATION TRUST FUND continued

Buffelsfontein Gold Mines Limited continued

At 30 June 2013, these funds continued being held in a separate bank account by the DMR. The DMR had confirmed a balance of R131 million at 30 June 2013. Hence the investment in Buffels Trust Fund at 30 June 2013 amounted to R131 million, with interest income of R11.2 million being recognised for the year.

Cons Murch Mine

During March 2011, Village Main Reef Limited acquired the operations of Consolidated Murchison Mine (previously a division of Metorex Limited) and formed the company Cons Murch Mine (Pty) Limited. Cons Murch Mine (Pty) Limited has applied to the DMR for the conversion of the mining right from an old order mining to a new order mining right. Section 11 transfer was granted in the prior financial year and the mining right was transferred into the name of Cons Murch Mine (Pty) Limited.

A specific Section 37 compliant rehabilitation trust was established which will be used to fund the rehabilitation of Cons Murch Mine (Pty) Limited. During the current financial year, Metorex transferred the amount of R25 million together with interest into the Cons Murch Rehabilitation Trust account. Interest amounting to R2.1 million is included in the statement of comprehensive income under interest earned.

GROUP

2013

Mine management

agreementR’000

Mining right

R’000Total

R’000

6. INTANGIBLE ASSETSCost as at 1 July 2012 10,000 73,063 83,063

Accumulated amortisation as at 1 July 2012 – – –

Carrying value as at 1 July 2012 10,000 73,063 83,063

Impairment (10,000) – (10,000)

Amortisation – (12,662) (12,662)

Carrying value as at 30 June 2013 – 60,401 60,401

Cost as at 30 June 2013 10,000 73,063 83,063

Accumulated amortisation and impairment as at 30 June 2013 (10,000) (12,662) (22,662)

Carrying value as at 30 June 2013 – 60,401 60,401

2012

Cost as at 1 July 2011 10,000 73,063 83,063


Carrying value as at 1 July 2011 10,000 73,063 83,063

Amortisation – – –

Carrying value as at 30 June 2012 10,000 73,063 83,063

Cost as at 30 June 2012 10,000 73,063 83,063

Accumulated amortisation as at 30 June 2012 – – –

Carrying value as at 30 June 2012 10,000 73,063 83,063


111


COMPANY

2013

Mine management

agreementR’000

Mining right

R’000Total

R’000

Cost as at 1 July 2012 10,000 – 10,000


Carrying value as at 1 July 2012 10,000 – 10,000

Impairment (10,000) – (10,000)

Carrying value as at 30 June 2013 – – –

Cost as at 30 June 2013 10,000 – 10,000

Accumulated amortisation as at 30 June 2013 (10,000) – (10,000)

Carrying value as at 30 June 2013 – – –

2012

Cost as at 1 July 2011 10,000 – 10,000


Carrying value as at 1 July 2011 10,000 – 10,000

Amortisation – – –

Carrying value as at 30 June 2012 10,000 – 10,000

Cost as at 30 June 2012 10,000 – 10,000

Accumulated amortisation as at 30 June 2012 – – –

Carrying value as at 30 June 2012 10,000 – 10,000

The intangible assets relate to the Cons Murch Mine mining right which was acquired in March 2011. The current assessed life-of-mine for the Cons Murch Mine is 11 years. An amount of R12.7 million was charged as amortisation of the mining right in the current financial year. The amount has been included in ‘cost of sale’ in the statement of comprehensive income.




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

7. FINANCIAL ASSETSAvailable-for-sale financial assets includes the following:

Unlisted shares: Rand Mutual Assurance Company

The investment in Rand Mutual Assurance Company consists of 118,750 shares. The fair value is determined with reference to the directors’ valuation.

Opening balance 17 17 – –

Fair value adjustment – – – –

Closing balance 17 17 – –

Unlisted shares: Rand Refinery Limited (RRL)

During the previous financial year, there was a dispute between Village and DRD relating to ownership of the Rand Refinery shares and rights to the dividend receivable from RRL of R6.8 million, declared in FY2011. In the current financial year, Village entered into a settlement agreement with DRD, whereby R20 million would be paid to Village as settlement of the dividend receivable of R6.8 million, and the balance of R13.2 million (considered to be fair value), for ownership of the RRL shares. A fair value adjustment of R17.1 million was recognised as a charge against the fair value reserve through other comprehensive income. No profit or loss was recognised on disposal of the investment. R3.1 million, being the remaining balance of the fair value reserve in respect of the investment in RRL shares was recycled to profit and loss through other comprehensive income.


Fair value adjustment (17,086) 8,041 – –

Disposal of shares (13,207) – – –

Closing balance – 30,293 – –

Continental Coal Limited (Continental)

An impairment amounting to R45.6 million was included in the statement of other comprehensive income under the line item ‘impairment’. This related to the mark-to-market adjustment on the investment in Continental Coal which is based on the closing share price per share.

Opening balance – – – –

Initial advance to Continental 18,920 – – –

Share subscription including the non-controlling interest 60,920 – – –

Impairment (45,598) – – –

Closing balance 34,242 – – –


113


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

On 18 March 2013, Village entered into a binding funding agreement with Continental, a South African thermal coal production, development and exploration company, listed on the Australian Securities Exchange (ASX) and the Alternative Investment Market of the London Stock Exchange (AIM), pursuant to which:

• Village and Continental entered into a private placement agreement in terms of which, inter alia, Village will subscribe for 100,000,000 ordinary shares in Continental (Continental shares) at an issue price of A$0.08 per share (the private placement)

• Village and Continental entered into a buy-back agreement in terms of which Village will acquire all of the shares held by shareholders of Continental holding parcels of Continental shares with a market value of less than A$500 (minority members)

• Village may, up to 30 April 2014, acquire further Continental shares on the market at a price of up to A$0.10 per share, thereby increasing Village’s shareholding in Continental to 19.9% of the issued share capital of Continental. Both the timing and price of any future purchases remain uncertain.

The transaction reflects Village’s continued diversification strategy whilst maintaining Village’s requirement to invest in strong, cash-generating assets. Village intends to ultimately hold a 19.9% interest.

Pursuant to the private placement, Village subscribed for 100,000,000 Continental shares at an issue price of A$0.08 per Continental share for an aggregate subscription price of A$8,000,000 (the subscription price), payable in cash.

In addition, pursuant to the private placement, a further 25,000,000 unlisted options to acquire Continental shares was issued to Village, at a strike price of A$0.10 per option, which options will expire on 31 March 2016.

Upon signature of the formal agreements in respect of the private placement and the buy-back referred to below, Village advanced A$2,000,000 to a wholly-owned South African subsidiary of Continental as a secured interim loan, which converted into Continental shares upon Continental shareholders approving the private placement. The A$2,000,000 formed part of the total subscription price of A$8,000,000. The balance of the subscription price was paid in cash to Continental upon Continental shareholders approving the private placement.




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

7. FINANCIAL ASSETS continued

Pursuant to the buy-back, Village acquired all of the shares held by minority members (other than those held by minority members who elect to retain their shares in Continental) at a minimum sale price of A$0.0521 per Continental share. The minimum sale price is equal to the simple average of the last sale prices of Continental’s shares, quoted on the ASX for each of the 10 trading days prior to 11 March 2013 (the record date).

Financial assets at fair value through profit and loss

Mine Waste Solution convertible rand notes

During April 2010, FIU concluded its convertible redeemable note financing in terms of the FIU recapitalisation programme. In terms of the Village transaction, Village acquired 392,874 of the Mine Waste Solution rand notes. Each note has a face value of R1,000, carries interest at 11% per annum and is convertible into 107.36 common FIU shares at an equivalent rand price of R9.31 per share at the option of the holder prior to 13 April 2013.

The fair values of the unlisted securities were based on cash flows discounted using a rate based on the market interest rates and the risk premium specific to the unlisted securities.

As at 30 June 2012, the par value of the notes was considered the approximate fair value. This was as a result of FIU’s decision, and Village’s consent, to have the notes redeemed at an earlier date. This decision was reached on 13 June 2012. On 1 August 2012, Village received R392.8 million in full settlement of the Mine Waste Solutions notes.

Opening balance 392,874 321,102 392,874 321,102

Fair value adjustment – 71,772 – 71,772

Proceeds on settlement of notes (392,874) – (392,874) –

Closing balance – 392,874 – 392,874


115


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

First Uranium Investment

Village holds 13,556,737 shares in First Uranium Corporation comprising an investment holding of 5.7% in the company. The fair value of the investment has been determined with reference to the listed First Uranium Corporation share price on the NEX of the TSX.

Balance at the beginning of the period 25,702 – 25,702 –

Reclassification from non-current assets held-for-sale – 25,702 – 25,702

Fair Value adjustment (23,796) – (23,796) –

Balance at the end of the period 1,906 25,702 1,906 25,702

Share options in Lesego Platinum Mining

During November 2010, Village Main Reef acquired an option to purchase 2,043,551 shares in Lesego Platinum Mining Limited at a strike price of R2.44. This option has been treated as a financial asset at fair value through profit and loss. The option had subsequently expired in December 2012 and the option was impaired. An amount of R3.7 million is included in the statement of comprehensive income under the line item ‘Impairment of assets’.

Opening balance – – 3,716 3,716

Fair value adjustment – – (3,716) –

Closing balance – – – 3,716

Total financial assets at fair value through profit and loss 1,906 418,576 1,906 422,292

Total financial assets available-for-sale 34,259 30,310 – –

Total financial asset 36,165 448,886 1,906 422,292

Non-current assets

Available-for-sale 34,259 30,310 – –

34,259 30,310 – –

Current assets

Fair value through profit and loss 1,906 418,576 1,906 422,292

1,906 418,576 1,906 422,292




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

8. CATEGORIES OF FINANCIAL INSTRUMENTSFinancial assets and financial liabilities by category of financial instruments are set out below.

The carrying amounts presented in the statement of financial position relate to the following categories of assets and liabilities.

Financial assets

Assets at fair value through profit and loss

Financial assets at fair value through profit and loss 1,906 418,576 1,906 422,292

Investment in rehabilitation trust fund 36,948 35,282 – –

Available-for-sale financial assets

Unlisted shares (Rand Mutual Assurance Company) 17 30,310 – –

Listed shares (Continental Coal Limited) 34,242 – – –

Loans and receivables

Trade and other receivables (excluding prepayments and VAT) 96,014 217,296 16,353 45,262

Loans receivable – – 171,245 –

Cash and cash equivalents 207,314 294,736 172,674 234,309

Investment in rehabilitation trust fund 163,355 124,819 5,229 4,966

Financial liabilities

Financial liabilities designated at fair value through profit or loss

Borrowings – 331,714 – –

Cash-settled share option liability 10,199 9,977 10,199 9,977

Financial liabilities measured at amortised cost

Trade and other payables 735,011 605,689 6,484 5,584

Finance lease liabilities 764 1,632 – –

Bank overdrafts 36,522 28,086 – –

Financial liability – financial system 14,620 – 307 –


117


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

9. REIMBURSIVE ASSETBuffelsfontein Gold Mines Limited

On 20 December 2006, First Uranium (Pty) Limited (FUSA) entered into an agreement to acquire 11 surface tailings dams from Buffels, (the Buffelsfontein Tailings and Rights Agreement). It was originally contemplated that the transaction would be recognised on the satisfaction of the conditions precedent in the Buffelsfontein Tailings and Rights Agreement. While the conditions have not yet been satisfied, Mine Waste Solutions commenced processing the material from the Buffelsfontein Tailings in December 2007. All the benefits thereof accrued to Mine Waste Solutions, and consequently, Mine Waste Solutions assumed the asset retirement obligation related to the Buffelsfontein Tailings.

As the DMR has not yet approved the transfer of the mining rights to Mine Waste Solutions, the liability still resides with Buffels.

On 13 June 2012, it was announced that the Mine Waste Solutions tailings were sold to AngloGold Ashanti. As a result, the Tailings and Rights Agreement was transferred to AngloGold Ashanti, although the process for Buffels to abandon the mineral rights and the transfer of these rights to AngloGold has not yet been concluded. 115,009 81,338 – –

Cons Murch Mine (Pty) Limited

During March 2011, Village Main Reef Limited acquired the operations of Consolidated Murchison Mine (previously a division of Metorex Limited) and formed the company Cons Murch Mine (Pty) Limited.

Cons Murch Mine (Pty) Limited has applied to the of DMR for the conversion of the mining right from an old order mining to a new order mining right. Section 11 transfer was granted in the current year and the mining right was transferred into the name of Cons Murch Mine (Pty) Limited. A specific Section 37 compliant rehabilitation trust was established which will be used to fund the rehabilitation obligations at Cons Murch Mine. During the year under review, the funds were received from Metorex and the funds were paid into the bank account of the Cons Murch Rehabilitation Trust.

Opening Balance 25,000 25,000 – –

Transfer to Rehabilitation Trust (25,000) – – –

115,009 106,338 – –




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

10. INVESTMENT IN SUBSIDIARIESLesego Platinum Mining Limited – – 153,748 153,748 Umbono Minerals and Mining (Pty) Limited – – 167,443 167,443 Umbono Platinum Mining (Pty) Limited – – 62,689 62,689 Nebavest 69 (Pty) Limited – – 135,389 135,389 Nebavest 49 (Pty) Limited (1) – – 59,273 59,273 Simmer and Jack Investments (Pty) Limited (2) – – – (5) 316,932 Business Venture Investments No. 1557 (Pty) Limited (BVI) (3) – – – (5) 150,000Jovizest (Pty) Limited (4) – – – (5) –Disadox (Pty) Limited (4) – – – (5) –Simidox (Pty) Limited (4) – – – (5) –Newshelf 1214 (Pty) Limited (4) – – – (5) –Newshelf 1258 (Pty) Limited (4) – – 40,365 –Village Main Reef Gold Investment 01 (Pty) Limited – – 276,567 –Total – – 895,474 1,045,474

(1) Village holds the investment in Cons Murch Mine (Pty) Limited through Nebavest 49 (Pty) Limited.(2) Village holds Buffelsfontein Gold Mines Limited and Temotuo Rehabilitation Company through Simmer and Jack Investments (Pty) Limited.(3) The investment in Blyvooruitzicht Gold Mining Company Limited of R150 million is held through BVI.(4) Various investment holding companies utilised to hold investments by Village.(5) These investments are less than R1,000.

GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

11. TRADE AND OTHER RECEIVABLESTrade and other receivables 94,891 208,130 13,346 40,000Pre-payments 372 372 172 172Deposits 1,123 248 1,123 248VAT 32,665 8,546 1,884 263Tax receivable 6,711 – 6,711 –Trade receivables from subsidiaries/related party – – – 4,751Total 135,762 217,296 23,236 45,434

Trade receivable terms are strictly 30 days; whereas amounts longer outstanding are seen as past due.

At 30 June 2013, trade receivables of R8.2 million (2012: R2.3 million) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The age of these trade receivables is as follows:Between 1 – 3 months 3,482 855 1,597 3,882More than 3 months but not more than 6 months 4,762 1,496 – –Reconciliation of Group provision for impairment of trade and other receivablesGross trade other receivables 95,932 209,444 13,346 44,751Provision for trade and other receivables (1,041) (1,314) – –Net trade and other receivables 94,891 208,130 13,346 44,751


119


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

Movements on the Group provision for impairment of trade receivables are as follows:


Receivables written-off during the year – (35) – –

Unused amounts reversed (330) (194) – –

Additional provisions made 57 543 – –

1,041 1,314 – –

The individually impaired receivables mainly relate to contractors who have defaulted in reimbursing Village for utility consumption costs. Even though the contractors are not in liquidation and are making ad hoc repayments, management have concluded that these debtors be impaired.

All amounts disclosed above are short-term. The carrying value of trade receivables is considered a reasonable approximation of fair value.

The creation and release of impairment of receivables has been included in general and administrative and overhead expenditure in the statement of comprehensive income.

The other classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. Other than employee benefits, in respect of loans to employees, the Group does not hold any collateral as security.

GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

12. INVENTORIESConsumables 55,036 54,314 – –

Antimony-in-process 23,811 13,090 – –

Gold-in-process 19,970 60,308 – –

98,817 127,712 – –

Impairment allowance for obsolescence in consumables (181) – – –

Total 98,636 127,712 – –

R456 million (2012: R348.7 million) of the cost of inventory has been included in cost of sales.

Inventory is carried at the lower of cost and net realisable value.




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

13. CASH AND CASH EQUIVALENTSCash and cash equivalents consist of:

Cash on hand 54 20 47 –

Bank balances 24,715 61,743 16,712 10,084

Short-term deposits 182,545 232,973 155,915 224,225

207,314 294,736 172,674 234,309

Bank overdraft (36,522) (28,086) -– –

170,792 266,650 172,674 234,309

Cash and cash equivalents pledged as collateral

Bank guarantees amounting to R5 million have been issued. (Refer to note 35 for details).

It is the Company’s objective to only invest with banks that are financially sound. Short-term deposits and transactional banking have as a result been assigned to ABSA Bank Limited, Standard Bank Limited and Investec Bank Limited.

The credit ratings for the corporate and operational banks are as follows:

Rand Merchant Bank

ABSA Bank

Standard Bank

Investec Bank

Long-term issuer default rating BBB A-0 BBB+ BBB–

Short-term issuer default rating F3 F2 F2 F3

National short-term rating F1+ F1+ F1+ F1

Viability rating bbb bbb+ bbb+ bbb

Support rating 3 1 5 2

Rating definitions

A–O Strong capacity to meet financial commitments but somewhat more susceptible to adverse effects of changes in circumstances and economic conditions.

BBB+ Adequate protection factors and considered sufficient for prudent investment. However, there is BBB– Considerable variability in risk during economic cycles. F2 Good quality grade with satisfactory capacity to meet financial commitments. F3 Fair quality grade with adequate capacity to meet financial commitments. F1/F1+ Best quality grade, indicating exceptionally strong capacity to meet financial commitments. bbb/bbb+ Adequate capacity to meet financial commitments. However, adverse economic conditions or changing

circumstances are more likely to lead to a weakened capacity to meet financial commitments. 1 A bank for which there is an extremely high probability of external support. 2 A bank for which there is a high probability of external support. 3 A bank for which there is a moderate probability of support. 5 A bank for which there is a high probability of external support, but it cannot be relied upon.

BE CAREFULTHIS IS NOT LINKED


121


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

14. NON-CURRENT ASSETS AND LIABILITIES HELD FOR SALENon-current assets held-for-sale

The other non-current assets consist of residential houses and property in Stilfontein, which is part of the Buffels reporting segment. These houses are held at fair value and are expected to be sold within the next 12 months.

Reconciliation of other non-current assets 275 8,620 – –

Balance at beginning of year 8,620 31,581 – –

Transfer from investment property (refer to note 4) – 9,604 – –

Transfer to investment property (refer to note 4) (8,345) (645) – –

Disposal of land – Temotuo – (3,999)

Gains/(losses) on measurement to fair value less cost to sell – 135

Disposal of houses – Buffels – (4,399) – –

Disposals – Duff Scott – (23,657) – –

275 8,620 – –

15. DISCONTINUED OPERATIONSBuffelsfontein Gold Mines Limited

On 14 May 2013, Village announced the intention to cease operations at the Buffelsfontein Mine. Buffelsfontein Gold Mines Limited is a separate identifiable cash-generating unit.Buffelsfontein Gold mines Limited is reported in the North-West Segment.

An amount of R414 million on the property, plant and equipment items was impaired under IAS 36 impairment of assets as the cash generating unit (Buffels) is seen to have no value in use as the operations have been ceased, and there is no active market to determine a fair value on the assets.

Analysis of discontinued operations of the statement of comprehensive income

Revenue 470,309 597,692 – –

Expenses (1,037,187) (839,595) – –

Total comprehensive (loss) before tax (566,878) (241,903) – –

Taxation – – – –

(Loss) for the year from discontinued operations (566,878) (241,903) – –

Analysis of cash flows of the discontinued operations

Cash flows from operating activities (341,668) (224,077) – –

Cash flows from investing activities (76,083) (14,356) – –

Cash flows from financing activities – (73,128) – –




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

15. DISCONTINUED OPERATIONS continued

Duff Scott disposal

The disposal of Duff Scott Hospital was concluded with effect on 1 November 2011.

Revenue – 17,433 – –

Expenses – (17,488) – –

Total comprehensive (loss) before tax – (55) – –

Taxation – – – –

Loss after tax from discontinued operation – (55) – –

Pre-tax loss recognised on re-measurement of assets of disposal group – – – –

Taxation recognised on re-measurement of assets of disposal group – – – –

Loss for the year from discontinued operations – (55) – –

Analysis of cash flows from discontinued operations

Net cash from operating activities – 9,790 – –

Net cash from investing activities – (10,540) – –

Total cash movement for the period – (750) – –

Cash at the beginning of the period – 2,728 – –

– 1,978 – –

Total loss from discontinued operations (566,878) (241,958) – –


123


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

16. EQUITYi. Stated capital

Consideration shares issued by Village as part of the reverse acquisition by Simmers of Village 597,512 597,512 – –

Share price of Village 1.60 1.60 – –

Representing 66.27% of the market capitalisation of Village 956,019 956,019 – –

Market capitalisation share holding of Village @ 33.73% as at 1 July 636,500 486,500 – –

Additional shares issued for Blyvoor acquisition – 150,000 – –

Total stated capital 636,500 636,500 – –

Authorised

5,000,000,000 (2012: 500,000,000)

Ordinary shares of 12.5 cents each 625,000 625,000

Issued share capital

Ordinary shares 123,415 123,415

Share premium 1,575,907 1,575,907

Total issued share capital 1,699,322 1,699,322

Reconciliation of number of shares issued:

Reported as at 1 July 987,289 901,575

Issue of shares for cash –

Issue of shares for Blyvoor acquisition – 85,714

Closing balance 987,289 987,289

For the 2013 financial year 151,304,171 unissued ordinary shares were under the control of the directors in terms of a resolution of members passed at the last AGM.

21,405,000 shares were granted during the previous financial year as part of the FSP share scheme. On 27 June 2013 32,003,001 shares were granted as part of the FSP share scheme (see note 38). These shares are held in trust and are subject to vesting conditions. They have been excluded in the above issued shares reconciliation.

Reconciliation of fully paid-up shares

Shares fully paid 987,289 987,289 987,289 987,289

FSP shares issued not fully paid up 53,408 21,405 53,408 21,405

Total number of shares 1,040,697 1,008,694 1,040,697 1,008,694




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

16 EQUITY continued

Treasury shares (73,316) – – –

As at 30 June 2013, Village had cumulatively purchased 60,522,537 of its own ordinary shares through its wholly-owned subsidiary, Buffelsfontein Mines Limited, in terms of a general authority granted by Village shareholders on 30 November 2012. These share purchases were funded from the Company’s available cash resources and comprise 5.8% of the Company’s issued share capital since the granting of the general authority.

The Village ordinary shares were purchased for an aggregate price of R73.3 million in the following tranches:

• 722,178 on 6 December 2012 at 115.18 cents per share;



• 23,748,837 on 27 December 2012 at 119.31 cents per share;

• 249,672 on 27 December 2012 at 117.86 cents per share.

• 204,625 on 4 January 2013 at 122.45 cents per share;







• 3,227,434 on 16 January 2013 at 119.91 cents per share;








• 2,839,908 on 1 March 2013 at 176.38 cents per share;

• 2,587,243 on 4 March 2013 at 112.34 cents per share;

• 866,071 on 5 March 2013 at 116.211 cents per share; and

• 2,189,000 on 6 March 2013 at 119.32 cents per share.


125


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

The purchases were effected through the order book operated by the JSE trading system without any prior understanding or arrangement between the Company and the counter parties. The total Village ordinary shares purchased of 60,522,537 or 5.8% of the Company’s share capital are to be held as treasury shares.

The Company may purchase a further 149,698,680 ordinary shares in terms of the general authority granted by Village shareholders and is valid until the Company’s next annual general meeting.

ii. Fair value reserve – 20,187 – –

Other reserves in the statement of changes in equity relate to the following:

• Fair value reserve: this relates to fair value adjustments on the available-for-sale financial assets. An amount of R17 million was passed as a fair value adjustment.

• Fair value reserve: An amount of R3.1 million was recycled to profit and loss for the year on the disposal of Rand Refinery shares.

iii. Non-distributable reserve 18,180 8,595 18,180 8,595

• Non-distributable reserve: the current year balance of R18.2 million relates to a share option reserve arising from the FSP share scheme, which was granted in the current year. This is an equity settled scheme and the fair value is determined at grant date and expensed over the vesting period.

There was no tax effect on the current year movement in reserves.

iv. Transactions with non-controlling interest 29,252 29,252 – –

v. Non-controlling interest (NCI) (180,044) (12,745) – –

The NCI is comprised of the following:

• NCI of Lesego Platinum and Sweet Sensations (Pty) Limited accounted for at their proportionate share of the carrying value of assets and liabilities of those entities.

• NCI of Blyvoor, which was acquired during the previous financial year, accounted for at their proportionate share of the fair net asset/liability value assumed in the purchase price allocation.




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

17. FINANCIAL LIABILITIESi) At fair value through profit or loss – 170,498 – –

Premier Royalty Corporation

The Aberdeen perpetual liability was disposed of to Premier Royalty Corporation in the current financial year.

From an accounting perspective, the Premier perpetual royalty is accounted for as a financial liability in terms of IAS 39: Financial Instruments: Recognition and Measurement (IAS 39) and was fair valued at each reporting period with changes accounted for through profit or loss. Village accounted for the full potential contingent liability and mark-to-market the fair value thereof.

The perpetual royalty has been fair valued by Mr Ranti Mothapo, a consulting actuary and analyst with the Matlotlo Group (Pty) Limited. As a result of the increase in the consensus basket gold price and decrease in interest rates the value of the perpetual royalty liability increased during the year.

All derivatives are classified as at fair value through profit/loss, unless they are designated as a hedge and therefore the classification of the liability as at fair value through profit or loss is seen as appropriate.

On 15 June 2013, it was announced that the operations at Buffelsfontein Gold Mines Limited were to cease with immediate effect. The result being that there would be no future production from the Buffelsfontein mine and therefore there would be no perpetual liability. The liability was adjusted accordingly on 30 June 2013.

Derivative financial liability: Deutsche Bank AG Forward Gold Purchase Agreement – Second Agreement – 161,217 – –

Buffels entered into a Forward Gold Purchase Agreement with Deutsche Bank AG whereby Deutsche Bank purchased 64,800oz of gold from BGM. Deutsche Bank deposited a prepayment US$25 million (less fees) to Buffels which was to be repaid over a tenure of 18 months. The repayment happened by means of the delivery of the first 3,600oz of Buffels’s delivered gold to Rand Refinery per month for the period starting November 2011 to April 2013. An amount was paid to Buffels on the second day of every month which is calculated on the 3,600 ounces @ US$450/oz being the difference between the maximum of US$1,550/oz and minimum of US$1,100/oz as set out in the agreement. The liability was fully settled on 30 April 2013.


127


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

Village Main Reef Share Option Liability 10,199 9,977 10,199 9,977

This relates to the Village Share Appreciation Right Scheme. This is a cash-settled share based payment scheme, which is valued at mark-to-market at reporting date.

ii) Financial liabilities at amortised cost

Finance lease obligation – mine equipment – – – –

Certain motor vehicles and equipment at Cons Murch Mine (Pty) Limited have been acquired through a finance lease transaction. The average lease term was 3 years and the average effective borrowing rate was 11.5%.

The Company’s obligations under finance leases are secured by the lessor’s charge over the leased assets.

Finance liability – motor vehicles and equipment


Repayments (868) (840) – –

Closing balance 764 1,632 – –

Financial liability – financial systems

Additions 15,779 – 384 –

Repayments (1,159) – (77) –

Closing balance 14,620 – 307 –

Total financial liabilities 25,583 343,324 10,506 9,977

Reconciliation of financial liabilities

Opening balance as at beginning of the period 343,324 384,400 9,977 9,271

New borrowings raised 15,779 – 384 –

Repayments (139,845) (147,205) (77) (9,271)

Fair value adjustments (193,897) 96,152 – –

Share appreciation option recognised 222 9,977 222 –

Closing balance as at end of period 25,583 343,324 10,506 9,977

Non-current liability portion 11,595 172,734 10,506 9,977

Current liability portion 13,988 170,590 – –

The fair value of financial liabilities at fair value through profit and loss is estimated using valuation techniques with all significant inputs based on observable market prices.

Management estimates the credit risk (risk of default) related change in fair value on a residual basis, as the difference between fair value changes specifically attributable to interest rates and foreign exchange rates and the total change in fair value.




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

17. FINANCIAL LIABILITIES continued

iv) Finance lease liabilities – mining equipment

Lease liabilities are effectively secured as the rights to the leased asset reverts to the lessor in the event of default.

Gross finance lease liabilities – minimum lease payments: No later than 1 year 764 1,078 – –

Later than 1 year and no later than 5 years – 718 – –

Later than 5 years – – – –

Future finance charges on finance lease liabilities – (164) – –

Present value of finance lease liabilities 764 1,632 – –

v) Financial liability – financial systems

Gross financial liability – minimum lease payments: No later than 1 year 4,418 – 93 –

Later than 1 year and no later than 5 years 13,623 – 287 –

Future finance charges on finance lease liability (3,421) – (73) –

14,620 – 307

18. DEFERRED TAXThe analysis of deferred tax assets and deferred tax liabilities is as follows:

Deferred tax liabilities:

• Deferred tax liability to be recovered after more than 12 months 151,889 246,357 – –

• Deferred tax liability to be recovered within 12 months – – – –

151,889 246,357 – –

2013

Deferred tax assetFinancial

assets PPE Provisions Total

Opening balance – – (31,137) (31,137)

Charge to the statement of comprehensive income (3,466) (120,244) (987) (124,697)

Closing balance (3,466) (120,244) (32,124) (155,834)

Deferred tax liability

Opening balance 1,657 271,926 3,911 277,494

Charge to the statement of comprehensive income – 2,174 28,055 30,229

Closing balance 1,657 274,100 31,966 307,723


129


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

19. PROVISION FOR ENVIRONMENTAL REHABILITATIONReconciliation of environmental rehabilitation provision

Opening balance 404,511 282,760 5,367 5,367

Adjustment of provision – – – –

Change in decommissioning asset 40,940 23,042 – –

Acquired through business combination –- 77,000 – –

Unwinding of discount/accretion 98,070 21,709 – –

Balance at the end of the year 543,521 404,511 5,367 5,367

The provision for environmental rehabilitation is comprised as follows:

Buffelsfontein Gold Mine 327,534 230,963 – –

Tau Lekoa Gold Mine 47,421 44,299 – –

Cons Murch Mine 48,251 46,882 – –

Blyvooruitzicht Gold Mine 114,948 77,000 – –

Village Main Reef Limited 5,367 5,367 5,367 5,367

Current 442,482 – – –

Non-current 101,039 – 5,367 5,367

Total 543,521 404,511 5,367 5,367

The Group has an obligation to incur restoration, rehabilitation and environmental costs when environmental disturbance is caused by development and mining activities. A provision is recognised for the present value of such future costs.

Provision is also made for the future costs relating to the decommissioning of the plant or other site restoration work.

The closure cost estimation for BGM and Tau Lekoa has been reviewed by GCS (Pty) Limited, an independent water, environment, engineering and earth sciences consultancy. The assessment for Cons Murch (Pty) Limited has been performed by Turgis Mining Consultants.

The provisions are based on the estimated net cost for the respective companies to rehabilitate their mines. On the assumption that third parties will attend to the rehabilitation of the mines, the undiscounted costs, 10% contingency, are estimated at R599.7 million (2012: 454.1 million).

The Buffelsfontein and Blyvooruitzicht rehabilitation costs are shown at current cost estimates and not at discounted values.

2012

Deferred tax assetFinancial

assets PPE Provisions Total

Opening balance – – – –

Charge to the statement of comprehensive income – – (31,137) (31,137)

Closing balance – – (31,137) (31,137)

Deferred tax liability

Opening balance – 149,126 3,911 153,037

Charge to the statement of comprehensive income 1,657 122,800 – 124,457

Closing balance 1,657 271,926 3,911 277,494




The Blyvooruitzicht rehabilitation liability (R115 million) will be derecognised in FY2014, as the mine has been put into liquidation. The environmental rehabilitation provisions have been reviewed by Lufuno Mugovhani, the group environmental manager and a qualified environmentalist.

Bank guarantees, in conjunction with environmental trust funds, have been put in place for all of the abovementioned operations to the extent considered appropriate.

Forward inflation rate

Discount rate

Assumptions:

The discount rates used to determine the net present values of the mines over their respective life-of-mine periods were based on the nominal and inflation curves as follows:

Tau Lekoa Mine 5.70% 7.01%

Cons Murch Mine 5.70% 7.01%

Buffelsfontein Gold Mine and Blyvooruitzicht liabilities are shown at current cost estimates, due to the fact that Buffels has been put on care and maintenance and Blyvoor has been put into provisional liquidation.

GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

20. LOANS TO/FROM GROUP COMPANIESLoans to Group companies 171,245 12,400

Buffelsfontein Gold Mines Limited – – 90,040 12,400

Blyvooruitzicht Gold Mining Company Limited – – – –

Nebavest 49 (Pty) Limited – – 1,000 –

Disadox (Pty) Limited – – 79,840 –

VMR Shared Services (Pty) Limited – – 365 –

Loans from Group companies (7,067) (8,482)

Cons Murch Mine (Pty) Limited – – (7,067) (8,482)

These loans have no fixed repayment terms and are non-interest bearing.

21. TRADE AND OTHER PAYABLESTrade payables 200,163 99,373 1,149 581

Other payables 246,676 290,537 3,005 3,085

Blyvoor preference shares 143,964 143,964 – –

Accrued leave pay 120,066 51,192 2,331 1,918

Accrued bonuses 24,142 20,623 – –

Total 735,011 605,689 6,485 5,584

All amounts disclosed above are short-term. The carrying value of trade payables is considered a reasonable approximation of fair value.

In terms of the subscription agreement dealing with Blyvoor preference shares A, B and C, there are no fixed terms of repayment in terms of the preference shares. The preference shares merely provide the preference shareholder with the right to receive 26 cents in the Rand for every Rand that Blyvoor repays on its shareholder loan, to a maximum of R409 million in total on the shareholder loan. The preference shares are disclosed as a contingent liability in the statutory accounts of Blyvoor, however, due to the acquisition of Blyvoor by Village in the previous financial year, the preference shares were recognised as a liability in terms of IFRS 3: Business Combinations.


131


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

22. RETIREMENT BENEFIT OBLIGATIONSCons Murch was purchased by Village in March 2011 from Metorex Limited (Metorex). Some of Cons Murch’s former employees are entitled to a post-retirement medical aid contributions subsidy benefit. Cons Murch is liable for 100% of the medical aid contributions of the eligible former employees and their spouses. This benefit is payable for as long as either the pensioner or the spouse is alive.

The retirement benefit scheme was discontinued in 2011. No charges have been made to the profit and loss account in the current year. At 30 June 2013 no revaluation of the retirement obligation was deemed necessary, in light of the discontinued scheme.

The demographic profile of the members who qualified for the post retirement medical subsidy as at 30 June 2013 is as follows:

Item AmountMale members 7Female members 11Average age 79.1 yearsAverage life expectancy 11 yearsAverage medical aid contribution R1,904Average dependants 0,28

The total value of the actuarial liability/provision at 30 June 2013 is estimated at R2,900,200 2,900 3,368 – –

Reconciliation of liability at June 2013 Amount

Accrued liability at June 2012 R3,367,831 – – – –

Plus service cost – – – – –

Plus interest cost – – – – –

Less expected benefit payments (R467,631) – – – –

Accrued liability at June 2013 R2,900,200 – – – –

ASSUMPTIONS 2011

Factor Basis

Discount rate 12 year Government nominal bond yield 8.69% naca

Expected CPI rate 12 year Government nominal bond/R197 inflation linked bond2

5.95% naca

Medical inflation CPI + 1.5% 7.45% naca

Post retirement mortality Curve used for annuitants by life industry PA(90)

Adult dependants Assume that current adult dependant situation will not change (no remarriage or take up of adult dependants for those who do not have)

Determined per member

Age difference Generally used assumption of age difference in retirement and life assurance sector

Wives 4 years younger than husbands

Child dependants No distributions currently made with respect to child dependants, assume this will not change

–




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

23. REVENUESale of antimony 205,734 112,562 – –

Sale of gold 2,344,453 1,791,846

Total 2,550,187 1,904,408 – –

24. OPERATING PROFIT/(LOSS)Operating profit/(loss) for the year is stated after accounting for the following:

Management fee: related party – -- – (1,200)

Audit fees – external (2,527) (4,534) (1,378) –

Audit fees – internal (2,144) (963) (828) –

Profit on sale of property, plant and equipment 6,185 – – –

Profit on disposal of the solution shares – (364) – –

Depreciation on property, plant and equipment (188,721) (102,497) (326) (5)

Employee costs – including share option costs (990,107) (737,084) (35,170) –

Net foreign exchange losses (16,518) (9,127) – 11,173

Loss on forward sales – (23,090) – –

Optimisation project – (52,000) – –

Profit on partial disposal of FIU – 51,299 – 51,299

Loss on disposal of Rand Refinery shares – Blyvoor – (2,640) – –

25. INVESTMENT INCOMEDividend from First Uranium Investment 26,286 – 26,286 –

Interest revenue on Mine Waste notes – 32,484 – 32,484

Interest from bank accounts 14,359 16,918 12,703 11,763

Interest on rehabilitation funds 4,045 – 264 –

Total 44,690 49,402 39,253 44,247

26. RESTRUCTURING COSTRetrenchment cost (32,767) 9,018 (1,485) –

27. FAIR VALUE ADJUSTMENTSMine Waste Notes – 71,772 – 71,772

First Uranium shares (23,796) (40,950) (23,796) (40,950)

Other fair value adjustments – 4,365 (3,716) 4,365

Total (23,796) 35,187 (27,512) 35,187


133


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

28. IMPAIRMENT OF ASSETS Impairment of investment in Business Venture Investments 1557 (Pty) Limited – – (150,000) –

Impairment of loans – – (41,714) –

Impairment of property, plant and equipment (469,158) – – –

Impairment of Mine Management Agreement (10,000) – (10,000) –

Impairment of Conti Coal Investment (45,599) – – –

Total (524,757) – (201,714) –

The loan impairments relate to:

• Blyvooruitzicht loan: R41.7 million (2012: Rnil). This loan was granted by the head office to Blyvooruitzicht. The loan was impaired as a result of the liquidation of Blyvoor.

• Investment in Business Venture Investments 1557 (Pty) Limited. On 1 June 2012, Village issued 85,714 shares at a value of R150 million to BVI 1557 (Pty) Limited. The Blyvooruitzicht Gold mine investment is held by Village Main Reef Limited through BVI 1557 (Pty) Limited. Following the provisional liquidation announcement of Blyvoor, management has decided to impair the investment by R150 million.

• Blyvooruitzicht Gold Mining Company; R469 million. The impairment relates to the property, plant and equipment which was fully impaired at 30 June 2013. The recoverable amount of the Blyvooruitzicht Gold Mine cash generating unit was assessed at 30 June 2013 and it was assessed that the cash generating unit should be impaired to reflect the lower of value in use or net realisable value. The value in use of the Blyvooruitzicht unit was assessed as negative. Due to the fact that no active market exists for the cash generating unit, the net realisable value minus cost to sell is seen as zero and the unit was impaired accordingly.

• Mine Management Agreement; R10 million.

• Conti Coal investment; R46 million. The investment in Conti Coal was acquired on 18 March 2013, for a subscription amount of R18 million. The investment is accounted for as an available-for-sale financial asset and measured at fair value with reference to the closing share price. At 30 June 2013, an impairment of R46 million was recognised against the investment due to a decline in the share price since acquisition.




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

29. FINANCE COSTInterest expense on financial liabilities – (343) – -

Accretion expense on environmental rehabilitation liability

(27,710) (5,778) – –

Bank interest (2,464) (284) (16) (300)

Interest on late supplier payments (266) (224) – –

Other finance costs – – – –

Total (30,440) (6,629) (16) (300)

30. TAXATIONCurrent

• Current year 76 1,300 – –

• Prior year under provision 444 – – –

• Capital gains tax 1,047 – – –

Deferred tax

Originating and reversing temporary differences (94,468) (1,655) – –

Taxation for the year (92,901) (355) – –

Reconciliation of tax expense

Taxation at statutory rate (275,103) 88,091 (59,447) 22,868

Prior year current tax under-provided for 445 846 – –

Income not subject to tax (11,045) (17,268) (8,031)

Capital gains tax 15,966 461 – 461

Expenses not deductible 28,701 15,553 57,520 7,234

Utilisation of assessed loss 82,098 (5,863) 9,940 (5,863)

Deferred tax asset not recognised 66,037 (82,175) 18 (9,190)

Taxation for the year (92,901) (355) – –

Reconciliation of tax rate

Taxation at statutory rate (28%) 28% (28%) 28%

Current tax under-provided for 0.15% 0.27% – –

Income not subject to tax (1.13%) (5.49%) (3.78%) (18,99%)

Capital gains tax 1.52% 0.15% – 0.56%

Expenses not deductible 2.92% 4.94% 27.09% 8.86%

Utilisation of assessed loss 8.36% (1.86%) 4.68% (7.18%)

Deferred tax asset not recognised 6.72% (26.12%) 0.01% (11.25%)

(9.46%) (0.11%) – –

A further estimated R1,593 million of unredeemed capital is available and R529 million of assessed losses are available for future use against taxable mining income. No deferred tax asset was raised on these balances. An amount of R82.1 million was used to offset the deferred tax liability.


135


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

31. EARNINGS PER SHAREReconciliation between earnings profit/(loss) and headline profit/(loss):

Net profit/(loss) from continuing operations (322,731) 556,924 (212,044) 81,670

Net loss from discontinuing operations (566,878) (241,958) – –

Profit for the year (889,609) 314,966 (212,044) 81,670

Less:

Non-controlling interest (167,299) (634) – –

Attributable to the owners of the parent – continuing operations (155,432) 557,558 (212,044) 81,670

Impairment of financial assets at fair value through profit/(loss) – – – –

Impairment of property, plant and equipment 469,158 – 3,716 –

Impairment of mining agreement 10,000 – 10,000 –

Impairment of investment in associate – – – –

Impairment in non-current assets held-for-sale – 22,362 – –

Impairment of loans – – 41,714 –

Impairment of investment – – 150,000 –

Profit on sale of assets (6,185) – – –

Profit on sale of non-current assets held-for-sale – (51,299) – (51,299)

FCTR released through profit and loss – (32,462) – –

Impairment of financial assets available-for-sale 45,599 – – –

Gain on bargain purchase – (27,371) – –

Headline profit/(loss) for the year from continuing operations 363,140 468,788 (6,614) 30,371

Attributable to the owners of the parents – discontinued operations (566,878) (241,958) – –

Impairment of property, plant and equipment 414,086 – – –

Impairments of loans 5,693 27,011 – –

Profit on sale of assets – (12,527) – –

Fair value – adjustment on held-for-sale assets – 2,151 – –

Headline profit/loss for the year from discontinued operations (147,099) (225,323) – –




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

31. EARNINGS PER SHARE continued

Basic profit/(loss) per share (cents) from continuing operations

(16.19) 61.36 (22.09) 8.99

Basic profit/(loss) per share (cents) from discontinuing operations

(59.05) (26.63) – –

Total basic profit/(loss) per share (cents) (75.24) 34.73 (22.09) 8.99

Diluted profit/(loss) per share (cents) from continuing operations (16.19) 60.93 (22.09) 8.93

Diluted profit/(loss) per share (cents) from discontinuing operations (59.05) (26.44) – –

Total diluted profit/(loss) per share (cents) (75.24) 34.49 (22.09) 8.93

Headline profit/(loss) per share (cents) from continuing operations 37.83 51.59 (0.69) 3.34

Headline profit/(loss) per share (cents) from discontinuing operations (15.32) (24.80) – –

Diluted headline profit/(loss) per share (cents) from continuing operations 37.83 51.23 (0.69) 3.32

Diluted headline profit/(loss) per share (cents) from discontinuing operations (15.32) (24.62) – –

Net asset value per share (cents) 79.85 178.89 119.23 143.09

Note: All earnings/(loss) per share calculations are based on a weighted average number of shares. Net asset value per share is based on the number of shares in issue.

Reconciliation of number of shares issued ’000 ’000 ’000 ’000

Reported at 1 July 987,289 901,575 987,289 901,575

Shares issued for cash – 85,714 – 85,714

Shares issued at 30 June 987,289 987,289 987,289 987,289

Weighted average number of ordinary shares in issue 987,289 901,575 987,289 901,575

Adjusted for:

• Blyvoor acquisition – 7,045 – 7,045

• Treasury shares (27,292) – (27,292) –

Weighted average number of ordinary shares for earnings per share 959,997 908,620 959,997 908,620

Forfeitable share scheme shares issued. (Refer to note 42). 21,668 6,413 21,668 6,413

Weighted average number of ordinary shares for diluted earnings per share 981,665 915,033 981,665 915,033

Notes:Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year.

The forfeitable share scheme shares are anti-dilutive instruments, in the 2013 financial year, that have the potential to be dilutive.


137


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

32. CASH GENERATED FROM/(UTILISED IN) OPERATIONSContinuing operationsProfit/(loss) before taxation (415,632) 556,569 (212,044) 81,670Adjusted for:Depreciation on property, plant and equipment 152,417 102,497 326 308Amortisation of intangible assets 12,662 – – –Dividend received from First Uranium (26,286) – (26,286) –Profit on disposal of financial assets – (34,091) – (51,299)Profit on disposal of fixed assets (6,185) – – –Foreign currency translation reserve – (32,462) – –Finance income (14,359) (49,172) (12,703) (44,247)Rehabilitation accretion cost 27,710 5,778 – –Blyvoor impairment statutory reversal (5,071) – – –Finance cost 2,730 851 16 300Gain on bargain purchase – (27,371) – –Fair value adjustments 23,796 35,187 27,512 (35,188)Share option costs 9,808 18,572 9,808 18,572Impairment of investment in BVI 1557 (Pty) Limited – – 150,000 –Impairment of assets 524,757 – 10,000 –Impairment of Blyvoor loan – – 41,714 –Foreign exchange gains and losses – 9,127 – 11,174Interest received in rehabilitation fund (4,045) – (264) –Loss on forward sales 16,518 23,090 – –Total 298,820 608,575 (11,921) (18,710)

Changes in working capital:Decrease/(increase) in inventories 12,680 (28,195) – –Decrease/(increase) in trade and other receivables 147,410 (10,594) 28,909 (79,730)Increase/(decrease) in trade and other payables 145,508 (104,111) 1,285 (10,994)Cash generated from/(utilised in) operations 604,418 465,675 18,273 (109,434)

Discontinuing operationsProfit/(loss) before taxation from discontinuing operations (566,878) (241,958) – –Fair value adjustments 215,626 27,909 – –Depreciation 26,525 24,516 – –Impairment of assets – 27,010 – –Profit on sale of assets (10,373) (27,094) – –Rehabilitation accretion cost – 15,932 – –Hedging losses 15,720 24,067 – –Loss on Duff Scott – 55 – –Recycling reserve (3,101) – – –Finance costs 61,990 6,095 – –Finance income (22,142) (115) – –Aberdeen loan settlement – 73,128

(282,633) (70,455) – –

Changes in working capitalDecrease in inventories 16,391 6,682 – –Increase in trade and other receivables (59,165) (91,330) – –Decrease in trade and other payables (16,261) (59,184) – –Cash utilised in discontinuing operations (341,668) (214,287) – –




GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

33. TAX PAIDBalance at beginning of the year – – – –

Current tax for the period recognised in income statement – – – –

Current tax paid 8,202 – 6,711 –

Deferred tax charge for the current year – – – –

Balance at end of the period 8,202 – 6,711 –

34. EMPLOYEE BENEFIT EXPENSESIt is the policy of the Group to provide retirement benefits to its employees. Various defined contribution pension and provident funds, all of which are subject to the Pensions Fund Act, exist for this purpose. The defined contribution costs represent the actual contributions paid by the Group. As at 30 June 2013, there were no material outstanding/prepaid contributions and so no prepayment or accrual has been disclosed in the statement of financial position in relation to these plans. The assets of the defined contribution plans are held separately in independently administered funds. The Group is under no obligation to cover any unfunded benefits.

Total Group contribution to such schemes (40,671) (47,860) – –

Wages and salaries (990,106) (689,224) (25,363) (26,114)

Total (1,030,777) (737,084) (25,363) (26,114)

34.1 Directors’ emolumentsSalaries, bonuses and fees 18,178 23,256 18,178 23,055

Fringe benefits – – – –

Pensions/provident fund contributions – – – –

34.2 Key managementSalaries and bonuses 9,067 12,592 – 6,625

Fringe benefits 488 142 – –

Pensions/provident fund contributions 212 1,003 – –

The Group defines key management as general managers and financial managers at each of the subsidiaries and head office. There are no prescribed officers that have been identified in the Group. Directors have not earned remuneration for services rendered in the carrying on of the affairs of any other company within the Group.


139


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

35. COMMITMENTS AND CONTINGENCIESCapital commitments

Capital expenditure authorised but not yet contracted for at the statement of financial position date:

92,055 34,527 – –

Capital expenditure already contracted for at the statement of financial position date: 4,901 12,270 – –

Operating leases

Minimum lease payments under non-cancellable operating leases for each of the following periods amount to:

Not later than 1 year 326 – –

Later than 1 year and not later than 5 years – – – –


These leases relate to office equipment and certain machinery.

Finance leases – mine equipment:

Not later than 1 year 764 1,077 – –

Later than 1 year and not later than 5 years – 555 – –


Total 764 1,632 – –

These leases pertain to certain motor vehicles and equipment under finance lease. The Company’s obligation under the finance leases are secured by the lessor’s charge over the assets.

Financial liability – financial system:

Not later than 1 year 3,026 – 63 –

Later than 1 year and not later than 5 years 11,595 – 243 –


Contingencies

i. Guarantees

Guarantees in favour of Eskom:

• Mutual and Federal – 11,400 – –

Mutual & Federal Insurance Company Limited issued an irrevocable insurance guarantee to Eskom Holdings Limited in relation to the power supply agreement entered into between Eskom and Buffelsfontein Gold Mine. Buffelsfontein Gold Mine provided an indemnity to Mutual & Federal Insurance Company Limited.

• Bank guarantees – Cons Murch Mine 3,277 3,277 – –

Guarantees in favour of Total SA (Pty) Limited:

• Bank guarantees – Buffelsfontein Gold Mines 1,750 1,750 – –




CARRYING VALUE

Held by

2013 holding

%

2012 holding

%30 June

201330 June

2012

36. RELATED PARTIESRelationshipsHolding companyVillage Main Reef LimitedSubsidiariesUmbono Minerals and Mining (Pty) Limited Village Main Reef Limited 100 100 167,443 167,443Umbono Platinum Mining (Pty) Limited Umbono Minerals and Mining

(Pty) Limited73 73 – –

Village Main Reef Limited 27 27 62,689 62,689Nebavest 69 (Pty) Limited Village Main Reef Limited 100 100 135,389 135,389Lesego Platinum Mining Limited Umbono Platinum Mining (Pty)

Limited100 100 – –

Village Main Reef Limited 45 45 136,292 136,292Sweet Sensation 79 (Pty) Limited Lesego Platinum Mining Limited 45 45 – –

Khumo Mining and Investments (Pty) Limited

50 50 – –

Nebavest 69 (Pty) Limited 5 5 – –Khumo Mining and Investments (Pty) Limited

Nebavest 69 (Pty) Limited 100 100 – –

Cons Murch Mine (Pty) Limited Nebavest 49 (Pty) Limited 77 77 – –Nebavest 49 (Pty) Limited Village Main Reef Limited 100 100 66,100 66,100Village Main Reef Nature Conservation Trust Village Main Reef Limited 100 100 1 1Simmer and Jack Investments (Pty) Limited Village Main Reef Limited 100 100 316,932 316,932Buffelsfontein Gold Mines Limited Simmer and Jack Investments

(Pty) Limited100 100 1,325,804 1,325,804

Buffelsfontein Rehabilitation Trust Buffelsfontein Gold Mines Limited 100 100 – –Temotuo Rehabilitation Company – a company registered under Section 21 of the Companies Act

Buffelsfontein Gold Mines Limited 100 100 – 3,889

Business Venture Investments No. 1557 (Pty) Limited

Village Main Reef Limited 100 100 – (1) 150,000

Jozivest (Pty) Limited Village Main Reef Limited 100 100 – (1)

Disadox (Pty) Limited Village Main Reef Limited 100 100 – (1)

Simidox (Pty) Limited Village Main Reef Limited 100 100 – (1)

Newshelf 1214 (Pty) Limited Village Main Reef Limited 100 100 – (1)

Newshelf 1258 (Pty) Limited Village Main Reef Limited 100 100 – (1)

Vaximode (Pty) Limited Village Main Reef Limited 100 100 – (1)

Village Main Reef Gold Investments 01 (Pty) Limited

Village Main Reef Limited 100 100 – (1)

CompaniesMargaret Water Company (association incorporated under Section 21)BEE partnerXelexwa Investments Holdings (Pty) Limited (formerly Jaganda Holdings (Pty) Limited)Vulisango Holdings (Pty) LimitedUmbono Financial Services (Pty) Limited(1) These investments are less than a R1,000


141


GROUP COMPANY

30 June 2013 R’000

30 June 2012 R’000

30 June 2013 R’000

30 June 2012 R’000

Key management

Directors (refer to note 34) 18,178 23,256 18,178 23,055

Key management (refer to note 34) 9,767 13,737 – 6,625

Related party balances

Loan accounts – owing (to)/by related parties

Buffelsfontein Gold Mines Limited – – 91,039 12,400


Reimbursive asset recognised

Refer to note 9 regarding reimbursive asset recognised relating to surface tailings sold to First Uranium (Pty) Limited. 115,009 81,338 – –

Trade receivables/(payables)

Village Main Reef Limited – – – 7,567

Nicolor (Pty) Limited – – 380 –

Buffelsfontein Gold Mines Limited – – 1,597 (4,545)

Continental Coal Limited – – 9,725 –

Cons Murch Mine (Pty) Limited – – 508 (2,828)

Lesego Platinum Mining Limited – – – (194)

Tau Lekoa Gold Mining Company (Pty) Limited – – 1,136 –

Related party transactions

Proceeds from Mine Waste Solutions Notes (1) 392,874 – 392,874 –

Interest received from Mine Waste Solutions Notes (1) – 32,484 – –

Royalties received from Mine Waste Solutions Notes – 13,326 – –

Professional fees paid to Umbono Financial Services (Pty) Limited 1,800 2,052 1,800 2,052

Professional fees paid to To the Point Growth Specialists (Pty) Limited (2) 1,249 2,736 1,249 2,736

Management Fees (paid)/received

Village Main Reef Limited – – 31,264 30,120

Buffelsfontein Gold Mines Limited – – (20,933) (22,421)


Tau Lekoa Gold Mining Company (Pty) Limited – – (996) –

Blyvooruitzicht Gold Mining Company Limited – – (1,800) –

Lesego Platinum Mining Limited – – (275) (872)

Share based payments – refer to directors’ report for full disclosure.

Refer to directors’ report for disclosure of directors’ emoluments.

(1) Mine Waste Solutions was previously a subsidiary of Buffelsfontein Gold Mines Limited and was disposed of in December 2007. Village Main Reef Limited held an investment in Mine Waste Solutions, which was settled in the current financial year.

(2) To the Point Growth Specialists (Pty) Limited is a shareholder of Village Main Reef Limited. The chairman of the Board, Bernard Swanepoel, is a majority shareholder of To the Point Growth Specialists (Pty) Limited.




37. FINANCIAL RISK MANAGEMENT The Group’s risk management approach requires consistent and systematic risk assessment and reporting procedures across the Group’s operations. The Board, via the audit committee, is ultimately responsible for the overall system of risk management and oversees measures to understand the changing environment within which the Group operates and the identification and mitigation of new and existing risks on an ongoing basis.

During 2012 a number of risk workshops were held, which were facilitated by the Company’s internal auditors. Post the risk workshops, risk registers from all operations have been updated or generated by their respective management teams and submitted to the executive committee and the Group audit and risk committee for review.

The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potentially adverse effects on the Group’s financial performance.

a. Financial risk factors

Liquidity risk

Liquidity risk is being managed by maintaining sufficient cash and cash equivalents. This includes the availability of funding through an adequate amount of committed credit facilities, and the ability to close-out market positions. The availability of funds and credit facilities is assessed on an ongoing basis through the preparation of cash flow forecasts and monitoring of adequate utilisation of borrowing facilities. The treasury function is performed by Villages’ head office finance department.

South African banks (overdraft facility)

2013 Credit limits

R’000

2012 Credit limits

R’000

R13.5 million (2012: R21.9 million) was available under the above facility as at year-end. This facility is reviewed on a regular basis. 50,000 50,000

2013

Carrying value at

30 June 2013 R’000

Less than 1 year R’000

Between 1 – 5 years

R’000

Over 5 years R’000

Total R’000

Bank overdraft 36,522 36,522 – – 36,522

Finance lease liabilities 764 764 – – 764

Financial liabilities 14,620 3,025 11,595 – 14,620

Trade and other payables 735,011 735,011 – – 735,011

786,917 774,558 11,595 786,917

2012

Carrying value at

30 June 2012 R’000

Less than 1 year R’000

Between 1 – 5 years

R’000

Over 5 years R’000

Total R’000

Bank overdraft 28,086 28,086 – – 28,086

Borrowings (excluding financial lease liabilities)

341,692 48,171 37,970 149,718 235,859

Finance lease liabilities 1,632 1,078 718 – 1,796

Net settled derivative financial instrument – – – – –

Trade and other payables 605,689 605,689 – – 605,689

977,099 638,024 38,688 149,718 871,430


143


Credit risk

Credit risk arises from the risk that a counterparty may default or not meet its obligations timeously.

The Group has no significant concentrations of credit risk. Village has one significant debtor named Rand Refinery Limited.

The potential concentration of credit risk consists mainly of cash and cash equivalents, trade debtors and other receivables.

The Group is exposed to credit-related losses in the event of non-performance by counterparties to derivative instruments. The counterparties to these contracts are major financial institutions. The Group continually monitors its positions and the credit ratings of its counter parties and limits the amount of contracts it enters into with any one party.

Sundry debtors comprise a number of customers, dispersed across different geographical areas. Regular credit evaluations are performed on the financial condition of these and other receivables. Trade debtors are presented net of the allowance for impairment.

Market risk

Commodity price risk

Commodity price risk refers to the risk of changes in the prices achieved on commodities produced by the Group.

Gold is sold at market spot prices. Forward sales of gold production may be considered, from time to time, where financing is required in the construction or acquisition of value adding transactions.

The Group is subject to the volatility of the gold price and exchange rates. Investment decisions relating to expansions and/or acquisitions are particularly affected by such fluctuations and could impact the Group’s earnings and cash flow.

The Group continues to drive various initiatives seeking to reduce procurement costs through centralised buying and better inventory management. As part of these initiatives, the Group has entered into fixed price contracts with suppliers of certain commodities.

Securities price risk

The Group is exposed to equity securities price risk because of investments held by the Group and classified on the consolidated statement of financial position as available-for-sale financial assets. These investments are not seen as strategic and is not actively managed.

Sensitivity analysis

The calculation of a 20% change in the share price of available-for-sale investments would have resulted in a R5.1 million movement in other comprehensive income.

Interest rate risk

The Group does not hedge its exposure to interest rate risk. Deposits, overdrafts and all other investments attract interest at rates that vary with the prime interest rate in South Africa.

Cash and cash equivalents include short-term investments as well as bank borrowings, therefore the Group is only exposed to cash flow interest risk. The Group’s primary exposure in respect of borrowings is detailed in note 15. The Group does not hold any instruments with fixed interest rates, hence the exposure to fair value interest rate risk is minimal.

The Group policy is to manage interest rate risk so that fluctuations in variable rates do not have a material effect. The Board meets regularly to address and manage interest rate risk. Cash flow forecasts are prepared and reviewed on a monthly basis and management uses this control to minimise and manage interest rate risk.




37. FINANCIAL RISK MANAGEMENT continued

Interest rate sensitivity

The following table illustrates the sensitivity of profit and loss to a reasonably possible change in interest rates of +/- 1%. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant.

2013 2012

R’000 +1% R’000 –1% R’000 +1% R’000 –1%

Group

Bank overdraft (365) 365 (281) 281

Short-term deposits 1,825 (1,825) 2,947 (2,947)

Profit for the year 1,460 (1,460) 2,666 (2,666)

Company

Bank overdraft – – – –

Short-term deposits 1,559 (1,559) 2,343 (2,343)

Profit for the year 1,559 (1,559) 2,343 (2,343)

Foreign exchange risk

The Group’s exposure to foreign exchange risk arises as a result of transactions denominated in the United States dollar.

Foreign currency risk is limited to the settlement of quarterly royalties payable to Premier and receipts of additional payments from Deutsche bank. A 1% change in the foreign currency exchange rate would result in a R5,973 (2012: R30,422) movement in the statement of comprehensive income. Other non-recurring consulting and listing fees are incurred on a haphazard basis and exposure to foreign currency risk in these cases are immaterial.

It is the Group’s policy not to hedge its exposure to foreign exchange fluctuation risk. Such risk is monitored by the Group’s finance function and ultimately the audit committee.

b. Capital management policies and procedures

The Group’s capital management objectives are:– to ensure the Group’s ability to continue as a going concern; and– to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Group monitors capital on the basis of the carrying amount of equity less cash and cash equivalents as presented on the face of the statement of financial position.

The Group sets the amount of capital in proportion to its overall financing structure, i.e. equity and financial liabilities. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.


145


During 2013, the Group’s strategy, unchanged from 2012, was to maintain the gearing ratio within 20% – 30%.

This ratio for the reporting periods under review is summarised as follows:

2013 R’000

2012 R’000

Total equity 830,953 1,804,480

Cash and cash equivalents (207,314) (294,737)

Capital 623,639 1,509,744

Total equity 830,953 1,804,480

Financial liabilities and lease obligations 25,583 343,324

Overall financing 856,536 1,853,068

Gearing ratio 0.27 0.19

c. Fair value estimationThe Group adopted the amendments to IFRS 7 Improving Disclosures about Financial Instruments effective from 1 January 2009. These amendments require the Group to present certain information about financial instruments measured at fair value in the statement of financial position.

The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy. This hierarchy groups financial assets and liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial assets and liabilities. The fair value hierarchy has the following levels:• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly (i.e. as prices) or indirectly (i.e. derived from prices); and• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measurement.

The financial assets and liabilities measured at fair value in the statement of financial positions are grouped into the fair value hierarchy as follows:

2013 Level 1 Level 2 Level 3 Total

AssetsFinancial assets at fair value through profit and loss – 1,906 – 1,906Available for sale financial assets – 34,259 – 34,259Total assets – 36,165 – 36,165

LiabilitiesFinancial liabilities at fair value through profit and loss – 10,199 – 10,199Total liabilities – 10,199 – 10,199

2012 Level 1 Level 2 Level 3 Total

AssetsFinancial assets at fair value through profit and loss – 418,575 – 418,575Available for sale financial assets – 30,310 – 30,310Total assets – 448,885 – 448,885

LiabilitiesFinancial liabilities at fair value through profit and loss – 343,324 – 343,324Total liabilities – 343,324 – 343,324




38. SHARE BASED PAYMENTThe directors of the Company may from time to time offer shares to the trustees (and simultaneously instruct and authorise the trustees in writing to offer such shares or grant options to employees named in the offer) in respect of shares which do not exceed the scheme allocation. Such shares shall be offered for subscription or purchase in terms of an offer or pursuant to the grant of an option at the purchase price or at such other price as may be determined by the directors in terms of the deed.

Village Forfeitable Share Plan and Share Appreciation Rights Scheme

Village Main Reef has implemented two share schemes to employees, the Forfeitable Share Plan (FSP) and the Share Appreciation Rights Scheme (SARS).

The FSP is an equity settled share based payment and is measured at fair value at date of grant. These costs are expensed as services rendered over the vesting period, based on the estimate of the awards that will eventually vest and be adjusted for the effect of non-market based vesting conditions.

The SARS is regarded as cash-settled share-based payments for valuation purposes. At each reporting date the expected cost is revalued by mark-to-market for the vested period of the liability. The changes in the mark-to-market liability are expensed.

The fair value of the FSP and SARS are independently valued. The value of the FSP grant is similar to the value of the Village Main Reef ordinary share. The value of the SARS grant is determined using the Black-Schöles option valuation model. The significant inputs into the model are: vesting period and conditions, risk-free interest rate, volatility, price of grant and dividend yield. The assumptions for these inputs are as follows:

Assumptions

Valuation share price Closing price on 30 June 2012 R1.80Volatility Two year historical share price volatility 59.10%Interest rates Zero yield curve anchored on 30 June 2012 based on swap

rates5.71% – 5.77%

Dividend yield Based on historical and forecast dividends of zero 0%Grant (strike) price Closing price on 30 June 2011 R1.17

Closing price on 3 September 2011 R1.68Vesting period As per terms of both FSP and SARS grants 12 monthsExpiration date SARS grant – grant 30 June 2011 30 June 2015

SARS grant – grant 3 September 2011 23 September 2015

The fair values of the FSP are determined to be the share price at grant date as this is when the shares are issued.

The valuation of share options was performed by Mr Ranti Mothapo, a consulting actuary and analyst, with the Matlotlo Group (Pty) Limited.

A two-year daily historical horizon was used to calculate the volatility. Since the SARS grant is essentially a one year instrument, the actuary found a two year horizon to be suitable for the purpose of this valuation. No relevant data was found for implied volatilities for a single share option on Village Main Reef with a three year time horizon.

The purpose of the FSP is to provide selected employees of the employer companies, including executive directors, with the opportunity to receive shares in the Company, thereby providing participants with an incentive to advance the Group’s interests. The plan shall be applicable to awards made on or after the approval of the plan by shareholders of the Company and is subject to certain performance conditions.


147


Where imposed for a specific award, or part thereof, as soon as reasonably practicable after the end of the performance period in relation to such an award, the remuneration committee shall review the performance condition as specified in the award letter and determine the extent to which it has been satisfied.

Where the remuneration committee is satisfied that the performance condition has been fulfilled, the remuneration committee will calculate the number of shares that vest for each participant and will notify the participant of this fact accordingly.

Where the remuneration committee is satisfied that the performance condition has not been fulfilled, the forfeitable awards subject to the performance condition will not vest and will lapse immediately. The participant will be notified of such fact accordingly and of the reason that the performance condition was not fulfilled.

An award will vest on the later of:• The date specified in the award letter to be the vesting date; and• The date on which the remuneration committee determines that the performance condition has been satisfied (where

applicable), provided that the participant remains employed by or remains a salaried office holder of an employer company.

Where the award is subject to a performance condition, the award will vest to the extent that the remuneration committee determines that the performance condition and any other conditions imposed have been satisfied. Refer to the remuneration report for the vesting terms (pages 62 to 66).

The following grants were made during the year:

SchemeGrants

outstandingValue per

grantOutstanding

lifeExpected

costExpensed for

the year

FSP 49,485,892 R0.76 2.7 years R42,201,454 (R6,238,325)

SARS 8,000,000 R0.028 2.0 years R221,518 (R4,585,226)

Total 57,485,892 R42,422,972 (R10,823,551)

Recognition of the movement of the share incentive schemes for the 2013 financial year.

FSP SAR FSP price SAR priceFSP

evaluationSAR

evaluation

Opening balance 16,805,293 9,750,000 R0.51 R1.02 8,594,763 9,977,108

Grants 36,231,591 – R0.46 – 16,666,531 –

Cancelled (3,550,992) (1,750,000) R1.55 R1.01 (5,356,785) (1,762,500)

Vested – – – – – –

Total 49,485,892 8,000,000 – – 19,904,509 8,214,608

39. EVENTS AFTER THE REPORTING DATEOn 30 July 2013 , Village announced that its Board of Directors voted to suspend financial assistance to Blyvooruitzicht Gold Mining Company Limited (Blyvoor) and advised the Board of Directors of Blyvoor accordingly. The operations of Blyvoor were discontinued and placed in provisional liquidation on 6 August 2013. Blyvoor will be classified as a discontinued operation for FY2014.

The directors are not aware of any matters or circumstances arising after the reporting period up to the date of this report, not otherwise dealt with in this report that require an adjustment to the financial results at reporting date.




40. SEGMENTAL REPORTINGOperating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker, who is the Chief Executive Officer.

All inter-segment transfers are carried out at arm’s length prices.

The accounting policies the Group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.

The Group’s mining and exploration activities are conducted mainly in the Gauteng, Limpopo and North West provinces of South Africa. An analysis of the Group’s operating segments is geographically set out below. The segments have been determined from a geographical and product perspective. The Group includes operating assets in three gold operations, Buffelsfontein and Tau Lekoa (the ‘North West’ segment), and Blyvoor (the ‘Gauteng’ segment), an antimony/gold producer in Cons Murch (the ‘Limpopo-Cons Murch’ segment) and a very exciting brownfields platinum exploration project in Lesego Platinum Limited (the ‘Limpopo-Lesego’ segment). During the current financial year all of the Group’s gold was sold to the Rand Refinery, while Cons Murch exports its antimony to India.

The Chief Executive Officer has determined the operating segments, based on reports that are used to make strategic decisions. An analysis of the Group’s operating segments is geographically set out below based on the requirements of IFRS 8: Segment Reporting. When assessing performance, the CEO considers the revenue, cost of sales, administrative and general expenditure of each segment. Products produced by the operations are not sold internally between operations. Sales between operations are limited and in such events comprise of plant and equipment and consumables.

2013

Limpopo LesegoR’000

Limpopo Cons Murch

R’000

North West Tau Lekoa

and Nicolor R’000

Gauteng Blyvoor R’000

Corporate R’000

Continuing operations

Total R’000

Discontinued operations

North West Buffels R’000

Total R’000

Revenue – 336,996 1,480,895 732,296 – 2,550,187 470,309 3,020,496

Cost of sales (3,718) (316,852) (1,001,853) (962,318) (49) (2,284,790) (663,528) (2,948,318)

Gross profit/(loss) (3,718) 20,144 479,042 (230,022) (49) 265,397 (193,219) 72,178

Other income – 288 4,556 7,976 6,873 19,693 26,991 46,684

General administrative and overhead expenditure (3,414) (24,862) (79,323) 708 (26,761) (133,652) (70,438) (204,090)

Impairment of assets – – – (469,158) (55,599) (524,757) (419,779) (944,536)

Operating profit/(loss) (7,132) (4,430) 404,275 (690,496) (75,536) (373,319) (656,445) (1,029,764)

Finance income 1,280 2,386 – 1,770 39,254 44,690 22,842 67,532

Restructuring costs – – (2,903) (28,379) (1,485) (32,767) (62,763) (95,530)

Net movement in fair value – – – – (23,796) (23,796) 198,460 174,664

Finance charges – (4,088) (3,928) (22,408) (16) (30,440) (68,972) (99,412)

Profit/(loss) before tax (5,852) (6,132) 397,444 (739,513) (61,579) (415,632) (566,878) (982,510)

Taxation – 1,072 (445) 92,274 – 92,901 – 92,901

Profit/(loss) for the year (5,852) (5,060) 396,999 (647,239) (61,579) (322,731) (566,878) (889,609)

Other comprehensive income – – – – – – –

Fair value adjustments to available-for-sale investments – – – – – (20,187) (20,187)

Total comprehensive profit/(loss) for the year (5,852) (5,060) 396,999 (647,239) (61,579) (322,731) (587,065) (909,796)


149


2012

Limpopo LesegoR’000

Limpopo Cons Murch

R’000

North West Tau Lekoa

and Nicolor R’000

Gauteng Blyvoor R’000

Corporate R’000

Continuing operations

Total R’000

Discontinued operations

North West Buffels R’000

Total R’000

Revenue – 331,849 1,462,583 109,976 – 1,904,408 597,691 2,502,099

Cost of production (3,274) (312,264) (970,691) (107,370) – (1,393,599) (678,642) (2,072,241)

Gross profit/(loss) (3,274) 19,585 491,892 2,606 – 510,809 (80,951) 429,858

Other income – 3,286 (17,571) (2,640) 51,451 34,526 43,477 78,003

General administrative and overhead expenditure (2,867) (11,063) (72,736) (28) (48,883) (135,577) (56,994) (192,571)

Impairment of loans – – – – – – (27,011) (27,011)

Operating profit/(loss) (6,141) 11,808 401,585 (62) 2,568 409,758 (121,479) 288,279

Finance income 1,628 3,370 260 157 43,987 49,402 (115) 49,287

Restructuring costs – – 9,018 – – 9,018 – 9,018

Net movement in fair value – – – – 35,187 35,187 (98,283) (63,096)

Recycling of FCTR – – – – 32,462 32,462 – 32,462

Gain on bargain purchase – – – – 27,371 27,371 – 27,371

Finance charges – (3,309) (2,821) (199) (300) (6,629) (22,026) (28,655)

Profit/(loss) on ordinary activities (4,513) 11,869 408,042 (104) 141,275 556,569 (241,903) 314,666

Loss from discontinuing operations – – – – – – (55) (55)

Profit/(loss) before tax (4,513) 11,869 408,042 (104) 141,275 556,569 (241,958) 314,611

Taxation (1,300) – – 1,655 – 355 – 355

Profit/(loss) for the year (5,813) 11,869 408,042 1,551 141,275 556,924 (241,958) 314,966

Other comprehensive income

Fair value adjustments to available for sale investments – – – – – – 8,041 8,041

Foreign currency translation reserve – – – – (32,462) (32,462) – (32,462)

Total comprehensive profit/(loss) for the year (5,813) 11,869 408,042 1,551 108,813 524,462 (233,917) 290,545




GROUP COMPANY

2013 R’000

2012 R’000

2013 R’000

2012 R’000

41. EXPLORATION ACTIVITIESProperty, plant and equipment 477,222 462,126 – –

Trade and other receivables 200 200 – –

Cash and cash equivalents 15,849 39,040 – –

Total assets 493,271 501,366 – –

Deferred tax (97,848) (97,848) – –

Trade and other payables (1,654) (2,142) – –

Total liabilities (99,502) (99,990) – –

Income – – – –

Expenses (5,852) (5,769) – –

Exploration activites in the Group relate to Lesego. The above is an analysis of assets and liabilities and income and expenditure of exploration activities in the Group.


151

GLOSSARY OF TERMS

GLOSSARY OF TERMS

ABET: Adult basic education and training

AGM: Annual general meeting

Amsl: Above mean sea level

ARM: African Rainbow Minerals

Au: Gold

BBBEE: Broad-based black economic empowerment

BEE: Black economic empowerment

BIC: Bushveld Igneous Complex

Blyvoor: Blyvooruitzicht Gold Mining Company/Blyvoor Gold Mine

BFS: Bankable feasibility study

BSP: Bonus share plan

Buffels: Buffelsfontein Gold Mine

CEO: Chief Executive Officer

CFO: Chief Financial Officer

Cu: Copper

CLR: Carbon Leader Reef

Conti/Continental:

Continental Coal Limited

CSDP: Central Securities Depositary Participant

DFS: Definitive feasibility study

DMR: Department of Mineral Resources

DTI: Department of Trade and Industry

DRDGold: DRDGold Limited

EDC: Enterprise development centre

EMP: Environmental management programme

ERP: Enterprise resource planning

FIU: First Uranium Corporation

FOG: Fall-of-ground

FSP: Forfeitable share plan

FCTR: Foreign currency translation reserve

GASA: Geological Association of Southern Africa

GRI: Global Reporting Initiative

GSSA: Geological Society of South Africa

HDSA: Historically disadvantaged South Africans

HEPS: Headline earnings per share

HTC: HIV testing and counselling

IASB: International Accounting Standards Board

IDC: Industrial Development Corporation

IFRIC: International Financial Reporting Interpretations Committee

IFRS: International Financial Reporting Standards

IRR: Internal rate of return

IT: Information technology

JSE: Johannesburg Stock Exchange

King III: King Code of and Report on Governance Principles for South Africa 2009

Kt: Kilotonne (1,000 tonnes)

LED: Local economic development

Lesego: Lesego Platinum Limited

LTIFR: Lost time injury frequency rate

Minxcon: Minxcon (Pty) Limited

Mlb: Million pounds

Moz: Million ounce

MPRDA: Mineral and Petroleum Resources Development Act

MSA: MSA Group Services

NEX: A separate board of the TSX

Ni: Nickel

NPV: Net present value

NUM: National Union of Mineworkers

Pt: Platinum

PGMs: Platinum group metals

Pd: Palladium

RD: Relative density

Rh: Rhodium

RIFR: Reportable injury frequency rate

RRL: Rand Refinery Limited

SADC: Southern African Development Community

SAICA: South African Institute of Chartered Accountants

SENS: JSE news services

SARS: Share appreciation right scheme

SAMREC: South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves

Sb: Antimony

SG: Specific gravity

Simmers: Simmer and Jack Mines Limited

SHE: Safety, health and environment

SLP: Social and labour plan

SMME: Small, medium and micro enterprises

SMU: Small mining units

SSET committee:

Sustainability, social, ethics and transformation committee

TAU: Tau Lekoa Mine

TCOE: Total cost of employment

TGP: Total guaranteed pay

The Act: Companies Act, 71 of 2008

TSR: Total share return

TSX: Toronto Stock Exchange

U3O8: Uranium oxide

VCR: Ventersdorp Contact Reef

Venmyn: Venmyn Deloitte (Pty) Limited

Village: Village Main Reef Limited

3PGE+Au: Platinum

Exchange rate: US$1: R9.88; AUS$: R9.01; CAD$1: R9.37 (as at 30 June 2013)



NOTES


CORPORATE INFORMATION

CORPORATE INFORMATION

DIRECTORSFerdi Dippenaar (Chief Executive Officer and Managing Director: Village Gold Division)

Executive

Marius Saaiman (Interim Chief Financial Officer and Managing Director: Village Platinum Division)

Executive

Dalubuhle Ncube (Managing Director: Antimony Division)

Executive

Gerard Kemp

Independent non-executive director

Khetiwe McClain


Octavia Matloa


Bernard Swanepoel (Chairman)

Non-executive director

Phiway Mbuyazi


Baba Njenje


COMPANY SECRETARYCharlene VenterIsle of HoughtonFirst Floor, Old Trafford 113 Boundary RoadHoughton EstateJohannesburg, 2146(P.O. Box 1539, Houghton, 2041)

REGISTERED OFFICEIsle of HoughtonFirst Floor, Old Trafford 113 Boundary RoadHoughton EstateJohannesburg, 2146(P.O. Box 1539, Houghton, 2041)

TRANSFER SECRETARIESLink Market Services South Africa (Pty) Limited13th Floor, Rennie House,19 Ameshoff StreetBraamfontein, 2001(P.O. Box 4844, Johannesburg, 2000)

Tel: +27 11 713 0800Fax: +27 86 674 4381

SPONSORBravura Equity Services (Pty) Ltd,23 Fricker Road,Ground Floor,Suite 2,Illovo, 2196(P.O. Box 2070, Parklands, 2121)

Tel: +27 11 459 5037

AUDITORSPricewaterhouseCoopers IncRegistered Accountants and AuditorsChartered Accountants (SA)2 Eglin RoadSunninghill, 2157(Private Bag x36, Sunninghill, 2157)

BANKERSABSA Bank Limited15 Alice LaneSandton, 2196

LISTING PARTICULARSVillage Main Reef Limited(formerly known as Village Main Reef Gold Mining Company (1934) Limited)(Registration number 1934/005703/06)

Share code: VILISIN: ZAE000154761

INVESTOR AND PUBLIC RELATIONSFerdi DippenaarTel: +27 11 463 2489Email: [email protected]


www.villagemainreef.co.za
