200 Hans Strijdom Drive, Randburg 2194Private Bag X3015, Randburg 2125, South Africa

Telephone: +27 11 709 4111 Fax: +27 11 793 2413 www.mintek.co.zaProduced by the Information and Communications Division, Mintek

Printed by Creda CommunicationsISBN 0 621 35649 2

RP 58/2005

our vision to be a global leader in mineral and metallurgical R&D and technology transfer.

our mission to serve South Africa by promoting technology, industrial growth and human

development.

our compact • add value to South Africa’s mineral resources

• expand the country’s mineral technology industries

• develop the minerals industries in the SADC and throughout Africa

• support the growth of SMMEs in the minerals sector

• transform Mintek’s business practices and staff profile

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Contents

Highlights 2004 - 2005...............................................2

The mining value chain........................................pullout

Organisational structure...........................................3

Chairman’s review....................................................4

CEO’s report..............................................................5

Performance against objectives................................7

Technical review....................................................... 9 Gold....................................................................................................................... 9

Platinum group metals..........................................................................................11

Ferrous metals..................................................................................................... 13

Non-ferrous metals.............................................................................................. 14

Industrial minerals................................................................................................17

Commercial activities..............................................19Participation in operating companies ................................................................. 19

Mintek business development projects..................................................................20

Process optimisation............................................................................................20

Equipment sales...................................................................................................22

Partnerships and technology alliances................................................................22

Mineral policy and sustainable development .......... 23 African Mining Partnership (AMP).......................................................................23

Spatial Development Initiatives............................................................................24

Support of provinces and metropoles...................................................................24

Resource-based Technology Strategy (RBTS)....................................................24

Policy support.......................................................................................................25

Kgabane....................................................................................................25

Small-scale Mining (SSM)....................................................................................25

People....................................................................26 HIV/AIDS............................................................................................................. 26

Employment equity...............................................................................................26

Black Economic Empowerment............................................................................27

Human resources development...........................................................................27

Corporate governance.............................................30

Report of the Audit Committee...............................32

Directors’ report.......................................................33

Financial statements...............................................34Report of the Auditor-General..............................................................................35

Financial statements and notes............................................................................40

Mintek publications.................................................68

Glossary..................................................................70

Contact details........................................................70

Addendum........................................................71

mintek

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Highlights 2004 - 2005

Work on gold-based catalysts under Project AuTEK — the collaborative initiative to develop novel industrial uses

for gold has reached product development stage. Mintek now has the

capacity to produce catalysts in batches of up to 20 kg for a wide range of

industrial applications. The AuTEK biomedical programme has broadened its

investigations to include anti-HIV and anti-malarial agents, in collaboration

with local and overseas universities.

Exploration and development work on new platinum

group metals projects in South Africa continued at a high level, and Mintek

conducted metallurgical testwork and piloting in support of several pre-

feasibility and feasibility studies.

Mintek was appointed as co-ordinator of the

bioleaching work package in the European Union’s BioMinE project.

This project, which is supported by a major strategic investment by the

Department of Science and Technology, will provide the opportunity for

Mintek and other South African organisations to interact with the international

scientific community in developing the next generation of biotechnology

techniques for minerals processing.

Major advances in the application of DC arc smelting technology included the successful completion of

R&D on the Mintek Thermal Magnesium Process, a large pilot-plant exercise

for a ferronickel project in central Asia, and the start of a long-term furnace

campaign to recover platinum group metals from metallurgical wastes.

Work on uranium resumed after a break of more than 15

years, with metallurgical investigations for two projects in South Africa, as

well as testwork for the feasibility study on the Langer Heinrich project in

Namibia. After depressed market conditions for two decades, the uranium

price has increased three-fold due to renewed international interest in nuclear

power, and this has led to numerous re-assessments of South Africa’s

dormant and newly discovered uranium resources.

Sustainable livelihoods. A Mineral Sector Strategy was

developed for the Northern Cape province, and has been adopted as part

of the overall provincial development strategy, which was inaugurated early

in 2005. A project on the pilot-scale production and field-testing of a soil

ameliorant made from industrial waste materials was successfully completed.

The production technology, which was developed with the assistance of

Eskom TSI, has been designed to be used by small-scale manufacturers who

will supply the product to small-scale farmers.

2

The Mining Value ChainTechnologies and services developed by Mintek

Exploration• Geochemical sample analysis

• Mineral/ore characterisation

• Certifi ed Reference Materials

• Artisanal and small-scale mining project evaluation

Mining• Artisanal and small-scale mining

(ASSM) - small scale mining technology

• ASSM training assistance

Pyrometallurgy • Pelletisation and briquetting

• Pre-heating and pre-reduction

• DC arc process development and piloting

• Modelling and simulation

• SAF control strategy

• Fluidised bed and condenser technologies

• Refractories performance investigations

• High- temperature solid state and phase equilibrium investigations

• Ore, slag, matte and alloy characterisation

Refi ning• Gold refi ning and value-added

products/chemicals

• Pyrometallurgical refi ning of – zinc (PWG to SHG) – off-grade ferro-alloy fi nes

• Titanium chlorination technology

General• Ore characterisation, analytical and process

mineralogy

• Certifi ed Reference Materials

• Materials testing and development

• Engineering design, manufacturing, installation and commissioning

• Project management services

• Regional minerals-based studies

ConcentrationComminution/Flotation• Flowsheet design and

optimisation

• Plant audits

• Ultrafi ne milling

• Control and optimisation strategies

Physical separation• Gravity, magnetic,

electrostatic and dense media separation

• Pneumatic jigging, Mineral Density Separator

• Optical sorting and preconcentration

Hydrometallurgy & Biotechnology • Atmospheric and pressure leaching

• Bioleaching (refractory gold and base metals)

• Solvent extraction and ion exchange

• Electrowinning

• Process simulation

• Reagent development and evaluation

• Gold recovery by CIP/RIP

• Activated carbon regeneration

• Uranium processing expertise, U3O

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recovery

• Cyanide measurement and control, monitoring and auditing

Value addition • New industrial applications for

gold – Catalysis – Biomedical – Nanotechnology

• ‘Smart’ materials and sensors

• PGM-based superalloys

• Low-nickel stainless alloys

• Gold and platinum jewellery alloys

• Identifi cation of downstream metals-based industrial manufacturing opportunities

200 Hans Strijdom Drive, Randburg 2194Private Bag X3015, Randburg 2125, South AfricaTelephone: +27 11 709 4111 Fax: +27 11 793 2413 www.mintek.co.za

Specialists in mineral andmetallurgical technology

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Board of Directorsas at 31 March 2005

Corporate structureas at 30 November 2005

CEO, MINTEKDr Paul Jourdan

TechnologyDr Roger Paul

Research and DevelopmentDr Molefi Motuku

Corporate ServicesVimlan Govender

Executive ConsultantDr Nic Barcza

Mineral Policy & Sus-tainable DevelopmentPetrus Fusi

Small Scale Mining Unit Dr Nellie Mutemeri

Mineral Economics & Strategy UnitSodhie Naicker

Sustainable DevelopmentMelanie Naidoo-Vermaak

Kgabane Jewellery ProjectBusi Ntuli

Finance(Treasury)Naresh Patel

Human Resources & TrainingMonobe Manaka

Information & CommunicationsErna Harmse

PyrometallurgyTom Curr

BiotechnologyTony Pinches

Advanced MaterialsDr Elma van der Lingen

Engineering SupportNick Maritz

High Temperature TechnologyDr Johan Nell

AnalyticalScience

Monde Mtakati

Minerals Processing

Vishal Deeplaul

Measurement and Control

Dr Dave Hulbert

HydrometallurgyDr Johan Nell

MineralogyDorrit de Nooy

Standing (left to right): Dr F Crundwell; Dr PP Jourdan - CEO, Mintek; Mr MG Khumalo - Chairperson; and Mr MA Mngomezulu

Seated (left to right): Dr NP Mjoli; Ms L Mojela; and Ms T Eboka Absent (top left inset) Prof PE Ngoepe; (top right inset) Mr VP Pillay; (bottom left inset) Ms Gugu Mthethwa; and (bottom right inset) Mr R Havenstein

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Chairman’s review

The year under review, 2004-2005, marked the 70th anniversary of Mintek and the 10th

anniversary of our democracy: an auspicious year for all

Mintekkers. It also coincided with the second institutional

review by international peers, and I’d like to take this

opportunity to thank the panel of experts for their honest

and constructive assessment of Mintek at 70 years.

The panel consisted of Anastassios Pouris (University of Pretoria), John Meach (CERM3, Canada), Sibusiso Sibisi (CSIR), Rod Whyte (AAC), and Mark Woffenden (AJ Parker Centre, Australia). Special thanks to Viloshni Naidoo who provided the secretariat. However, the biggest thank you should go to all Mintekkers whose hard work and dedication provided the basis for a very positive assessment of the international quality of our work that concluded that “Mintek is currently held in very high regard both nationally and internationally...[which is] necessary for South Africa to realise its aspirations for wealth generation…”

However, the review panel also outlined several important strategic challenges facing Mintek in the short to medium term:

• To manage the dynamics of the political and industrial forces that shape the balance between commercial and R&D activities — a balance that affects the very character of Mintek;

• To maintain an appropriate contribution to the wealth creation, poverty alleviation and human capacity building objectives, whilst also maintaining strong relations with international mining companies;

• To anticipate possible significant changes in Mintek’s client base;

• To retain the Mintek brand with respect to its research and products; and

• To retain high-quality disadvantaged group personnel in the face of competition from industry and other science councils.

As with technological challenges, Mintek has risen to these more complex challenges, particularly since the start of the Millennium, and the Board is confident that the organisation will be able to devise and implement innovative and sustainable strategies to deal with these and future challenges, whilst retaining world-class technological excellence.

Over the last few years Mintek has made great strides in becoming more representative of our country’s diversity, and HDSA management has risen from 4 to 55 per cent. At the same time the quality of Mintek’s work has improved considerably, as reflected in the CDFR, which has fallen from over 30 to 12 per cent at the end of 2004/05. However, the pressure caused by employment equity charters has resulted in significant pressure from other sectors on retaining HDSA personnel, and Mintek needs to devise sustainable strategies in this regard.

From an operations point of view, the year under review was one of Mintek’s best with most targets having been achieved. Revenue reached R239.2 million and was marginally below the figure budgeted. Following the

Institutional Review, new areas have been opened up and greater emphasis has been put on full financial and operational responsibility for the SBUs. The business re-engineering has resulted in major changes to our business process and procedures (highlighted in the Auditor-General’s Report) which will be implemented over the next two years.

A new reporting structure for science councils was developed during the year. Mintek is now characterised as Type 2, meaning that we will report to the DME. We welcome the opportunity for even greater interaction and synergy with the DME, while retaining our S&T link with the DST.

A significant milestone was achieved in August 2004, with Mintek’s safety management system being certified to OHSAS 18001. As a result, Mintek’s quality (ISO 9001), environmental (ISO 14001), and safety (OHSAS 18001) management structures are now certified, and have been integrated to streamline overall management.

Mintek has been on the present site for 30 years. During this period there have been significant changes and expansion in the development of residential and light industrial properties around Mintek. The Board approved the expenditure of R10 million over the next three years for the upgrade of infrastructure on the site to ensure that our pilot-plant operations, in particular, are compliant with legislation pertaining to noise, and the containment and/or discharge of solid, aqueous, and gaseous emissions.

The Board was joined by three new members in late 2004, Mr Ralph Havenstein, Ms Gugu Mthethwa, and Mr Vishnu Pillay, who bring insights and wisdom from their respective sectors of mining, finance, and planning and operations. Welcome! I would also like to thank all the Board members for their time and contributions to the effective governance of the organisation over the last year.

Finally, the Institutional Review panel concludes that “Mintek has an excellent international reputation as a world class organisation in minerals research... [and is] acknowledged by all stakeholders to be a significant asset to the South African mining industry … spanning the spectrum from major mining companies looking for focused and specialised solutions to medium and small enterprises seeking a total technical and economic solution.” I am confident that Mintek will maintain and strengthen its technical competence and continue to be a significant contributor to growth and development in our country and our continent.

Mzi Khumalo, Chair of Mintek

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CEO’s report

The past year was an exceptional one

for Mintek. Reaching its 70th anniversary is a major

achievement in the life of any organisation. In the

case of one like Mintek, with a very specific focus on

technology development for the metals and minerals

industries, it is particularly noteworthy.

While many similar specialised bodies around the

world have downsized dramatically or have vanished

altogether, Mintek has gone from strength to strength,

and has firmly established itself as a world leader in its

field. This was borne out by the independent Institutional

Review, conducted in October 2004, which confirmed

the very high regard, both nationally and internationally,

in which Mintek is held. In view of the global nature of

the minerals industry, for us to aspire to anything less

than being a world leader would be to risk losing the

international recognition necessary for South Africa to

realise its aspirations for wealth generation in the mining

community.

On the R&D front, several of our major projects

reached important

milestones. Development

work on the thermal

magnesium process was

successfully concluded,

and technically the

process is now ready for

demonstration. More than

5 000 t of PGM-bearing

waste materials have

been toll-treated in the

DC arc furnace, in an

ongoing campaign that is also demonstrating to industry

the smelting step in the ConRoast process for high-

chromium concentrates. Mintek managed a successful

pre-feasibility study for a new ferronickel project in

Kazakhstan, and preparations are well advanced to

begin the large-scale demonstration of our heap bioleach

process for chalcopyrite concentrates and ores in Iran.

Mintek returned a solid financial performance for the

year. Our total revenue grew to R239.2 million (from

R204.4 million in 2003/2004), while expenditure was

contained at R226.4 million, resulting in a net profit

of R12.8 million. The ring-fencing of our strategic

business units, which began in 2004, will be completed

during the 2005 financial year, enabling us to focus on

further reducing corporate costs. This, however, has

necessitated a complete review of our business process

and accounting policies

refected in the auditors’

report (Refer to Note 1,

the disclaimer, at the

end of the Report of the

Audit Committee on page

32). This process will

be implemented in the

next financial year and

completed in the 2006/7

financial year.

Mintek has progressively

transformed its staff profile to reflect the diversity of

our society, and we are ahead of the target number of

previously disadvantaged people in all occupational

categories. Progress has been slower, however, at the

professional levels (engineers and scientists), where

there is a shortage of skills nation-wide, and Mintek

will be looking to its training ”pipelines” to increase the

number of employment-equity professionals.

In line with our increasing total income over the years,

Mintek’s productivity, as measured by the company’s

income per employee, has also risen, while the quality

Dr Paul Jourdan,CEO of Mintek

Mintek has progressively transformed its staff

profile to reflect the diversity of our society,

and we are ahead of the target number

of previously-disadvantaged people in all

occupational categories.

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of the output — shown by the decreasing client-

dissatisfaction rate — has also improved over the past

two years. I regard this as one of Mintek’s greatest

achievements.

A further major focus of transformation, addressed in

terms of our Compact with the Minister of Minerals and

Energy, is the diversification of Mintek’s client base. While

we have continued to serve our traditional clients, the

medium and large mining companies, we now also have

a substantial range of activities across all industry sectors

through our involvement in the Artisanal and Small-Scale

Mining, the Kgabane rural jewellery programme, and

various projects under the umbrella of the MESU.

On the subject of the beneficiation of minerals and

commodities in South Africa, much remains to be

done. Mintek has been successful in developing new

beneficiation technologies, such as the recovery of

PGMs from chromite tailings, bioleaching of chalcopyrite-

containing concentrates, zinc refining, and DC arc

processes for magnesium metal production and PGM

recovery, but translating these into investment projects is

an ongoing task, particularly in view of the strong Rand.

Mintek is continuing to work with the Coega Development

Corporation on a number of initiatives, including the

ferronickel project and a proposed ferromanganese

smelter, as well as the development of an interactive

database for planning possible industries within the

metallurgical zone.

Mintek also continued to play an active role in developing

the minerals industries in other African countries,

both through commercial projects and by assistance

to the African Mining Partnership and the regional

SDIs. Process development testwork was conducted

for a major new uranium project in Namibia, and for

several base-metal projects in Zambia and the DRC. A

downstream scan of proposed mineral-based activities

in the Zambezi Valley SDI was completed, and a study

begun on the broader African minerals-industry cluster, its

interrelationships and supporting institutions.

During the year, Mintek welcomed Mr Ralph Havenstein,

Ms Gugu Mthethwa, and Mr Vishnu Pillay to the Board.

On a sadder note, we said farewell to two members

of executive management, Dr Francis Petersen and

Kholeka Mzondeki, and we wish them well in their new

ventures.

In conclusion, I’d like to refer once more to the

Institutional Review, whose Panel summarised Mintek’s

response to the challenges of the past few years as “a

remarkable achievement in the face of the reduction in

government funding … and the demands for equity and

redress to secure democracy for all South Africans.” My

heartfelt thanks go to all Mintekkers, who so ably rose to

these challenges, and helped maintain and enhance our

reputation as one of the world’s foremost technological

institutions.

Dr Paul Jourdan,

CEO, Mintek

September 2005

Mintek also continued to play an active role

in developing the minerals industries in other

African countries, both through commercial

projects and by assistance to the AMP and

the regional SDIs.

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Performance against objectives

Key result area/ Key performance indicator Target Actual Performance critical objective results

STAKEHOLDER PERSPECTIVE

Fulfilling the Council Mandate Four main areas of focus Value addition More than 12 projects Ongoing/Satisfactory through beneficiation

Facilitating growth of Policy lessons drawn Ongoing/Satisfactory SA mineral technology from various case inputs, capital goods studies & services

Development of Conducted studies of Achieved regional strategies for mineral development mineral processing strategies of SADC sector countries

Contributing to growth Training of about Exceeded of SMMEs 1000 HDIs in jewellery, mining & ceramics

Support of the NSI/ Three main areas of focus include: R&D Strategy Goals - Impact on quality of life Rural poverty alleviation Investigation of Ongoing/Achieved and development suitable minerals for mining & beneficiation - Impact on growth and wealth Sustainable livelihoods for various ASSM creation projects in SA Broadening skills base of rural communities

- Impact on NSI or national priority Foreign exchange Export of high-tech Ongoing/Achieved earnings plants, technologies and services

Transfer of technology The Resource-based Ongoing/Achieved Technology Cluster Broadening of SA’s project promotes a mineral competitive shift from resource advantages dependence to high- tech growth by Leveraging off Mintek’s developing the local resources and resource mining inputs sector technologies

Industrial diversification Introducing novel industrial uses for gold Sustainable economic and platinum. growth linked to mineral resources Application of bio- technology in mineral Provide a base for a processing knowledge-based economy

Ensuring Quality of Policy/ Mintek is committed to contributing Reflect and uphold Provide a baseline from Ongoing/Achieved Decision-making to the development of a sustainable national R&D objectives which to gauge and R&D base in SA assess current and Prioritise research future R&D activities within Mintek to a within Mintek theme-level Ensure that the functions Adopt a strategic of basic research, approach towards innovation and funding for research development undertaken are well-articulated and Draw on available uphold the broader industry inputs national objectives in terms of R&D and S&T generation

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FINANCIAL PERSPECTIVE

Financial Sustainability Sources of income for 2004 & 2005 2004 / R-million 2005 / R-million % of Total/2005

- Parliamentary grant - core funding 82 439 88 632 34.8

- Innovation Fund 14 106 9 621 3.8

- External contract funding - local 72 951 95 949 37.6

- External contract funding - international 35 609 45 122 17.7

- Non-operating income 17 977 15 573 6.1 (rent, interest, etc.) Total 223 080 254 897 100 Ratio of contract income to total - 2002/2003 2003/2004 2004/2005 period 2002-2005 Ratio (%) 49.7 48.7 55.3

ORGANISATIONAL PERSPECTIVE

Overhead Efficiency Ratio of overhead cost to total cost - 2002/2003 2003/2004 2004/2005 period 2002-2005 45.0 41.0 42.1

Ratio (%) Qualifications Number % of Total Staff Proportion of researchers to total staff PhD and Masters 66 28 degrees

Salaries to total expenditure - 2002/2003 2003/2004 2004/2005 period 2002-2005 Ratio (%) 55.5 54.8 56.8

Best-practice Results of Quality Audit 2002/2003 2003/2004 2004/2005 ISO 9001 (Quality) ISO 9001 (Quality) ISO 9001 (Quality)

ISO 18001(Safety) ISO 18001(Safety) ISO 18001(Safety)

ISO 14000 (Environment) ISO 14000 (Environment) ISO 14000 (Environment)

Customer Services/Quality Mintek’s Client Dissatisfaction Frequency 2002/2003 (Average) 2003/2004 (Average) 2004/2005 (Average) Rate (CDFR) has decreased steadily over 20 10 11 the period 2003-2005. (Maximum CDFR = 30)

LEARNING & GROWTH PERSPECTIVE

Quality of Scientific Output Total scientific outputs/documents/ 2002 2003 2004 publications 415 430 401

Quality of Scientific Capacity Total Masters and PhD researchers 2004/2005 66

Anecdotal evidence of intellectual capital 2002 2003 2004 (including staff papers, publications, 6 3 3 documents and patents per person/ man-year)

Development of 2004/2005 Scientific Capacity Number of foreign delegations hosted 13 to promote bilateral research

Strategic alliances formed with other 5 S&T organisations

Interaction with professional bodies 6 to promote S&T

Number of projects with external 14 collaborators

Number of publications with external 12 collaborators

TRANSFORMATION PERSPECTIVE

Organisational Demographics Employment equity demographics 2004/2005

- Percentage of black researchers and 35.5% managers

- Percentage of women researchers and 16% managers

- Percentage of disabled staff members 1.02%

- Council’s HIV/AIDS programmes and 15 initiatives

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Technical reviewGold

Cyanide monitoring continued for AngloGold Ashanti’s

metallurgical plants in southern Africa, Tanzania and

Mali, and this work will be extended to the Ghanaian

operations in the current year. Some preliminary work

was also done for Randgold Resources’ Loulo project

in Mali, which is scheduled to begin production in the

second half of 2005. Together with AngloGold Ashanti,

Mintek began a THRIP-funded project to investigate

various environment-related aspects of cyanide usage,

including the vapour pressure of HCN, the stability

of Prussian Blue-type precipitates in backfill, the

fate of thiocyanate in the environment, and cyanide

destruction by ultraviolet light. Work continued towards

the accreditation of analytical methods for cyanide, and

Mintek plans to apply for

ISO 17025 certification for

cyanide analysis later in

2005.

A programme of testwork was completed as part of the

pre-feasibility study on the Burnstone gold project (South

Rand) for Vancouver-based Great Basin Gold. The work,

which consisted of gravity separation and preg-robbing

tests on a composite sample of borehole cores, showed

that more than 90 per cent of the gold could be recovered

by gravity separation followed by carbon-in-leach. The

metallurgical testwork was carried out in conjunction with

MDM Ferroman, which is responsible for process and

plant design.

In early 2005, Great Basin initiated a feasibility study

on the project with the aim of reaching a development

decision within 12 months. Should the project go ahead,

Burnstone will be the first new gold producer on the

South Rand gold field in over 40 years.

Small-scale batch and continuous testwork, involving

milling and flotation to produce a copper concentrate

and leaching of the tailings for gold recovery, was carried

out for European Minerals’ Varvarinskoye project in

Kazakhstan. A bankable feasibility study was completed

by MDM Ferroman in November 2004, and construction

of the project is under way, with the first gold pour

scheduled for the end of 2006.

Gas-phase sampling

to determine cyanide

volitilisation rates

at a tailings storage

facility

Scale-up work on gold-based catalysts under Project

AuTEK 9

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RIP testwork using the Minix gold-selective resin was

carried out to recover gold from a copper leach residue

for Cominco Engineering Services Ltd.

Project AuTEK — the collaborative initiative to develop

novel industrial uses for gold and increase local

beneficiation — is now in its fifth year. The work on

catalysts for carbon monoxide oxidation has reached

product development stage. One of the potential

applications is in respirators, where the AuTEK catalyst

has the advantage of retaining its activity for much

longer than the conventional hopcalite catalyst, as well

as the ability to function in humid conditions. Prototype

respirators using the AuTEK gold-based catalyst will

be submitted to the NIOSH (US) for evaluation and

accreditation early in 2006, and the first commercial

production is expected in 2007.

Mintek now has the capacity to produce catalysts, in

batches of up to 20 kg, in a form suitable for a wide range

of industrial applications, and is ready to collaborate with

end-users in the pollution control, chemical processing

and fuel cell industries to design gold-based catalysts for

their specific needs.

Work on nano-monolayer-protected gold clusters for

drug delivery is in progress with the Universities of

Liverpool and Parma (Italy), and an investigation into the

manufacture of nanofibres by electrospinning has begun .

These materials have a very high surface area, and have

potential for use in biosensors as well as catalysts.

An investigation was conducted into the effects of

key growth parameters on the size and shape of gold

nanoparticles produced by biosynthesis. In order for

biosynthesis to compete with existing chemical and

physical methods, techniques need to be developed

that can control the particle size to a very narrow range,

as well as produce uniform shapes. A project was

begun with the University of the Free State to identify

the biomolecules that are responsible for the reduction

reaction and subsequent nanoparticle formation, which

could lead to a more controlled process. Another project,

at Rhodes University, is undertaking an initial screening

of micro-organisms for their potential for synthesising

platinum nanoparticles.

The AuTEK biomedical programme, which originally

focused on anti-tumour drugs, has broadened its

investigations to include anti-HIV and anti-malarial

agents, in collaboration with seven local and six

European universities. Screening work and toxicological

studies are continuing, and in-vivo testing will start

towards the end of 2005. Work has been initiated with

NECSA on radio-labelling to investigate the mode of

action of various compounds.

One of the major achievements of Project AuTEK has

been the establishment of a pool of skilled researchers

with strong international links. The number of researchers

has grown from five in the year 2000 to more than 50,

and collaborative links have been forged with nine local

universities and more than a dozen overseas in six

countries. Two PhD and eight MSc degrees have already

been completed, and another 30 postgraduate projects

are registered. AuTEK researchers have made 68

contributions in international journals and conferences.

The launch of AuTEK Americas is planned for late 2005.

AuTEK’s budget has grown from R1-million to just over

R14-million in 2005, and the project has been very

A scanning electron microscope image of nanofibres

Gold labelling of neurologically active pentapeptides for

cancer research

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successful in leveraging additional funding, which now

accounts for 40 per cent of the budget. A considerable

contribution has been made by the NRF through THRIP,

for building infrastructure and expertise. During the

period under review, these funds were used to acquire

a RAMAN/Fourier Transform Infrared spectroscope and

an ASAP surface area analyser for studying adsorbed

species on catalyst surfaces. In 2004 the DST approved

a R5-million grant for an atomic force/scanning tunnelling

microscope for the fundamental characterisation of

nanoparticles, and a further R3.7-million in 2005 for a

high-resolution SEM and nuclear magnetic resonance

spectrometer. These facilities make Mintek a leading

centre for nano-research in South Africa.

Platinum Group Metals

Exploration and development work on new platinum

group metals projects in South Africa continued at a high

level during 2004/2005, and Mintek’s testwork facilities

were heavily utilised.

A major piloting campaign was completed on a 500 t

bulk sample from a new project in the eastern Bushveld

Complex, to provide metallurgical data as inputs into the

feasibility study, and to determine the most appropriate

concentrator design and the performance criteria. Two

different MF2 configurations were evaluated, and the

minimum product specifications were attained with both

circuits.

Metallurgical variability testwork, to determine the

factors that influence metal recoveries, was carried out

as input to the pre-feasibility study by Ridge Mining on

the Sheba’s Ridge project. The study was completed

in March 2005, and Mintek will also be involved in work

for the bankable feasibility study on the project, which

is scheduled for completion by the end of 2006. Similar

work was performed for Aquarius Platinum’s Everest

South project - Mintek previously ran piloting campaigns

to determine the design parameters for the Everest South

concentrator, which is due to be commissioned at the end

of 2005.

Bench-scale investigations were done as part of the

pre-feasibility studies for African Platinum’s Leeuwkop

project, and for the Boikgantsho joint venture between

Anooraq Resources and Anglo American Platinum.

A major programme of work on PGM ores from many

different sources, was carried out to evaluate the use of

dense media separation (DMS) for the up-front rejection

of waste material and to compare the flotation recoveries

from DMS concentrate and ROM material.

Mintek has commissioned a dedicated milling and

flotation mini-plant, which is used mainly for reagent

evaluation and comparative testwork. The plant

has a throughput capacity of 100 kg/h, and is easily

configurable and economical to run. It is proving to be

useful for testwork where many different conditions need

to be evaluated, or in cases where there are only limited

quantities of material available, such as from borehole

cores. Examples of the kinds of work undertaken include

an independent evaluation of gangue depressants for

a reagent manufacturer, and continuous rougher rate

tests on UG2 samples containing various amounts

of waste to evaluate the potential benefits of dense

media separation. The infrastructure for the main 1 t/h

milling and flotation pilot plant was also upgraded and

modernised.

Two major collaborative research projects are under

way, supported by industry partners. The first involves

a comparison of preconcentration methods for UG2

(Top and bottom) A pilot plant campaign for a feasibility

study on a new PGM project

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ores, and the second is looking at a number of generic

problems encountered in the PGM smelting industry.

Science Vote-funded research is being undertaken

on the classification of UG2 tailings, optical sorting of

non-UG2 ores, new flotation cell technologies, and the

fundamentals of milling processes.

Funding has been approved for a THRIP project, which

will start in the 2005 financial year, to investigate the

limiting factors in the PGM smelting process. All three of

the major platinum producers are supporting the project,

which will include studies such as flow behaviour, the

solid phases, disengagement of the matte from slag,

interactions between the furnace gases and refractory

materials, and matte liquidus temperatures.

A long-term DC furnace campaign was initiated to

recover PGMs from revert tailings and other wastes for

one of the platinum producers. This material is difficult

to process conventionally because of its high chromium

and low base-metal sulphide content. By the end of the

period under review, over 5 000 t of a planned 10 000 t

had been processed. As well as being a major service

work project, this exercise is serving to demonstrate the

smelting stage of the ConRoast process, which involves

the smelting of primary platinum-bearing feed materials

in a DC arc furnace, with the PGMs collected in an

iron alloy. A paper entitled “DC arc smelting of difficult

PGM-containing feed materials” was presented at the

International Platinum Conference in September 2004.

The programme on the development of PGM-based

analogues of the nickel-based superalloys is now in

its fifth year. This work is supported by the three major

platinum producers Anglo Platinum, Impala Platinum and

Lonmin Platinum, with collaborating institutions being

Japan’s National Institute for Materials Science (NIMS)

and the universities of Bayreuth and Leeds. Significant

progress was made in the ThermoCalcTM work, and

investigations of the experimental phase diagrams are

ongoing, with the current focus on resolving anomalies

found in the binary diagrams. A major effort is being

made to identify a niche opportunity for testing prototype

alloys.

Mintek participated in an Innovation Fund project,

managed by the CSIR, on the addition of platinum to

coatings on nickel-based superalloys. The conventional

aluminising process produces a nickel aluminide

coating. Platinum additions result in a mixture of higher-

order phases that strengthen and extend the life of the

coating. This effect has long been known, but is not well

understood. This project will be resumed if an industrial

partner can be found.

Mintek is participating in a second Innovation Fund-

sponsored project at the University of Cape Town on

the development of platinum-based jewellery alloys.

During the year under review, the properties of a range of

compositions based on 95%Pt, were evaluated for their

suitability for use by small-scale jewellers. This work will

continue during 2005/2006.

Mintek has entered into an agreement with Johnson

Matthey Catalysts to act as a test facility for the Smopex®

technology. Smopex is a new metal scavenging system

that uses polyolefin-base ion exchange fibres with high

loading capabilities to recover low levels of precious

metals from process streams. With a local testing facility,

the costs of transporting the test solutions will be lower,

and there will be less chance of the solutions ageing.

Mini-plant work on the evaluation of flotation reagents

DC arc smelting of PGM revert tailings

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Ferrous Metals

Mintek acted as manager, assisted by Bateman Metals,

GBM Minerals Engineering Consultants, and Wardell

Armstrong International (WAI), for the preliminary

feasibility study on Oriel Resources’ Shevchenko

ferronickel project in Kazakhstan. Based on the positive

results, Oriel commissioned a Definitive Feasibility Study

(DFS), with Bateman as lead engineers, partnered by

ThyssenKrupp company Polysius, WAI and Mintek. As

part of the study, about 190 t of calcined lateritic ore was

smelted in Mintek’s DC arc pilot plant at power levels

of up to 1.5 MW, producing 11.5 t of ferronickel alloy at

nickel grades and recoveries in line with targets.

The DFS, which will be completed in the third quarter

of 2005, is based on a smelter plant with an initial

installed capacity of two 80 MW twin-electrode DC arc

furnaces, followed by a third furnace after the third year

of operation. Subject to a positive outcome, construction

could start during the second quarter of 2006, with the

first ferronickel production by early 2008. At full capacity,

the project would produce 140 000 t of ferronickel per

annum.

A “pre-concept” study was completed on the production

of ferrochromium at the Voskhod mine in Kazakhstan.

At the end of the year under review, Oriel commissioned

Mintek to carry out a scoping study to design and cost a

chromite beneficiation flowsheet.

Mintek is in the final phase of a three-year project, funded

by the Innovation Fund/NRF, to develop a low-nickel

austenitic stainless steel for structural applications.

Welding, corrosion, and cold formability tests were

completed, and industrial scale-up trials (approximately

2 t) were carried out in order to validate the properties

achieved in laboratory. Prototype fasteners were

produced from some of the industrial bars by hot forging

and thread cutting, in order to demonstrate the properties

of the alloys. Overseas visits have been made to several

stainless steel manufacturers in order to identify a partner

with which to commercialise the alloy.

Trials of the “smart” rockbolt or SmartboltTM, which

undergoes a phase transformation when strained and

can thus be monitored to provide warning of impending

dangerous rock conditions, continued at a deep-level

gold mine. Mintek is negotiating with a manufacturer of

roof support systems to introduce the bolt in the mining

industry. Further investigations are planned to tailor the

properties to the conditions specific to different mining

operations (eg. gold and platinum). The development

of the Smartbolt was funded by the SIMRAC, which is

continuing to support it through commercialisation.

The Mineral Density Separator (MDS) was used

extensively to characterise iron ore samples for Kumba

Resources’ Sishen Expansion Project. The project,

which will boost Sishen’s production from 28 Mt/a to

38 Mt/a by 2009, is based on a new jigging technology

to upgrade ore that was previously unmarketable. The

MDS separates material into different density fractions

at densities exceeding 4.0, and the results can be used

to evaluate and predict the efficiencies of dense-media

and jigging operations, as well as to design and optimise

processing plants.

Ferronickel product from the Shevchenko laterite

smelting campaign

Graph illustrating the response of Smartbolts under

multiaxial loading

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Non-ferrous Metals

Mintek has been appointed as co-ordinator of the

bioleaching work package in the European Union’s

BioMinE project, part of the EU’s Sixth Framework

Programme (FP6). The project will provide the

opportunity for Mintek and other South African

organisations to interact with the European scientific

community in capacity-building and developing the next

generation of biotechnology techniques for minerals

processing.

BioMinE is an integrated project, involving 35 partners

from 14 different countries, that focuses on innovative

biotechnology-based processes for recovering or

removing metals from primary and secondary materials.

The primary objective of the bioleaching package is

to provide solutions to the technical constraints that

currently limit the broader commercial applications

of bioleaching technologies. R&D activities focus on

improvements in the performance and cost-effectiveness

of bioleaching processes, the wider application

of bioleaching to low-grade, complex and waste

metal resources, and innovations that will minimise

environmental impact and enhance sustainability.

In addition to the EU FP6 funding, Mintek’s contribution

to BioMinE is also being supported by a major strategic

investment by the DST. The ability of Mintek and

other South African organisations to participate in

and to compete for funds under the EU’s Framework

Programmes is facilitated by the SA-EU S&T Co-

operation Agreement signed in 1996.

Large-scale piloting of Mintek’s heap bioleaching

technology for primary copper sulphide ores is scheduled

to begin at the Sarcheshmeh Copper Complex in

southern Iran in the second half of 2005. Mintek has

completed a detailed engineering design of the plant,

and three pilot heaps, each of about 25 000 t, are under

construction with leaching of the first heap scheduled

to start in October. As part of the preparations for the

campaign, two 6 m columns with “intelligent” temperature

profile control, which simulates the temperature regime

within a full-scale heap, were run at Mintek under the

conditions that will be employed on-site.

The process has been designed utilising state-of-the-art

mathematical modelling of the transport phenomena in

heaps, and a control strategy has been developed and

implemented on Mintek’s Star Control System platform

that is designed to steer the operating conditions along

an optimal path throughout the duration of the process.

The heaps will be instrumented to monitor parameters

such as copper dissolution, bacterial activity and acid

consumption, and changes made to the operating regime

to optimise the rate and extent of copper dissolution,

control the heap pH and copper concentration in the

pregnant solution, and satisfy bacterial oxygen demand.

The project is being conducted in terms of a collaborative

agreement between Mintek and the National Iranian

Copper Industries Company (NICICO) that was

announced last year (Annual Report 2004).

Bioleaching columns with “intelligent” temperature

profile control, for simulating conditions in a full-scale

leach heap

Tapping of magnesium metal during the final piloting run

on the Mintek Thermal Magnesium Process

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The programme, which will run for about 18 months, is

aimed at proving the technology at a large scale, and

generating reliable operating information for commercial-

scale operations.

Mintek, in association with an industry partner and

funded by BioPAD, is engaged in a major R&D project

on the tank bioleaching of zinc sulphides. Various

microbiological and engineering strategies have

been examined with the aim of significantly reducing

processing costs, and progress on the engineering

side has led to a patent application for a novel bioleach

process configuration.

A second BioPAD-funded project involves the

development of a novel and effective technique for

innoculating bacteria into leach heaps for rapid start-

up and improved metal recoveries. The principle has

now been proven at the laboratory scale, and testwork

in 6 m columns will be conducted with the objective of

demonstrating the process under conditions applicable

to commercial-sized heaps. Given a successful outcome,

the next stage would involve piloting at a mine site.

R&D work on the Mintek Thermal Magnesium Process

has been completed successfully. During an eight-day

run in November 2004, about 30 t of feed material

were smelted in the DC pilot plant, and the magnesium

extracted as vapour for delivery to the condenser.

Fifteen taps of liquid magnesium, totalling 3 500 kg of

magnesium metal, were carried out from the condenser

during online operation. The crude magnesium was

of a consistently better quality than that produced by

conventional thermal processes, particularly with regard

to calcium.

The new condenser, which was designed to prevent the

build-up of dross that limited previous runs to about 20

hours of continuous operation, performed extremely well,

achieving continuous production with an efficiency of

85 per cent. The robustness of the process was shown

by the ability of the condenser to withstand a furnace

shutdown - for example, to clear a blocked feed port or

to add an electrode section - and immediately re-start

magnesium production and tapping.

This campaign demonstrated, for the first time, the

feasibility of a continuous atmospheric process for

thermal magnesium production. Technically, the process

is now ready for scaling up to a demonstration- and

further to an industrial-size operation.

A major programme of testwork was carried out for

Congo Mineral Developments (Adastra Minerals) in

support of a definitive feasibility study, which is being

undertaken by Murray & Roberts and GRD Minproc, on

the Kolwezi Tailings Project in the DRC. Most of the work

was concerned with manganese removal from the cobalt

electrolyte and the precipitation of cobalt salts, but some

solvent extraction and copper electrowinning work was

also undertaken. The Kolwezi project, which consists of

112.8 Mt of high-grade oxide tailings, has the potential

to be one of the world’s largest and lowest-cost cobalt

producers.

Preliminary comminution and metallurgical testwork was

started on the Kalukundi copper-cobalt deposit in the

DRC. High recoveries were obtained for both copper

and cobalt, and larger-scale testwork is planned for the

current year. This work forms part of the project feasibility

study, managed by MDM Ferroman, for Africo Resources

Ltd.

Leaching testwork was carried out for Casmin SPRL,

which is constructing a cobalt processing plant at

Kambove in the DRC, and sulphate and carbonate salts

produced for testing in the market. Limited leaching

testwork was also conducted for Metorex’s Ruashi-Etoile

copper cobalt project.

Laboratory-scale milling and flotation work was

conducted on samples from the Hunters Road nickel

deposit in Zimbabwe in order to evaluate the variability

of the ore. The results showed that a composite of the

ore zones could be treated to obtain a final concentrate

meeting the grade and recovery specified by the Bindura

Nickel Corporation. Further work was recommended to

optimise the flowsheet and conditions.

Process development work for the Kolwezi Tailings

Project – manganese removal

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Preliminary work was done for Mopani Copper Mines

(Botswana) on the development of a flowsheet for the

purification of cobalt electrolyte, and piloting work is

planned for 2005.

A number of concentration methods, including magnetic

separation, heavy media separation and flotation, were

tested for upgrading samples from Caledonia Mining’s

Nama cobalt project in northern Zambia.

At the end of the period under review, Vancouver-based

Formation Capital Corp. commissioned Mintek to develop

a hydrometallurgical flowsheet for its Idaho Cobalt Project

(ICP). The ICP, a high-grade primary cobalt deposit

unique to North America, is currently in the bankable

feasibility and advanced permitting stage of development.

A pilot Bateman Pulsed Column (BPC) was installed

and operated at Anglo American Research Laboratories

to compare the performance with conventional mixer-

settlers for extracting zinc from pregnant leach solution

generated by leaching Zincor tailings. The chemical

performance of the extraction and stripping circuits in

both equipment configurations was identical, and it

was demonstrated that the BPC is a viable alternative

contactor to mixer-settlers in terms of recoveries.

Removal of manganese from zinc electrolyte using

air/SO2 on a large batch scale was tested successfully

for Kumba Resources. This technology, which will allow

the company to process zinc concentrates with a higher

manganese content than it is able to at present, will

probably be implemented in 2005.

Comminution, heavy liquid separation and leaching

testwork were carried out as part of a feasibility

study, managed by Green Team International (GTI) of

Johannesburg, on the oxide zinc mineralisation at Sierra

Mojada, Mexico, for Metalline Mining Co.

A project on ion exchange fibres for metal recovery

was initiated under the technology bilateral agreement

with Belarus, and funded by the Innovation Fund. The

initial focus was on the removal of copper from cobalt

electrolyte. The fibres were prepared by the Institute

of Physical Organic Chemistry (IPOC) of the National

Academy of Sciences of Belarus, and evaluated at

Mintek with encouraging results. Follow-up work will be

done with Bateman to compare the costs of fibres versus

conventional resins. Ion exchange fibres have a great

kinetic advantage over granular ion exchangers, due to

a short diffusion track of the absorbable ion in the fibre,

and could potentially minimise the very large volumes of

solutions on ion exchange plants. An investigation into

the use of the fibres for gold recovery, which involves

grafting the Minix gold-selective active group onto the

fibre, was also started.

An industrial-scale melting trial was performed to

manufacture an Al-10%Ti master alloy using Al-Ti

concentrate produced in the 200 kVA DC arc furnace.

This work forms part of a three-year project sponsored

by the Innovation Fund to research the production of

additives (grain refiners and hardeners) for aluminium

and titanium alloys by aluminothermic reduction of

oxides in a DC arc furnace. The properties of the alloy

(grain refining efficiency and the dissolution rates) were

found to be comparable to those of a commercial master

alloy. However, the viability of the new process will be

determined by whether it is more cost effective to use the

Al-Ti concentrate as a source of titanium units compared

to using titanium scrap.

Recovery of uranium by ion exchange (top), and

precipitation of uranium peroxide (U3O8)

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Industrial Minerals

Metallurgical testwork was carried out on about 6 t of

ore from the Langer Heinrich uranium project in Namibia

in support of the bankable feasibility study, conducted

by GRD Minproc, for Australian company Paladin

Resources. The work included feed preparation by

scrubbing and attritioning, alkaline (carbonate) leaching

at atmospheric pressure and elevated temperature, ion

exchange and precipitation of uranium peroxide. The

calcined products generally contained about 90 per cent

U3O

8, and complied with published specifications for

uranium concentrates. At the beginning of May 2005,

Paladin approved the development of the project, which

will be the first conventional uranium mining operation to

be developed outside of Canada in the past twenty years.

Uranium production is scheduled to begin in September

2006.

Bench-scale leaching and recovery work was begun on

process development for Aflease Gold and Uranium’s

Dominion uranium project.

Laboratory-scale work was undertaken for AngloGold

Ashanti to assist with upgrading the uranium circuit

at Vaal River Operations. AngloGold Ashanti plans to

upgrade the South Uranium Plant to maintain uranium

production for at least an additional 11 years by exploiting

the by-product uranium reserves associated with its new

Moab Khotsong Shaft.

The movement and handling of radioactive material in

South Africa is subject to the Nuclear Energy Act (NEA).

Mintek is registered with the National Nuclear Regulator

(NNR), and is authorised by the DME to possess and

process source material (natural uranium ore or U3O

8)

with a uranium content not exceeding 50 kg at any one

time. Separate transport and (in the case of material

from outside South Africa) import permits are obtained

from the DME for each sample brought to Mintek. Before

the permits are granted, the NNR ascertains the level of

radioactivity of the sample, and that the exporting country

will accept the processed material back at the end of the

project. The transport company must also be registered

with the NNR. Mintek’s environmental officer has passed

the examinations set by the NNR to be registered as an

official Radiation Protection Officer.

A major programme of testwork was begun to evaluate

ore samples from CVRD’s manganese exploration

projects in Gabon. The work, which consists of scrubbing,

screening, gravity concentration, and density separation

tests on about fifty 500 kg samples each month, is

expected to continue until the end of 2005. CVRD,

which is also developing the Moatize coal project in

Mozambique and exploring for diamonds and various

metals in Angola, has entered into an MOU with Mintek,

whereby Mintek will act as the “preferred supplier” of

testwork for the company’s projects in Africa.

Pilot-scale gravity and magnetic separation testwork was

done on an alluvial chromite sample from Zimbabwe, and

the sample was successfully upgraded to foundry sand

specifications.

Milling, thickening and pressure filtration tests on

kimberlite tailings

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Attritioning, magnetic separation, and two pilot-scale

DMS runs were conducted to develop a flowsheet for an

andalusite deposit in Spain.

Routine sample characterisation, using sizing and heavy

liquid separation, was carried out on various kimberlitic

ores for De Beers. An 800 t sample from Jwaneng in

Botswana was upgraded in the dense media separation

plant after milling to various size fractions at Anglo

American Research Laboratories. A bulk sample of

kimberlite from an arid area was milled, and thickening

and pressure filtration tests carried out in conjunction with

an equipment vendor, to test the feasibility of recycling

water from the tailings back to the processing plant.

An audit was performed on the milling circuit at Foskor,

and recommendations made for improving the liberation.

A computer simulation study, using JKSimMet, was used

to evaluate proposed modifications to the comminution

circuit at Vergenoeg fluorspar mine, and a mass-balance

reconciliation carried out for Samquartz.

Quality, environment and safety

Mintek holds certification for the ISO 9001 (Quality),

ISO 14001 (environment), and OHSAS 18001

(Safety and Health) standards,

confirming its commitment to

deliver high-quality products and

services that meet international

standards in these areas. In

addition, the Analytical Services

Division is certified to ISO

17025 (Testing Laboratories).

Mintek’s integrated programme

of continual improvement in

quality, environment, safety and

health is officially driven by these

standards, and its performance

is monitored by international

auditors.

Mintek’s Environmental

Management System underwent

surveillance audits in August

2004 and February 2005.

Integrated QES internal audits

were also held to ensure that

all the environmental aspects of Mintek’s activities

are addressed and managed by means of Standard

Operating Procedures, and that the requisite

emergency procedures are in place.

In August 2004, SGS (SA) Ltd audited the safety

system and programme and certified Mintek to

the international standard OHSAS 18001. A safety

surveillance audit was carried out in February 2005.

A Lost Time Injury Frequency Rate of 1.1 was

achieved in April 2005, and the current target is less

than 1.0. Two of the eight injuries in the past twelve

months were reportable injuries. A behavioural safety

programme was introduced in 2004, and further

reductions in the accident rate are anticipated.

The CDFR target was reduced from 15 per cent

to 10 per cent in September 2004. The new target

was consistently achieved until January 2005, when

some issues regarding deliveries and invoicing

increased the CDFR. These issues were identified

and corrective action taken, and Mintek’s Corporate

Quality team continues to closely monitor these areas

to ensure that services to clients remain at a high

standard.

Checking the level of radioactivity in a uranium ore

sample

SGS

SYSTEM CERTIFICATION

ISO

14001

SGS

SYSTEM CERTIFICATION

ISO

18001

SGS

SYSTEM CERTIFICATION

ISO9001:2000

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Commercial activities

Mintek’s commercial activities comprise participation in operating

companies and joint ventures, sales of equipment and technology licensing

agreements. Mintek also actively promotes the establishment of mineral-based

development projects that could utilise its technologies.

Participation in operating

companies

Mintek participates in four operating

companies — Apic Toll Treatment

(Pty) Ltd (Atoll), Mogale Alloys (Pty)

Ltd, Musuku Beneficiation Systems

(Pty) Ltd and Tollsort (Pty) Ltd

— through its wholly-owned local

holding company Mindev (Pty) Ltd.

Mintek’s participation is by way of

shareholder loans as well as equity

contributions structured through

licences for Mintek’s technologies

and related expertise.

Atoll is a joint venture between

Mintek and Bateman Titaco that was

formed to market and exploit the Apic

jigging technology. During 2004, Atoll

acquired the Mabofo shareholding

in the Hernic Ferrochrome metal-

recovery operation. Atoll’s toll jigging

business in South Africa has reached

a sustainable critical mass, and

the company is looking at several

overseas opportunities.

The Mogale Alloys consortium is

made up of Mindev with a 25 per

cent shareholding, Atoll (20 per cent),

PGR Investment (25 per cent), and

Sebeso (30 per cent). During the

year under review, the company

produced 12.3 kt of ferrochromium,

23.1 kt of nickel-chromium alloy and

38.3 kt of silicomanganese. Forecast

production for 2005 is approximately

40 kt of nickel-chromium-containing

alloy and a further 30 kt of silico-

manganese. In 2005, Mogale Alloys

purchased the Palmiet Ferrochrome

plant from Samancor Chrome for

R78-million.

Musuku Beneficiation Systems

operates the Virginia gold refinery

and beneficiation centre. Mindev

has decided to exit this prospect,

but Mintek will continue to provide

technical assistance to the refinery

and market its gold beneficiation

technology independently.

The Tollsort Company has made

major breakthroughs in treating

gold waste dumps and UG2 ores by

optical sorting. The technology was

fully proven in a small commercial

tolling operation treating low-grade

(0.3 g/t) material at Kloof Gold

Mine, although the operation was

suspended in September 2004

due to the low head grade. Tollsort

will remain non-operational until

commercially viable optical sorting

projects have been identified.

The Tollsort optical sorting plant at Kloof Gold Mine

DNA double helix, target for anti-

cancer drugs

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Mintek business development projects

Mintek’s business development

activities are aimed at promoting

economic development by furthering

the beneficiation of South Africa’s

most important mineral resources.

The AuTEK projects for the use of

gold catalysts in respirators and

other applications are still in the

developmental and testing stages.

The possible commercialisation of

these projects will be considered in

the 2006/2007 financial year.

The commercial development of

the project to recover platinum from

chromite dumps has been delayed

due to the differing commercial

interests of the project partners.

The Innovation Fund will provide

R15-million over three years

to support the development of

technology for the recycling of PGMs

from reject autocatalysts. Mintek

is currently exploring business

development alternatives.

Ferrous metals. Mintek has

evaluated an opportunity to develop

an alternative or gas-based hot

briquetted iron project. However, a

study of the current economics of the

gas supply concluded that the project

would not be economically viable.

Mintek is nevertheless confident that

there is an opportunity to develop a

new steel project based on low-grade

Sishen ore fines using a coal-based

process.

The viability of producing ferronickel

at Coega is being investigated, and

Mintek is exploring the sourcing of

nickel ore from various locations.

The production of primary

magnesium is in the final stages

of development, and piloting of the

Mintek Thermal Magnesium Process

has been successfully completed.

Mintek is exploring alternatives

to demonstrate the technology

commercially.

Industrial minerals. A pre-feasibility

study for a 20 kt/a electrolytic

manganese dioxide production facility

in South Africa was completed by

Nexant Inc, Hazen Research and

Mintek, funded under a US Trade

and Development Agency grant.

The study concluded that the capital

cost of a greenfield plant would be

high compared to the expansion of

existing facilities elsewhere in the

world.

Process optimisation

Mintek is a world leader in the

development and application of

control and optimisation strategies

for mineral processing circuits. These

strategies, now integrated on the

StarCS platform, are undergoing

continual improvement and

expansion.

The MillStar™ milling control

strategy, on the StarCS, was installed

on the new SAG-ball milling circuit at

Industrias Peñoles’ Fresnillo-Proano

silver-gold-lead-zinc mine in Mexico.

As well as a segregated ore feed

control module, which prevents mill

overloads and enables operation

at a higher and more consistent

throughput, MillStar now incorporates

Model Predictive Control for effective

circuit stabilisation and particle size

control.

The MillStar stabiliser and optimiser

were implemented at Anglogold

Ashanti’s Obuasi operation in Ghana.

The MillStar implementation utilises

the latest MillStar tools to control the

SAG and ball mills in such a way that

maximum throughput and optimal

downstream recoveries are achieved.

A FloatStarTM flotation stabiliser and

optimiser, incorporating circulating

flow control and mass pull control,

was also installed.

MillStars were purchased by

Lonmin’s Karee UG2 and Mixed

plants, and Eastern Platinum’s

C Stream plant after successful

Ferro-nickel slag tapping

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trial installations. New areas of

application include crusher control

— implemented at CMT, where a

MillStar is installed on a trial basis

— and the control of a dry milling

application (on trial at Foskor).

FloatStarTM flotation control on the

StarCS was installed at Fresnillo and

at the Collahuasi Expansion project

in Chile, on the world’s fourth largest

copper mine. At the end of the year

under review, BCL placed an order

for stabilising and optimising control

of their flotation circuit. The FloatStar

Flow Optimiser was also installed on

a trial basis at Lonmin’s Karee 4 and

Karee UG2 plants.

The expansion of StarCS into the

Australian market continued, with

new installations at Perilya Broken

Hill, Zinifex Century mine, CMT,

and Sally Malay. Service contracts

were concluded with various mines,

including LionOre Emily Anne,

Century, and Newcrest Cadia-

Ridgeway.

Version 2 of the Cynoprobe online

cyanide analyser was launched in

the second half of 2004. The new

PLC-based instrument is much more

configurable, handles higher cyanide

concentrations, and can incorporate

pH measurement if required, as

well as multiplexing. The analyser

has been installed at gold plants

in South Africa and in Australia. An

online WAD Cynoprobe, which is

able to measure the concentration

of both free and WAD cyanide, is in

the final stages of development, and

plant trials will be

completed in the

second half of 2005.

Real-time WAD

cyanide analysis

assists plants in

complying with

the International

Cyanide Code,

and can be used to

control and optimise

cyanide destruction and recovery

processes.

LeachStarTM, Mintek’s leach circuit

control suite, has been installed at

a gold plant in South Africa. The

LeachStar system compensates for

variations in the leach feed rate, and

tightly controls the cyanide profile

across the leaching circuit, thereby

reducing cyanide reagent costs by

up to 20 per cent, as well as reducing

cyanide levels in the tailings stream.

Cynoprobe online cyanide analyser

Mintek’s sulphide flotation pilot plant, which underwent a major infrastructure upgrade in early 2005

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activities

The latest FurnStarTM system is a

collection of furnace control modules

and applications that runs on the

StarCS control platform, and modules

can be added or updated depending

on individual plant requirements.

Eight furnaces are now running

under the FurnStar system and many

more updates are planned. A control

module, based on information from

the Arcmon arc monitoring system, is

currently being developed. An online

electrode temperature profiler is also

expected to be available shortly as a

FurnStar module.

Equipment sales

During the year under review,

three 42 kg/h Minfurn carbon-

regeneration furnaces were

installed at gold operations in South

America. In response to industry

requests for Minfurns with a larger

capacity, a 125 kg/h unit was

designed and manufactured for a

gold project in Brazil.

Partnerships and

technology alliances

Links are maintained with

professional bodies, especially

ECSA, MQA, NSTF, the other

science councils, all relevant

government departments and

the SET community (EU FP6,

World Summit on Sustainable

Development and many

others). Mintek plays a role in

various bilateral agreements

by interacting with diplomatic

staff and hosting personnel from

Algeria, China, the DRC, France,

Finland, Germany, Sweden,

Russia, the United States and

the United Kingdom.

Mintek and the University of

Cape Town signed an agreement

to explore new opportunities

for collaborative research and

human resource development

in the areas of mineral and

metallurgical technology.

The DST has approved

collaborative projects with Japan

and Belarus under the relevant

bilateral S&T co-operation

agreements.

CIP circuit plant at Kloof Gold Mine

A 125 t/h capacity Minfurn carbon-regeneration furnace under construction at

Mintek

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Mineral policy & sustainable development

During the year under review, Mintek’s activities in the areas of mineral policy and sustainable development were grouped under a new General Manager’s position, in order to strengthen and grow these critical functions. These activities are carried out by the Minerals Economics and Strategy Unit (MESU) and the Small-Scale Mining unit (SSM). MESU has also been responsible for the incubating of the Kgabane jewellery project, whose objective is to establish a business framework for local communities based upon developing indigenous jewellery manufacturing skills.

MESU has two well-defined areas of strategic focus. The first is to produce national strategies, together with industry players and the DME, for the beneficiation of SA’s mineral resources. The second is to develop strategies for job creation based upon mineral resources.

In addition, MESU conducts commodity-based mineral economic studies to assess growth potential, and map out strategic and policy options for the development of

mineral resources. This work

encompasses projects in SA and

elsewhere in Africa, especially in

SADC countries.

African Mining Partnership

In the past financial year, MESU and

the SSM continued to support the

objectives of NEPAD through support

of the African Mining Partnership

(AMP) initiative. They have been

actively involved in formulating

project proposals and facilitating the

implementation of adopted projects.

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S

ustain

able

development

These include projects in the areas of

beneficiation, artisanal and small-

scale mining, and human resource

development. Kgabane has worked

on a goldsmithing project funded by

DST, aimed at transferring indigenous

goldsmith knowledge from Ghana

and Mali to South Africa.

MESU is concerned with the

difficulty that small-scale miners

have in raising finance, and is

therefore identifying methods

for SSMs to develop suitable

documents to assist in the sourcing

of financial support.

Spatial Development

Initiatives (SDIs)

During the year under review, MESU

undertook spatial development

studies along selected corridors

in various SADC countries. These

include studies on the Lobito and

Malange corridors in Angola. The

studies provide a strategic overview

of the natural resources of the

area being studied in relation to

the existing transport infrastructure

as well as potential infrastructure

developments. These concept

studies identify potential projects

and may include preliminary

economic analysis of them. MESU

also provides a service in identifying

opportunities for the development of

value-adding projects downstream

from such minerals-based initiatives.

The spatial view provided by

such studies makes it easier for

governments to justify putting the

infrastructure in place. Due to the

high rents that can be obtained

from mineral developments, the

outcome of such studies can

potentially lead to the development

of infrastructure projects. These, in

turn, can stimulate the development

of agriculture, industry and tourism in

the surrounding areas.

Mintek participated in the SDI

conference in Dar-es-Salaam and

played a significant role in obtaining

widespread acceptance of the

concept. Negotiations are under way

to conduct SDI studies of corridors

throughout Africa.

Support of provinces and metropoles

MESU supports both metropolitan

and provincial structures by

undertaking a variety of studies

and projects for them. In addition,

MESU participates in a number of

advisory committees and ad hoc

study groups. A highlight of the past

year was the completion of a mineral

sector development strategy for the

Northern Cape government.

MESU maintained close contact with

the Ekurhuleni Metropolitan Council.

This included participating in the

study of the pump and valve cluster

in the Metropole, involvement in its

mining forum and mining technical

sub-committee meetings, especially

with respect to the proposed dump

rehabilitation project (Hloekisa).

Resource-based Technology Strategy

MESU continues to support the

objectives of the government’s

National Research and Development

Strategy’s fourth technology and

innovation mission. This seeks to

use resources-based industries to

develop sustainable new knowledge-

based industries. It does this through

its RBTS programme.

The objective is to aid in the

understanding of policy and other

levers that facilitate the development

of a sustainable minerals-based

capital goods, technologies and

services cluster in South Africa. It

specifically focuses on the promotion

of input industries and the “lateral”

linkages that arise from initial

expertise in mineral extraction and

processing.

During 2004, the programme

completed a high-level overview of

the capital goods, technologies and

associated products and services

sectors supporting minerals-based

industries in South Africa. A key

outcome of the study was that, to

advance with the RBTS programme,

more detailed quantitative and

Part of the “Interwoven” jewellery

range from the Kgabane programme

Jewellery making in Sishen, part of

the Kgabane programme

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qualitative research was required

to map the nature of clustering

and linkage development around

particular mineral commodity groups.

Consequently, a detailed study was

initiated to map the linkages in the

platinum mining and processing

sector.

Policy support

MESU provides an important

support service to the State. The unit

has been involved in an advisory

capacity in the development of

the Broad-based Socio-Economic

Empowerment Charter and the

Scorecard. MESU has also been

involved in a support role in the

formulation of the Precious Minerals

and Diamond Amendment Acts, as

well as other minerals-related policies

being developed in various State

departments.

Kgabane

The Kgabane

programme trains

potential and existing

small entrepreneurs

in jewellery-making

skills and assists in

the establishment of

community-based

jewellery-making

groups involving

rural, peri-urban and

impoverished urban

areas. To date, about

418 women, disabled persons

and youths have been trained and

28 groups established in all nine

provinces.

The training programme has enabled

345 learners to be trained through

the MQA and Tanishq, the jewellery

brand of TATA India. A total of 23

groups of trainees have been set

up in eight provinces and support

to these groups is ongoing. A new

range of jewellery and gifts has

been created and is being marketed

through a number of up-market

retail outlets. Kgabane is also

running the jewellery showroom

at the departures terminal of the

Johannesburg International Airport.

Work is continuing with a number

of international partners in India,

Belgium, Ghana and Mali to further

strengthen expertise and identify

technology transfer and trade

opportunities.

Small-scale Mining Unit

The SSM Unit supports the

development of the SSM sub-sector

through fundamental research and

technology transfer, the provision of

technical services, training and skills

transfer, and facilitating access to

finance leading to rural development,

employment creation and poverty

alleviation.

The division continued to manage

the TRG23, on behalf of the

MQA. TRG23 is charged with the

Mintek’s SSM pottery training

programme

A range of micro nutrients (i.e

calcium and copper, to name but a

few), occur as metal hydroxides in

the Mintek-developed product called

“Slash”, encouraging the increase of

microbiological activites

development of unit standards,

qualifications and learning materials

for the small-scale mining sub-sector.

Training in glass-bead making,

pottery production, alluvial diamond

mining and processing was carried

out at Kangala (Mpumalanga),

Rustenburg (North West) and Soweto

(Gauteng).

Communities at Malungeni, Indwe

and Port St Johns (Eastern Cape),

Giyani (Limpopo) and Nkandla (KZN)

were trained in glass-bead and

ceramic manufacturing techniques.

These communities were also

assisted with setting up minerals-

related businesses, and marketing

them through the setting up of

the Rural African Market website,

agreements with Edcon, the Craft

Council of South Africa, Elective

Products and the Tsonga Kraal.

More than 700 small-scale miners

received training at Mintek and at

sites in various parts of the country

through the ASSM school under

programmes supported by the MQA

and the Department of Labour.

Picture of the Tengenenge Sculpture

Park, Zimbabwe, which is being

supported by the WK Kellogg

Foundation

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People

HIV/AIDS

As part of Mintek’s sustainable development

initiatives in the past financial year,

the HIV/AIDS Committee organised

HIV/AIDS awareness and information activities. The

committee comprises employee, management, employee

organisations and trade union (NUM) representatives.

A seroprevalence (saliva testing) assessment survey

of Mintek staff was undertaken in June 2004 by an

independent supplier, in order to give Mintek’s executive a

reliable indicator of the prevalence and impact of HIV/

AIDS within the organisation. This was an anonymous,

unlinked salivary-based HIV prevalence surveillance of the

Mintek work force.

The results indicated that 7.8% of the Mintek workforce is

HIV positive. This led to the integration of the HIV/AIDS

programme into the QES management system, ensuring

that divisional staff, through their QES Committee

meetings, participate actively in the HIV/AIDS programme

and that assessments of the performance of peer

educators and education programmes are available within

the division.

In addition, Mintek, through COHORT, participated in

a two-year project with other science councils in an

HIV/AIDS contact group led by the SABS. This interaction

with other organisations has contributed to ensuring that

the high standard of Mintek’s HIV/AIDS programme is

maintained.

Ongoing campaigns are held to

encourage voluntary counselling and

testing, and the promotion of good

health, which is vital to combating

HIV/AIDS. Mintek’s programme is

also supported through the telephonic

counselling services provided by the

employee assistance programme,

ICAS.

Employment equity

Mintek’s transformation efforts have

seen its workforce profile changing

dramatically compared to five years

ago. This has resulted in an increase

in the designated group percentage in

each occupational category.

Mintek work force profile, 31 March 2005

Occupational MALE FEMALE TOTAL

Category A C I Total W Total A C I W Total Grand DG DG% DG Total Total in category

Executive/divisional 7 - 2 9 9 18 - - - 2 2 20 11 55 managers

Professionals 22 4 18 44 74 118 11 - 1 2 49 167 93 56

Technicians/associate 33 5 1 39 23 62 14 1 3 1 32 94 71 76 professionals 4

Clerks 19 1 3 23 1 24 12 5 3 2 42 65 64 98 1

Craft/related traders 29 2 - 31 15 46 - - - - - 46 31 67

Plant/machine 72 2 - 74 1 74 14 - - - 14 88 88 100 operators

Elementary 9 - - 9 - 9 1 - - - 1 10 10 100 occupations

Total Permanent 19 14 24 229 12 350 52 6 1 6 139 490 368 75

% in group against 39 3 5 47 25 72 11 1 3 1 28 - 75 - TOTAL 3

* Disadvantaged group (DG) refers to Black, Indian, and Coloured males and females and only White females.

The above table shows figures for the period January

2004 to March 2005 and the Board-approved projection up

to 2006.

At professional levels (engineers and scientists), however,

there is only a minor improvement. Divisions have been

advised and encouraged to make use of “pipelines” to

increase the number of employment-equity professionals.

Mechanisms are in place through the bursary schemes to

attract persons from previously disadvantaged groups.

Percentage of people employed from previously disadvantaged groups

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Black Economic Empowerment

Mintek has adopted a strategy for promoting BEE

by setting targets to ensure that a percentage of its

expenditure is allocated to Black owned/empowered

companies.

As at October 2004, Mintek’s current spend on HDSAs

was 26% of its total controllable procurement. The

following procurement targets have been set for the

subsequent periods.

In order to achieve the procurement strategy objective, the

following procurement focus areas have been identified:

engineering

services,

contract labour

broking, financial

services, and

other specialised

products.

Apart from this initiative, Mintek is creating its own

database of Black owned/empowered companies, or

makes use of other databases, in order to achieve the set

targets. The set plan includes:

• the development of a supplier/vendor database;

• verification of BEE credentials;

• formalisation of service level agreements between

suppliers;

• creation of an information campaign to advise the

existing non-HDSA/BEE companies to transform;

• reviewing the Mintek procurement spend and

addressing specific product or supplier groups so as to

promote BEE;

• bi-annual reporting on the procurement spend with

HDSA or Black empowered companies; and

• use of the tender renewal process

to achieve Mintek‘s BEE objectives.

Human resources development

Science, Engineering and

Technology Promotion

The SETP Unit is an expansion

of Mintek’s bursary activities to

maximise the interface with State

and academia. It promotes minerals

processing and metallurgical technologies within

secondary and tertiary education, state departments and

various professional bodies. This is done both locally

and internationally, with due emphasis on the fields of

chemical, metallurgical and electrical engineering.

Although the carry-through benefits of Mintek’s

technologies make a major impact on society, a growing

portion of its activities have been redirected in order to

address societal and SET needs more directly.

Promoting the engineering profession to black girl-

learners

In 2004, Mintek started participating in a project aimed at

increasing the number of girl-children pursuing careers in

SET. The project prepares girl-children for SET careers

and tertiary studies.

The new financial year will see 30 girls from Alexandra,

Diepsloot, Auckland Park, Soweto and Ferndale

undergoing testing and attending Winter and Spring

School classes aimed at improving the knowledge

and skills of girl-child learners in grades 11 and 12. On

completion of their matric, the successful learners will be

integrated into Mintek’s normal bursary programmes.

Minquiz

More than 900 schools from South Africa’s nine provinces

participated in Minquiz competitions aimed at promoting

interest in mathematics and science. During the regional

competitions, participating schools were given tours

of the respective science faculties and divisions at the

host institutions. Science shows were also organised

to stimulate the participants’ interests, while teachers

benefited from motivational talks from other educators.

Percentage of BEE Procurement

of Total Procurement

30% (March 2006)

35% (March 2007)

40% (March 2008)

Middle: New individual trophies for the top three national teams were introduced early in 2005, so that learners can take their trophies home

Left: A group of girl learners attended the Mintek-sponsored training sessions aimed at improving their interest in SET

Bottom: The Minquiz 2004 finals were won by the KZN team from Muziwephahle High School and Crawford College

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Mintek Engineering Awareness

Programme

Mintek also contributes to increasing

the awareness of career opportunities

in metallurgical and mineral processing

activities through MEAP. Students from

schools in the Johannesburg area are

invited to attend a two-day programme at

Mintek, during which they are provided

with career guidance and exposure to

peers engaged in engineering-related

activities. In 2005, 10 Mintek staff and

five lecturers from WITS lectured and

demonstrated technologies to 240

students from 25 schools.

Mintek Fellows internships/training

Engineers, scientists and technicians are provided

with intensive practical training through three important

programmes, the Mintek Fellows (Graduates and

Researchers) and TechTrain. Candidates must have

recently completed their theoretical studies. The first two

programmes enable them to gain credits towards their

professional qualification while they are being trained

as engineers or research scientists. The TechTrain

programme enables technikon/university

of technology students to obtain their

one-year practical experience in

fulfilment of their diploma requirements.

During the 2004 academic year, Mintek

and the MQA funded two and 12 Mintek

Graduate Fellows respectively, and the

DST funded 7 Mintek Research Fellows.

Of the 45 TechTrainees receiving training

(30 on-site at any one time), 14 were

sponsored by the MQA, and the rest

by Mintek — a very useful manpower source in a busy

institute.

TYPE OF FINANCIAL Black Coloured Asian White TOTAL

SUPPORT

M F M F M F M F M F

Scholarships 7 7 0 0 0 0 0 1 7 8

Undergraduate bursaries 16 9 1 0 5 2 6 3 28 14

Postgraduate bursaries 9 8 0 0 3 1 7 8 19 17

Mintek Graduate 1 9 0 1 1 1 1 0 3 11

Fellows Development

Researcher 2 1 0 0 0 0 2 2 4 3

Development

TechTrain 17 13 0 0 0 0 0 0 17 13

TOTAL 52 47 1 1 9 4 16 14 78 66

% 36 33 1 1 6 3 11 10 54 46

Bursary Programme

Mintek directly supports 42 under-graduate and up to

36 postgraduate students at technikons and universities

through its bursary programme. Sincere attempts are

made each year to offer employment to these bursars and

trainees, where possible, on completion of their studies.

Mintek’s continuing efforts to maintain a strong potential

flow of academic and technically-trained employees can

be seen in the graph above, which

is increasingly reflecting the broader

demographics of the country.

Left and right: Mintek divisional representatives display their offerings and enable the visiting students to learn more about Mintek

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Periodic Table Card Game

Mintek has developed a card game that can be used to

assist in teaching science and the principles of the periodic

table. The Atomic Realms© game is aimed at enhancing

scientific education among students. Sponsors are

currently being sought to promote the game.

Adopt-a-school

Following on the successful implementation of Mintek’s

“Adopt-a-school” initiative at Kwadedangendlale

Secondary in Zola North, Soweto, which resulted in a

complete turnaround of the culture at the school and in

the community, Mintek has identified an opportunity in

Diepsloot for a second “Adopt-a-school” initiative. The

school, Itirele/Zenzele, was established in 1994 and is

housed in the homestead of what was once a mushroom

farm.

The periodic table card game was first tried out at the

Minquiz finals where participants tested their knowledge

of the periodic table of elements

Ferndale High School, one of Mintek’s “Adopt-a-school”

projects, received science teaching aids in order to

enable the learning and teaching of science in the

classroom. The Principal, Mrs King, joined the Head

of Science, Mintek representatives and students in

receiving the much needed science teaching aids from

Mintek

Thuto Dipheko, Chief Prefect at

Ferndale High, and Mr Wandile

Mbuya, Head of Science, took

a moment to inspect part of the

science teaching aids consignment

from Mintek

Plans are

underway to

improve the

infrastructure,

library cum media

centre, computer

centre and a

science laboratory.

The school has

more than a

thousand learners

who reside in the

Diepsloot informal

settlement. Of

these, 200 Grade

11 and 180 Grade

10 learners are

taking maths

and science as

subjects.

A third school, Ferndale High, has also been adopted.

Situated in the neighbouring community of Ferndale, the

school is housed in a model C-school facility. About 90% of

the learners at the school come from Diepsloot, Alexandra,

and Soweto. Although the infrastructure is solid, no

laboratory equipment and chemicals were available.

Mintek assisted in equipping the physics and chemistry

laboratories.

Other S&T Activities

Mintek also contributes to promoting a national

understanding and awareness of SET through participation

in state-initiated activities such as the DST and DME

SET weeks. Events include the Electra Mining Exhibition,

SASOL Techno-X schools exhibitions, and the DST SET

display at the Rand Show (April/May 2004 and 2005).

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Corporate governance

Mintek is committed to the principles of openness, integrity and

accountability in its dealings with all stakeholders. It endorses the codes of

corporate practices and conduct as set out in the King Report and the Public

Finance Management Act, and believes that the primary objective of the

corporate governance system is to ensure that the Board and Management

carry out their responsibilities faithfully and effectively.

Board of Directors (see Addendum, Table 1)

Mintek’s Board of Directors consists of one executive member and ten non-executive members who are

independently appointed by the Minister of Minerals and Energy in terms of the Mineral Technology Act No. 30, 1989

(the Mintek Act). Board members, excluding the CEO, hold office for a maximum of three years, but are eligible for re-

appointment. The Board members are chosen for their business acumen and skills, and bring individual judgement to

Board decisions. The Board Secretary is responsible for ensuring that Board procedures are followed.

The Board meets three times a year to review Mintek’s operational performance and to address issues of strategic

importance.

Audit Committee (see Addendum, Table 2)

The Audit Committee meets three times a year. It consists of one Board member and two independently appointed

non-executive members. The Committee operates in terms of a formal charter, and assists the Board in fulfilling its

responsibilities for the presentation of Mintek’s financial statements. It also ensures that the appropriate accounting

policies, internal controls and compliance with laws and regulation are in place. Both the internal and external auditors

have unrestricted access to the Audit Committee.

During the past year, the Committee considered various reports from the internal auditor, as well as the audit report

on the financial statements from the external auditor. The Committee considers Mintek’s annual financial statements

not to be a fair representation of its financial affairs at year-end in terms of the South African Statements of Generally

Accepted Accounting Practice.

Internal control

Mintek maintains internal controls and systems designed to provide reasonable assurance as to the integrity

and reliability of its financial statements and to safeguard, verify and maintain the accountability of assets. The

effectiveness of these controls is monitored by the internal auditors, who report to the Audit Committee.

The Audit Committee has requested management to review Mintek’s existing internal controls to ensure that they are

adequate.

Internal Audit

Mintek’s independent Internal Audit Services (IAS) function is outsourced to a major service provider whose primary

business is the provision of audit services. The IAS helps Mintek accomplish its objectives by adopting a systematic,

disciplined approach to evaluate and improve the effectiveness of risk management, control and governance

processes. The Internal Audit function has direct access to the Audit Committee.

Risk Management (see Addendum, Table 3)

A Risk Management Committee reviews the risk management process, internal controls, and significant risks facing

the organisation. The Committee provides the Audit Committee with a risk assessment report at appropriately

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scheduled intervals. Mintek utilises the services of insurance brokers on an annual basis to analyse and assess the

risks associated with Mintek’s assets, which are insured, together with public liability and professional indemnity, for

the risk assessed.

Human Resources Committee (see Addendum, Note 1)

The Transformation/Human Resources Committee consists of four Board members and three members of Mintek’s

Executive Management. The Committee reviews and determines the remuneration and terms of employment for

Mintek, and as part of this process, gives consideration to the annual review of remuneration packages based on

independent surveys. The Committee also looks into HR policies, internal controls, circumstances, conditions and

activities that affect material changes to policies and procedures and conditions of service for all employees and

compliance with demands and vested interests of Mintek’s stakeholders. The Mintek Board ratifies the decisions of the

HR Committee.

Management

Mintek is managed by a CEO assisted by four General Managers. Together, they make up Mintek’s Executive

Management team, which meets on a regular basis to review strategic and operational issues. Executive Management

is supported by 16 formally appointed divisional managers who are in charge of Mintek’s operating divisions and

centralised support functions.

Operational Performance

Mintek reports to the Department of Minerals and Energy (DME) but is also directly accountable to the Department

of Science & Technology for its R&D and technology-related activities. Eleven Key Performance Indicators (KPIs),

encompassing financial, organisational, innovation and learning, human resources and transformation perspectives,

determined by the National Council for Innovation (NACI), provide Mintek with a basis for evaluating its activities.

Each KPI is supported by a set of measures, identified by Mintek and the DST, that provide a more specific and

consistent base from which to assess progress. There is also a framework for peer review should the need arise.

Mintek’s Executive Committee meets on a weekly basis and the Management Committee convenes on a monthly

basis where financial results are presented. Budget for the current year is reviewed in November and presented at the

December Board meeting for approval.

Going Concern

The Mintek Board has reviewed the entity’s financial budgets for the period April 2005 to March 2006 and is satisfied

that adequate resources exist to continue business for the foreseeable future.

Safety, Occupational Health & Environmental Management

As a corporate citizen, Mintek acknowledges its obligation to its employees and the communities it serves to conform

in its operations to safety, health and environmental laws and the internationally accepted standards and practices.

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Report of the Audit CommitteeThe Audit Committee has adopted appropriate formal terms of reference, which have been confirmed by the Mintek Board, and has performed its responsibilities as set out in the terms of reference.In performing its responsibilities the Audit Committee has reviewed the following :• the effectiveness of the internal control systems• the effectiveness of the internal audit function• the risk areas of the entity to be covered in the scope of the internal and external audits• the adequacy, reliability and accuracy of the financial information provided to management and other users of such information• the accounting or auditing concerns identified as a result of the external and internal audits• compliance with legal and regulatory provisions• the activities of the internal audit function• the independence and objectivity of the external auditors• the scope and results of the external audit function

The Audit Committee is also responsible for :• reporting to the Mintek Board and the Auditor-General where the report implicates any members of the accounting authority in fraud, corruption

or gross negligence• communicating any concerns it deems necessary to the Mintek Board and the Auditor-General• confirming the internal auditor’s charter and audit plan• encouraging communication between members of the Mintek Board, senior executive management, the internal auditors and the external

auditors• recommending the appointment and the removal of the external auditors• conducting investigations within the terms of reference• concurring with the appointment and dismissal of the outsourced internal audit function• approving the internal audit work plan• setting the principles for recommending using the external auditors for non-audit services

The Audit Committee is satisfied that internal controls and the systems have been put in place and that these controls have not functioned effectively during the period under review. The Audit Committee considers Mintek’s internal controls and systems not appropriate in all material respects to :• reduce the entity’s risks to an acceptable level• ensure the entity’s assets are adequately safeguarded• ensure that the transactions undertaken are recorded in the entity’s records

The Audit Committee has evaluated the annual financial statements and the group annual financial statements of Mintek for the year ended 31 March 2005 and concluded that they did not comply, in all material respects, with the requirements of the Public Finance Management Act, 1999 (Act No.1 of 1999), as amended, and South African Statements of Generally Accepted Accounting Practice (GAAP).

The Audit Committee has requested management to review Mintek’s existing internal controls to ensure that they are adequate.

The Audit Committee agrees that the adoption of the going concern premise is appropriate in preparing the annual financial statements.

Note 1: Nature of the Audit Opinion - Disclaimer

The Auditor-General was unable to express an opinion on Mintek’s annual financial statements for 2004/05 due to certain significant matters arising from the execution of its audit.

The report of the Auditor-General clearly reflects Mintek’s non-compliance to Statements of Generally Accepted Accounting Practice (GAAP). The Auditor-General’s approach to the 2004/05 audit was to place greater emphasis on GAAP compliance in terms of recording, reporting and disclosure.

The primary reason for the non-compliance with GAAP was due to the change from a cash basis to an accrual basis of accounting. The secondary reason for the non-compliance with GAAP was due to Mintek’s ERP system having crashed six weeks prior to the year-end, which influenced the preparation and the levels of support that was offered to the Auditor-General.

The resolution of the significant audit findings require that Mintek reviews its current policies and procedures and have them approved by the Audit and the HR Committees and final ratification by the Mintek Board. The correction of the significant findings would be effected in the 2005/06 financial year.

The Audit Committee has therefore recommended the adoption of the annual financial statements by the board of directors at their meeting held on 26 January 2006.

Mr MG Khumalo - Chairman of the BoardDate: 30 November 2005

Audit Committee membersMs L Mojela (Chairperson)Dr PP JourdanMr TY DubeMr P TaljaardDr F Crundwell (alt.)Ms G Mthethwa (alt.)

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Directors’ report

The directors present their annual report, which forms part of the audited

annual financial statements of Mintek for the year ended 31 March 2005.

Mintek is listed as a national government business enterprise in schedule 3B of the Public Finance Management Act, 1999, as amended, (PFMA).

The Board of Directors acts as the accounting authority in terms of the PFMA.

The Directors of Mintek

Non-Executive directors: Mr MG Khumalo - Chairperson Dr F Crundwell Ms TM Eboka Mr R Havenstein Dr NP Mjoli Mr MA Mngomezulu Ms L Mojela Ms FG Mthethwa Prof PE Ngoepe Mr VP Pillay

Executive director: Dr PP Jourdan

The secretary of Mintek is Ms E Harmse and her business and postal addresses are as follows:

200 Hans Strijdom Drive Private Bag X3015 Randburg Randburg 2194 2125

Organisational structure

The organogram is reflected on page 3 of the annual report.

Principal activities

Mintek, South Africa’s national mineral research organisation, is an autonomous statutory organisation established to ensure the sustainability and growth of the minerals industry through technology development and transfer. In terms of its mandate under the Mintek Act of 1989, Mintek’s major goals are to:

• foster the establishment and expansion of industries in the field of minerals and related products

• contribute to wealth creation and poverty alleviation, and

• develop the requisite human capital to sustain the mining and minerals sector.

Specific aims include the following:

– Promoting increased beneficiation of South Africa’s minerals and mineral commodities by developing competitive and innovative processing technology and equipment.

– Strengthening South Africa’s international position as a supplier of mineral technologies, capital goods and services.

– Developing regional strategies for the mineral processing sector, concentrating on value-addition, capacity-building and broad-based development.

Operating results

The net profit for the Mintek group for the year was R12.8-million (2004: R7.5-million).

Review of operations

The revenue of R239.1-million (2004: R204.4-million) reflects a 17.0 per cent increase on 2004 and is mainly due to a growth in commercial income. This growth can be attributed to Mintek having adopted a strong commercial focus with an aggressive marketing effort.

Mintek has decentralised its business structures and its accounting practices have had to be adjusted. Mintek is now revising its accounting and related financial policies accordingly (Refer to Note 1, the disclaimer, at the end of the Report of the Audit Committee on page 32).

The profit before tax of R15.2-million (2004 :R7.6-million) reflects a 99.55 per cent increase on 2004 and is mainly attributable to increases in commercial income and income from associates.

Review of the financial position

The increase in total assets of R42.6-million is mainly due to increases in short-term investments (R20.0-million), cash on hand (R15.8-million), and investment in associates (R9.7-million).

Judicial proceedings

Two major debtors totalling R7.7-million included in tradereceivables are currently subject to legal recovery proceedings. The recovery of these debts is considered improbable and has been provided for in the provision for bad debts.

Events subsequent to balance sheet date

The directors are not aware of any matters or circumstances arising since the end of the financial year, not otherwise dealt with in the annual financial statements, which significantly affect the financial position of the group or the results of its operations.

Mintek has since reached a settlement with AVMIN. The amount received was R4.75-million.

Subsidiaries

The information relating to the entity’s financial interests in its subsidiary is disclosed in note 8.

Addresses

Mintek’s business, postal and registered addresses are as follows:

Business address Postal address

200 Hans Strijdom Drive Private Bag X3015Randburg Randburg2194 2125

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Financial statements and notesFOR THE YEAR ENDED 31 MARCH 2005

Contents

Report of the Auditor-General......................................................... 35

Balance sheets................................................................................40

Statements of changes in equity..................................................... 41

Income Statements......................................................................... 42

Cash Flow Statements.................................................................... 43

Notes to the Annual Financial Statements...................................... 4434

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Report of the Auditor-General

Report of the Auditor-General to Parliament on the group financial statements of the Council for

Mineral Technology (MINTEK) for the year ended 31 March 2005.

1. AUDIT ASSIGNMENT

The group financial statements as set out on pages 40 to 59, for the year ended 31 March 2005, have been audited in terms of section 188 of the

Constitution of the Republic of South Africa, 1996 (Act No. 108 of 1996), read with sections 4 and 20 of the Public Audit Act, 2004 (Act No. 25 of

2004) and section 12(2) of the Mineral Technology Act, 1989 (Act No. 30 of 1989). These financial statements, the maintenance of effective control

measures and compliance with relevant laws and regulations are the responsibility of the accounting officer. My responsibility is to express an

opinion on these financial statements, based on the audit.

2. NATURE AND SCOPE

The audit was conducted in accordance with Statements of South African Auditing Standards. Those standards require that I plan and perform the

audit to obtain reasonable assurance that the financial statements are free of material misstatement.

An audit includes:

• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,

• assessing the accounting principles used and significant estimates made by management, and

• evaluating the overall financial statement presentation.

Furthermore, an audit includes an examination, on a test basis, of evidence supporting compliance in all material respects with the relevant laws

and regulations which came to my attention and are applicable to financial matters.

The audit was completed in accordance with Auditor-General Directive No. 1 of 2005.

I believe that the audit provides a reasonable basis for my opinion.

3. QUALIFICATION

3.1 Revenue and deferred income

Contrary to paragraphs 14(e) and 20(d) of AC 111, Revenue, issued in terms of South African Statements of Generally Accepted Accounting

Practice (SA GAAP), Mintek did not correctly determine the total cost to be incurred in respect of projects undertaken prior to recognising the

revenue from the projects. Various projects were found where revenue was recognised in advance, instead of matching it to the costs incurred.

Consequently, revenue and deferred income disclosed in the annual financial statements was misstated.

3.2 Warranty provision

Contrary to AC130, Mintek did not provide for warranty claims on certain products sold during the 2004-05 financial year. I could not determine the

value of possible claims as a result of incomplete management information.

3.3 Accounts receivable and accounts payable

Accounts receivable and accounts payable were understated by R 4 383 892 due to the incorrect classification of debtors with credit balances.

3.4 Interest on outstanding debtors

During the 2004-05 financial year Mintek reversed interest charges on long outstanding debtors. Documentation authorising this reversal could not

be furnished for audit purposes. Consequently, I was unable to verify the validity of the interest written back of R2 903 920.

Furthermore, revenue received from debtors was not measured at the fair value of the consideration received or receivable. When the inflow of

cash or cash equivalents was deferred, the fair value of the consideration was not determined by discounting all future receipts using an imputed

rate of interest, as required by AC 111, issued in terms of SA GAAP. The extent of this error could not be quantified.

3.5 Value Added Tax

Included on VAT201 returns submitted to the South African Revenue Services (SARS) were export sales amounting to R45 121 844. Contrary to

the requirements of section 11(3), read with VAT Practice Note 2 of the Value Added Tax Act, 1991 (Act No. 89 of 1991), Mintek could not submit

the required documentary proof for goods exported to foreign countries.

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Value Added Tax and possible penalties and interest, could be levied by SARS if the required documentation to substantiate the exports are not

submitted. These expenses would be fruitless and wasteful.

3.6 Post employment benefits

The post retirement medical aid liability of R52 231 647 disclosed in note 17 of the annual financial statements was overstated by R3 331 647,

based on an actuarial valuation of R48 900 000 at 31 March 2005. Furthermore, the disclosure requirements set out in paragraph 120(f) of AC116,

were not complied with in the following instances:

(a) Actuarial gains were not calculated or disclosed;

(b) Interest raised on the liability was incorrectly calculated and not disclosed as interest expenses;

(c) The corridor, as disclosed in the accounting policy of Mintek was not used to determine actuarial gains and losses;

(d) The amount of R4 191 876 charged to the income statement did not agree with benefit payments made less contributions paid; and

(e) The movement in the prior year liability was not disclosed.

Also, although investments to the amount of R100 000 000 were held at year-end, they had not been ring - fenced to cover the post retirement

medical liability. Consequently, interest earned on such investments was not allocated to cover the interest accruals on the liability.

I could not re - perform the calculation required by AC116 due to inadequate information available in respect of payments to retired and current

employees from the 2002 to the 2005 financial year as well as the number of people that were entitled to these benefits from the 2002 to the 2005

financial year.

3.7 Cash and bank

Included in the bank confirmation was account number 4058904484 to the amount of R107 602. Appropriate information could not be obtained to

substantiate the exclusion of this account from the annual financial statements, and therefore the bank balance was understated by R107 602.

3.8 Contingent liabilities

Mintek raised a contingent liability for a guarantee in respect of a loan to an associate that was liquidated during the 2004-05 financial year as

disclosed in note 20 to the annual financial statements. The contingent liability to the amount of R1 193 043 therefore should have been raised as a

liability. This resulted in an understatement of current liabilities.

Furthermore, contingent liabilities arising from legal action against Mintek to the amount of R861 940 were not disclosed as required by AC130 in

note 20 to the annual financial statements.

3.9 Deferred income

Supporting documentation to substantiate the difference of R458 973 between deferred income per the trial balance (R14 734 887) and the

deferred income balance disclosed in the financial statements (R15 193 861) could not be provided by management.

3.10 Inventory

Supporting schedules could not be submitted for the amount of R1 510 690 written off in the prior year in respect of obsolete inventory. I could

consequently not verify the accuracy or validity of the impairment made.

Furthermore, inventory of R664 239 was found to be impaired in the 2004-05 financial year. Mintek did not adjust the value of the closing inventory

as required by AC108. Inventory was consequently overstated by R664 239.

3.11 Accounts payable

Accounts payable as at 31 March 2005 was overstated by R449 015 as a result of not updating creditors reconciliations with manual payments

made.

3.12 Investment property

The requirements of AC135 (Investment property) were not met with respect to the following disclosures:

(a) The fair value of the property was not disclosed as per the requirements of AC 135, paragraph 70(e);

(b) Expenses incurred to generate the rental income were not disclosed in accordance with AC 135, paragraph 67(d);

(c) A reconciliation was not disclosed as per the requirements of AC 135, paragraph 70(d); and

(d) Investment properties were not transferred from the property classification at the carrying amount of the property.

3.13 Cession not disclosed

A cession to the value of R5 000 000 in favour of the bank was not disclosed in the annual financial statements.

3.14 Movement on debtors account

Debtor accounts totalling R305 922 did not show any movement from the 2003-04 to the 2004-05 financial year. Mintek did not consider the

possible impairment of these debtors. Consequently accounts receivable may have been overstated by R305 922.

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3.15 Expenses

A correction to the amount of R350 877 dating back to 2002 was made to the current year expenditure and not to retained earnings.

3.16 Cash flow statement

An adjustment of R6 442 779 was made and disclosed in note 24 to the annual financial statements. This adjustment resulted from movements in

certain balance sheet accounts that were not included in the calculation of profit from operations.

Also, supporting documentation to substantiate re-statements in the opening balances of the cash flow statement could not be obtained.

3.17 Outstanding information

The following information could not be obtained for audit purposes:

(a) Supporting documentation to substantiate repairs and maintenance expenditure to the amount of R144 989;

(b) Two supplier statements for April 2005 were outstanding;

(c) Subsistence and travel advances to the amount of R136 555;

(d) Supporting documentation could not be presented for journal 0897/04 that allocated R92 739 to consumable expenditure (Account

485000);

(e) Supporting documentation to substantiate general expenditure to the amount of R528 630;

(f) Supporting documentation to substantiate journal entries in respect of expense transaction to the amount of R1 129 141; and

(g) Supporting documentation to substantiate capital commitments to the amount of R216 346.

4. DISCLAIMER OF AUDIT OPINION

Because of the significance of the matters referred to in paragraph 3, I do not express an opinion on the group financial statements.

5. EMPHASIS OF MATTER

Without further qualifying the audit opinion expressed above, attention is drawn to the following matters:

5.1 Property, plant & equipment

Mintek did not perform an annual impairment review of fixed assets as required by section 10 of AC128. I could therefore not determine the impact

of possible impairments of the carrying value of property, plant and equipment.

5.2 Foreign exchange losses - fruitless and wasteful expenditure

Mintek was exposed to foreign exchange risk, which resulted in foreign exchange losses of R1 493 530. The losses were regarded as fruitless and

wasteful expenditure as defined in the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA), but was not disclosed in annual financial

statements as required by the PFMA.

5.3 Rental received in advance

Mintek received R2 407 707 in advance in terms of a 15 year lease agreement (escalating at 7 per cent per annum). In terms of AC105, income

received in terms of operating leases must be allocated on a straight line basis to the income statement over the period of the agreement. Mintek

escalated the rental receipts at 7 per cent per annum.

The effect of this error on the financial statement was an understatement of the rental expense in the current year of R84 871.74 and an

understatement of the retained surplus of R237 018 at 31 March 2004. Also, the total liability at 31 March 2005 was overstated by R323 594.

5.4 Personnel expenditure

Personnel expenditure of R620 425 processed on the SAP payroll could not be traced to the general ledger. Management did not perform monthly

reconciliations on payroll data and could not explain this difference.

5.5 VAT

In addition to the matters raised in paragraph 3.5, Mintek did not comply with the Value Added Tax Act, 1991 (Act No. 89 of 1991) in the following

instances:

(a) Value Added Tax was not claimed on document number 1900047497. The input VAT claim should have been R80 881;

(b) Value Added Tax was incorrectly claimed on an invoice to the amount of R22 506 for catering, raised with journal number 0459/04; and

(c) Mintek did not declare output Value Added Tax on conference facilities rendered during the 2004-05 financial year. Value Added Tax due

to the South African Revenue Services was understated by approximately R90 788 based on the total revenue from conference facilities

amounting to approximately R648 482.

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5.6 Investments in associatesTollsort (Pty) Ltd ceased operations on 30 September 2004 but was kept running to service a loan. After redemption of the loan, it will be deregistered. This was in contravention of section 73 of the Companies Act, 1973 (Act No. 61 of 1973).

5.7 Weaknesses in internal control

The following significant weaknesses in internal control were identified during the course of the audit:(a) Reconciliations were not performed on suspense accounts balances of R13 518 445. Therefore duplicate entries passed against these

accounts were not detected timeously. Mintek subsequently corrected these errors; (b) Debtor credit limits were not monitored appropriately;(c) SAP consultants processed transactions in the live production system; (d) Reconciliations were not done between the PAYE deducted from the employees on the payroll and the general ledger;(e) The reconciliation between the leave accrual balance on the payroll report and leave accrual balance as per the general ledger was not

performed; (f) Weaknesses were observed in the staff incentive bonus scheme policy; (g) The human resources committee recommended an amount of R4 million for performance bonuses. This amount was not consistent with

the approved policy. Furthermore, the performance bonuses paid were based on unaudited financial results; and(h) Mintek did not implement a fraud policy as well as procedures and policies to deal with financial misconduct.

5.8 Lack of a service level agreement

A service level agreement was not drawn up between Mintek and Mindev Proprietary Limited during the 2004-05 financial year.

5.9 Lack of a job description for former Chief Financial Officer

Contrary to the requirements of Treasury Regulation 27 a formal job description and performance contract were not drawn-up between the former Chief Financial Officer and Mintek for the 2004-05 financial year.

5.10 Sustainable development

The quality environment and safety division of Mintek identified the following findings during two consecutive audits (i.e. audits performed in 2004 and 2005):(a) Hydro Metallurgy Division (HMD) procedures were not reviewed on an annual basis;(b) Calibration of HMD equipment listed was overdue; and(c) Several damaged bags containing samples were observed at the West yard storage area causing spillage onto the ground thus allowing

the possibility of leaching.

5.11 Payments made on photocopy invoices

Payments to the amount of R457 000 were made on photocopies of invoices.

5.12 Materiality and significance framework

The materiality and significance framework was not included in the strategic plan of Mintek. The percentages used to calculate the materiality figure could also not be substantiated by management.

5.13 Financial statement errors

A significant number of financial errors were identified during the course of the audit. Although the errors were corrected, the number of errors found in respect of the financial statements was of concern.

5.14 Compliance with laws and regulations

5.14.1 Lack of a formal tendering process

According to the procurement policy, a tendering process must be followed for purchases exceeding R300 000. No procedures were documented in respect of awarding contracts.

5.14.2 Property, plant & equipment

Contrary to section 51 (c) of the PFMA, management did not exercise sufficient internal controls to adequately safeguard fixed assets. The asset controller position was vacant from 31 May 2004 to 30 April 2005. During this period Mintek did not implement adequate internal controls in respect of assets.

5.14.3 Evaluation of the audit committee

Contrary to the requirements of the King Report on Corporate Governance, the board of directors did not formally evaluate the performance of the audit committee.

5.14.4 Corporate plan

Contrary to section 29 of the PFMA, the corporate plan of Mintek did not include and address the following:• Asset and liability management, and

• Cash flow projections.

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5.14.5 Tender advertisements and declaration of interest

Audit identified two tender advertisements that did not run for 30 days before closure of the tender as required by section 6.3 of the Supply Chain

Management Framework.

A declaration of interest by the tender committee members could not be obtained in respect of the above-mentioned tenders.

5.14.6 Losses made on projects

Contrary to the pricing policy of Mintek, losses of approximately R1 007 218 were noted on certain projects. I could not determine the total value of

losses incurred.

5.15 Information system audit

A number of weaknesses still existed in the IT general control environment. The most significant control weaknesses identified, were the following:

(a) Back-ups were not tested for recovery on a periodic basis. This resulted in the SAP system not being available for a long period of time;

(b) Several control weaknesses were noted with regard to the disaster recovery process;

(c) User account management was not adequately controlled; and

(d) Several security control weaknesses were noted on the operating system.

Weaknesses pertaining to disaster recovery planning, back-up and recovery, logical access security and user account management raised

concerns regarding the integrity of the data.

5.16 Financial management capacity

As is evident from this report, significant problems were identified by audit in the accounting, control, IT and governance environment of Mintek.

These problems were attributable to poor or inadequate accounting skills, a weak or inconsistent control environment and inadequate review and

supervision. These problems impacted on the effectiveness of the organisation to operate and lead to additional costs being incurred to address

the problems.

5.17 SAP systems failure

During February 2005, Mintek suffered from a system failure from which it only recovered during May 2005. This failure highlighted the inadequacy

of back-up and recovery procedures. As a result of the system failure, a breakdown of the normal system controls took place for an extended

period, which was not adequately compensated for by manual controls.

5.18 Financial sustainability figures not confirmed

The financial and other figures or percentages in the report on performance against key performance indicators were in some cases misstated and

could not be confirmed with either the trial balance or supporting evidence.

5.19 Submission of annual financial statements

Section 40(1)(c) of the PFMA prescribes the accounting officers’ reporting responsibilities and require that the annual financial statements should

be submitted within two months after the end of the financial year, which should have been 31 May 2005.

The annual financial statements of Mintek were submitted on 22 July 2005. Due to significant findings the statements were rectified and a final set

was re-signed on 22 November 2005 and presented for audit.

5.20 Late completion of audit

Section 40(1)(c) of the PFMA prescribes the accounting officers’ reporting responsibilities whilst section 40(2) requires that the Auditor-General

must audit the financial statements and submit an audit report on those statements to the accounting officer within two months of receipt of the

statements.

The audit was only completed on 13 January 2006 due to the following:

(a) Re-submission of the annual financial statements on 22 November 2005 as a result of numerous audit queries and adjustments; and

(b) Late completion of audits of subsidiary companies on 14 November 2005.

6. APPRECIATION

The assistance rendered by the staff of Mintek during the audit is sincerely appreciated.

I Vanker for Auditor-General Johannesburg

13 January 2006

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GROUP MINTEK

Notes 2004 – 2005

R2003 – 2004

R2004 – 2005

R2003 – 2004

R

ASSETS

Non-current assets

Land 6 4,927,776 4,927,776 4,927,776 4,927,776

Buildings 6 6,832,124 7,157,463 6,832,124 7,157,463

Property, plant and equipment 6 36,886,830 36,066,810 36,886,830 36,066,810

Investment property 7 4,937,219 5,081,030 4,937,219 5,081,030

Investment in associates 8 28,029,827 18,300,100 — —

Cost of investment shares 9 — — 100 100

Long-term staff debtors 12 1,273,453 2,436,346 1,273,453 2,436,346

Current assets 159,831,330 126,149,380 170,848,737 133,671,791

Inventories 11 2,090,871 4,399,118 2,090,871 4,399,118

Loans advanced to subsidiary 9 — — 11,017,411 7,522,412

Trade and other receivables 13 37,447,581 37,255,757 37,447,578 37,255,756

Short-term investments 10 100,000,000 80,000,000 100,000,000 80,000,000

Cash and cash equivalents 20,292,877 4,494,505 20,292,877 4,494,505

Total assets 242,718,558 200,118,905 225,706,239 189,341,316

FUNDS AND LIABILITIES

Funds: 138,551,508 122,524,086 120,312,189 111,759,528

Retained Earnings 138,551,508 122,524,086 120,312,189 111,759,528

Long-term liabilities

Non-current liabilities

Post-retirement liability 17 52,231,648 49,300,000 52,231,648 49,300,000

Rentals in advance – Billiton 18 1,768,218 1,843,861 1,768,218 1,843,861

Current liabilities 50,167,184 26,450,957 51,394,184 26,437,927

Trade and other payables 14 16,954,759 9,967,527 18,181,759 9,954,497

Deferred income 15 15,193,861 7,126,456 15,193,861 7,126,456

Provisions 16 18,018,564 9,356,974 18,018,564 9,356,974

Total funds and liabilities 242,718,558 200,118,905 225,706,239 189,341,316

P P JOURDAN V. GOVENDERCEO, MINTEK General Manager Corporate Services

Randburg15 November 2005

Financial statements and notesBALANCE SHEETS AT 31 MARCH 2005

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General Fund

Contract Research

Reserve Fund

Equipment Replacement

Fund

Technology Transfer

Fund

Postretirement

Benefit Fund RetainedEarnings Total

GROUP

Balance as at 31 March 2003 46,753,333 5,300,000 33,840,558 15,400,000 51,855,540 — 153,149,431

Transfer of funds to retained earnings (46,753,333) (5,300,000) (33,840,558) (15,400,000) (51,855,540) 153,149,431 —

Transfer to Post-retirement liability (49,300,000) (49,300,000)

Transfer of Post-retirement liability 19,799,131 19,799,131

Transfer to General reserve fund net group surplus for the period 7,995,750 7,995,750

Balance as at 31 March 2004 — — — — — 131,644,312 131,644,312

Prior year adjustments

Correction of error for overprovision of obsolete stock (refer to Note 25) 2,098,768 2,098,768

Adjustment for the understatement of depreciation on Buildings and Investment Property (refer to Note 25) (11,218,994) (11,218,994)

Balance as at 31 March 2004 — — — — — 122,524,086 122,524,086

Adjustment for the overstatement of staff costs (refer to Note 25) 3,221,390 3,221,390

Net surplus for the year 12,806,032 12,806,032

Balance as at 31 March 2005 — — — — — 138,551,508 138,551,508

MINTEK

Balance as at 31 March 2003 39,874,689 5,300,000 33,840,558 15,400,000 51,855,540 — 146,270,787

Transfer of funds to retained earnings (39,874,689) (5,300,000) (33,840,558) (15,400,000) (51,855,540) 146,270,787 —

Transfer to Post-retirement liability (49,300,000) (49,300,000)

Transfer of Post-retirement liability 19,799,131 19,799,131

Transfer to retained earnings net group surplus for the period 4,109,836 4,109,836

Balance as at 31 March 2004 — — — — — 120,879,754 120,879,754

Prior year adjustments

Correction of error for overprovision of obsolete stock (refer to Note 25) 2,098,768 2,098,768

Adjustment for understatement of depreciation on Buildings and Investment Property (refer to Note 25) (11,218,994) (11,218,994)

Balance as at 31 March 2004 — — — — — 111,759,528 111,759,528

Adjustment for overstatement of staff costs (refer to Note 25) 3,221,390 3,221,390

Net surplus for the year 5,331,271 5,331,271

Balance as at 31 March 2005 — — — — — 120,312,189 120,312,189

Financial statements and notesSTATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH 2005

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Financial statements and notesINCOME STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

GROUP MINTEK

Notes 2004 – 2005

R2003 – 2004

R2004 – 2005

R2003 – 2004

R

CONTINUING OPERATIONS

Revenue 2 239,181,549 204,399,854 239,181,549 204,399,854

Cost of sales 5 (160,367,724) (133,348,680) (160,367,724) (133,348,680)

Gross profit 78,813,826 71,051,174 78,813,826 71,051,174

Other operating income 3 7,186,535 7,987,763 7,186,535 7,987,763

Income from investments 4 8,574,585 10,752,591 8,574,585 10,752,591

Auditor’s remuneration (1,217,623) (643,908) (1,190,553) (628,908)

Fees for services (2,826,026) (1,392,667) (2,826,026) (1,392,667)

Administrative expenditure (75,800,172) (74,597,533) (75,787,738) (74,610,068)

Depreciation (8,868,497) (8,675,290) (8,868,497) (8,675,290)

Profit from operations 5 5,862,627 4,482,130 5,902,131 4,484,595

Financing costs 22 (570,860) (843,909) (570,860) (843,909)

Income from Associates 9,924,906 3,987,260 — —

Profit before taxation 15,216,673 7,625,481 5,331,271 3,640,686

Taxation 21 (2,410,641) (98,881) — —

Net surplus for the year 12,806,032 7,526,600 5,331,271 3,640,686

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Financial statements and notesCASH FLOW STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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GROUP MINTEK

Notes 2004 – 2005

R2003 – 2004

R2004 – 2005

R2003 – 2004

R

Cash flows from operating activities

Cash receipts from customers 164,871,616 125,168,543 163,621,616 125,168,543

Parliamentary grant received 88,632,000 82,439,000 88,632,000 82,439,000

Cash paid to suppliers and employees (213,860,725) (207,001,992) (213,843,625) (206,990,022)

Cash generated from operations 24 39,642,890 605,551 38,409,990 617,521

Interest received 8,574,585 10,752,591 8,574,585 10,752,591

Finance charges (570,860) (843,909) (570,860) (843,909)

Net cash inflow from operating activities 47,646,616 10,514,233 46,413,716 10,526,203

Cash flows from investing activities

Additions to property, plant and equipment (9,219,746) (10,516,398) (9,219,746) (10,516,398)

Increase in investment deposits (20,000,000) (8,000,000) (20,000,000) (8,000,000)

Decrease/(Increase) in interest in associate (3,725,597) 7,357,160 — —

Decrease/(Increase) in interest in subsidiary — — (2,492,697) 7,345,190

Proceeds on disposal of fixed assets 34,953 798,648 34,953 798,648

Decrease/(Increase) in short-term investment interest 1,062,146 (1,381,711) 1,062,146 (1,381,711)

Net cash outflow from investing activities (31,848,244) (11,742,301) (30,615,344) (11,754,271)

Net cash outflow from financing activities — — — —

Net increase/(decrease) in cash and cash equivalents 15,798,372 (1,228,068) 15,798,372 (1,228,068)

Cash and cash equivalents at beginning of period 4,494,505 5,722,573 4,494,505 5,722,573

Cash and cash equivalents at end of period 20,292,877 4,494,505 20,292,877 4,494,505

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Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

1. PRINCIPLE ACCOUNTING POLICIES

The annual financial statements have been prepared in accordance with South African Statements of General Accepted Accounting Practice, and

in the manner required by the Public Finance Management Act (PFMA).

The following are the principle accounting policies of the group which are in all material respects consistent with those applied in the previous year,

except as otherwise indicated.

Basis of preparation

The financial statements have been prepared on the historical basis, except as modified for certain financial instruments.

The financial statements are expressed in South African Rands (R).

The following are approximate values at 31 March for selected currencies:

2005 2004

R R

US dollar 6.24 6.35

Euro 8.09 7.74

Australian dollar 4.81 4.79

1.1 Basis of consolidation

The consolidated annual financial statements incorporate the annual financial statements of the entity and enterprises controlled by the entity (i.e.

its subsidiaries) made up to 31 March each year. Control is achieved where the entity has the power to govern the financial and operating policies

of an investee enterprise so as to obtain benefits from its activities.

On acquisition, the assets and liabilities and contingent liabilities of the relevant subsidiaries are measured at their fair values at the date of

acquisition. The interest of minority shareholders is stated at the minority’s proportion of the fair value of the assets and liabilities recognised.

Subsequently, any losses applicable to the minority interest, in excess of the minority interest, are allocated against the interests of the parent.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of

acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used

by other members of the group.

All inter-entity transactions and balances between group enterprises are eliminated on consolidation.

1.2 Investment in associates

An associate is an entity in which the group has significant influence, through participation in the financial and operating policy decisions of the

investee, but not control over those policies.

The results, assets and liabilities of associates are incorporated in these consolidated financial statements by using the equity method of

accounting, from the effective dates of their acquisition until the effective dates of their disposal. Investments in associates are carried

in the balance sheet at cost as adjusted by post-acquisition changes in the group’s share of the net assets of the associate, less any impairment in

the value of individual investments. Losses of the associate in excess of the group’s investments in those associates are not recognised.

Any difference between the cost of acquisition and the group’s share of the fair value of the identifiable net assets of the associate at the date of

acquisition is recognised according to the group’s accounting policies on goodwill.

Where a group enterprise transacts with an associate company, unrealised profits and losses are eliminated to the extent of the group’s interest in

the relevant associate, except where unrealised losses provide evidence of an impairment of the asset transferred.

1.3 Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the group’s interest in the fair value of the identifiable assets

and liabilities of a subsidiary or associate at the date of acquisition.

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To the extent that the cost of acquisition of a subsidiary or associate exceeds the group’s interest in the net fair value of the identifiable assets,

liabilities, and contingent liabilities acquired, goodwill is recognised as an asset in the balance sheet. Goodwill is reviewed for impairment at least

annually and any impairment loss is recognised immediately in the income statement and is not subsequently reversed.

If the group’s interest in the net fair value of the identifiable assets, liabilities, and contingent liabilities exceeds the cost of acquisition of a

subsidiary or associate, the difference is recognised in the income statement in the period of acquisition.

On disposal of a subsidiary or associate the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Goodwill arising on acquisitions before 31 March 2004 is no longer amortised, but reviewed for impairment at least annually.

Negative goodwill arising on acquisitions before 31 March 2004 has been derecognised, with a corresponding adjustment to the opening balance

of retained earnings.

1.4 Intangible assets

All intangible assets are initially recognised at cost. Intangible assets with a finite useful life are amortised on a straight-line basis over their

estimated useful lives. Intangible assets with an indefinite useful life are not amortised. The useful life of intangible assets that are not being

amortised is reviewed annually to determine whether events and circumstances continue to support an indefinite useful life assessment for those

assets.

1.5 Research and development costs

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally generated intangible asset arising from the group’s research and development is recognised only if all of the following conditions are

met:

- An asset is created that can be identified (such as software and new processes);

- It is probable that the asset created will generate future economic benefits;

- The development cost of the asset can be measured reliably;

- It is technically feasible to complete the intangible asset so that it will be available for use or sale;

- The ability to use or sell the intangible asset; and,

- It is the intention to complete the intangible asset so that it will be available for use or sale.

Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it

is incurred. Internally generated intangible assets are amortised on a straight-line basis over their useful lives, which is usually no more than five

years.

1.6 Impairment of assets

At each balance sheet date, the group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any

indication that those assets may be impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine

the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable

amount is determined for the cash-generating unit to which the asset belongs.

Intangible assets, with an indefinite useful life, and goodwill acquired in a business combination are tested for impairment annually, irrespective of

whether there is any indication that the assets may be impaired.

The recoverable amount is the higher of fair value less costs to sell and value in use. Value in use represents the present value of the future cash

flows expected to be derived from an asset (cash-generating unit). The expected future cash flows are discounted to their present value using a

pre-tax discount rate that reflects current market assessments of the time value of money and the risk specific to the asset for which the future

cash flow estimates have not been adjusted.

If the recoverable amount of an asset (cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset

(cash-generating unit) is reduced to its recoverable amount. Impairment losses are immediately recognised as an expense, unless the relevant

asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of

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its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had

no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income

immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation

increase. Impairment losses for goodwill are not reversed in subsequent periods.

1.7 Foreign currencies

These financial statements are presented in South African Rands since that is the currency in which the majority of the group’s transactions are

denominated.

Transactions in currencies other than the group’s reporting currency are initially recorded at the rates of exchange ruling on the dates of the

transactions. Gains and losses arising from the settlement of such transactions are recognised in the income statement.

Monetary assets and liabilities denominated in foreign currencies are re-translated at the rates of exchange ruling on the balance sheet date.

Unrealised differences on monetary assets and liabilities are recognised in the income statement in the period in which they occurred.

1.8 Property, plant and equipment

Land

Land is stated at cost, i.e. no depreciation is provided thereon.

Buildings and investment property

Buildings and investment property is stated at cost less accumulated depreciation.

Plant, equipment and vehicles

Plant, equipment and vehicles are stated at cost less accumulated depreciation.

Assets under construction

All assets under construction are carried at cost and depreciation only commences once the asset is commissioned and ready for its intended use.

Depreciation is charged so as to write off the cost or valuation of assets, other than land and assets under constructions, over their estimated

useful lives, using the straight line method, on the following bases:

- Buildings and investment property 50 years

- Plant 10 years

- Equipment 5 - 10 years

- Vehicles 5 years

- Furniture and fittings 10 years

Assets specifically acquired for contract are depreciated over the life of the contract.

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term

of the relevant lease.

The gain or loss arising from the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying

amount of the asset and is recognised as income.

Subsequent expenditure relating to an item of property, plant and equipment that has already been recognised is added to the carrying amount of

the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will

flow to the group. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

1.9 Post retirement benefits other than pensions

This fund was created to finance the long-term liability with respect to funding pensioners’ medical aid for retired members of staff and the past

service of staff presently employed by Mintek.

A portion of actuarial gains and losses is recognised as income or expense if the net cumulative unrecognised actuarial gains and losses at the end

of the previous reporting period exceed the greater of:

- 10% of the present value of the defined benefit obligation at the date before deducting plan assets, or,

- 10% of the fair value of any plan assets at that date.

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The portion of actuarial gains and losses to be recognised is the excess referred to above, divided by the expected average remaining working

lives of the employees participating in the plan.

Payments to defined contribution retirement benefit plans are charged to the income statement in the year to which they relate.

Current employer contributions with respect to retired members of staff are funded by way of withdrawals from this fund.

1.10 Post retirement benefits

The group operates a defined contribution plan, the assets of which are generally held in separate trustee-administered funds. The plans are

generally funded by payments from the group and employees, taking account of the recommendations of independent qualified actuaries.

1.11 Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories

to their present location and condition. Cost is calculated using the weighted average method.

Net realisable value represents the estimated selling price in the ordinary course of business less any costs of completion and costs to be incurred

in marketing, selling and distribution.

1.12 Provisions

Provisions are recognised when the group has a present obligation as a result of a past event and it is probable that this will result in an outflow of

economic benefits that can be estimated reliably. Long-term provisions are discounted to net present value.

Provisions for restructuring costs are recognised when the group has a detailed formal plan for the restructuring and the group has raised a valid

expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features to those

affected by it. Restructuring provisions only include those direct expenditure that are necessarily entailed by the restructuring and not associated

with the ongoing activities of the enterprise.

The group is exposed to environmental liabilities relating to its operations. Provision for the cost of environmental and other remedial work such

as reclamation costs, close down and restoration costs and pollution control is made when such expenditure is probable and the cost can be

estimated with a reasonable range of possible outcomes.

1.13 Government grants

Government grant is unconditional and is intended to compensate expenses and give immediate financial support to the entity with no future

related costs and is recognised as income in the period in which it is received.

Government grant is wholly used to finance the operational expenses and fixed assets are financed through cash flows generated from general

commercial business activities.

1.14 Revenue recognition

Revenue is recognised when it is probable that future economic benefits will flow to the enterprise and these benefits can be measured reliably.

Revenue from the sale of manufactured products and material sales are recognised when significant risks and rewards of ownership of the goods

have been transferred to the buyer.

Revenue arising from the rendering of services is based on the stage of completion determined by reference to the physical amount of work

performed in relation to the total project.

Revenue arising from licence fees is recognised on an accrual basis in accordance with the substance of the relevant agreements.

Interest income is accrued on a time proportion basis, taking into account the principal outstanding and the effective interest rate over the period to

maturity.

Royalties accrued is based on the nature of the applicable contracts.

Dividend income from investments is recognised when the right to receive payment has been established.

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Rental income is derived from rental of investments in fixed property and equipment and is recognised on an accrual basis in accordance with the

substance of the relevant agreements.

Advance income arising as result of contracts undertaken in terms of commercial work in respect of invoices raised and paid for in advance but

for which no substantial work has been made to justify the recognition of any revenue, is deferred until the income is earned based on the work

completed.

1.15 Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee.

All other leases are classified as operating leases.

The group as a lessor

Amounts due from lessees under finance leases are recorded as receivables at the amount of the group’s net investment in the leases. Finance

lease income is allocated to accounting periods so as to reflect a constant periodic rate of return to the group’s net investment outstanding in

respect of the leases.

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease.

The group as a lessee

Assets held under finance leases are recognised as assets of the group at their fair value at the date of acquisition. The corresponding liability to

the lessor is included in the balance sheet as a finance lease obligation. Finance costs, which represent the difference between the total leasing

commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a

constant periodic rate of interest on the remaining balance of the obligations for each accounting period.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease.

1.16 Contracts in progress

Where the outcome of a contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the

contract activity at the balance sheet date. The stage of completion is determined by the proportion that contract costs incurred for work performed

to date bear to the estimated total contract costs. Variations in contract work, claims and incentive payments are included to the extent that they

have been agreed with the customer.

Where the outcome of the contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred and

probably recoverable. Contract costs are recognised as expenses in the period in which they are incurred.

When it is probable that total contract costs will exceed total contract revenue, the expected loss is immediately recognised as an expense.

1.17 Investment property

Investment property is property that is held to earn rentals and/or for capital appreciation, is stated at cost less accumulated depreciation at the

balance sheet date.

1.18 Investments and loans

Investments, other than in associates, are stated at cost less any provision for diminution in value. Dividends are accounted for when declared in

respect of associates and on the disposal of an investment. The difference between the net disposal proceeds and the carrying amount is charged

or credited to the income statement.

1.19 Taxation

The charge for current tax is the amount of income taxes payable in respect of the taxable profit (tax loss) for the current period. It is calculated by

using tax rates that have been enacted or substantially enacted by the balance sheet date.

Deferred tax is accounted for by using the balance sheet liability method in respect of temporary differences arising from differences between the

carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible

temporary differences to the extent that it is probable that taxable profits will be available against which the deductible temporary differences can

be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of an asset or liability that

affects neither accounting profit nor taxable profit at the time of the transaction.

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Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled. Deferred tax is

charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is

also dealt with in equity.

1.20 Offset

The group offsets assets and liabilities if, and only if, the group:

- has a legally enforceable right to set off the recognised amounts; and

- intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

1.21 Irregular, fruitless and wasteful expenditure

Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicable legislation,

including:

- The PFMA, or,

- Any provincial legislation providing for procurement procedures in that provincial government.

Fruitless and wasteful expenditure means expenditure that was made in vain and could have been avoided had reasonable care been exercised.

All irregular, fruitless and wasteful expenditure is charged against income in the period in which it is incurred.

1.22 Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets, until

the assets are substantially ready for their intended use or sale. Qualifying assets are assets that necessarily take a substantial period to get

ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on

qualifying assets is deducted from the borrowing costs incurred. All other borrowing costs are charged against income in the period in which they

are incurred.

1.23 Financial instruments

Recognition

Financial assets and liabilities are recognised on the group’s balance sheet when the group becomes a party to the contractual provisions of the

instrument.

All “regular way” purchases and sales of financial assets are initially recognised using trade date accounting.

Measurement

Financial instruments are initially measured at cost, which includes transaction costs. Subsequent to initial recognition these instruments are

measured as set out below.

Financial assets

The group’s principal financial assets are investments and loans, accounts receivable and cash and cash equivalents.

Investments:

The following categories of investments are measured at subsequent reporting dates at amortised cost by using the effective interest rate method if

they have a fixed maturity, or at cost if there is no fixed maturity:

- Loans and receivables originated by the group;

- Held-to-maturity investments; and,

- An investment that does not have a quoted market price in an active market and whose fair value cannot be measured reliably.

Cost and amortised cost are inclusive of any impairment loss recognised to reflect irrecoverable amounts. The financial assets are subject to

review for impairment at each balance sheet date.

Investments other than those listed above are classified as available-for-sale investments or investments held-for-trading and are measured at

subsequent reporting dates at fair value without any deduction for transaction costs that may be incurred on sale or other disposal.

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Trade and other receivables:

Trade and other receivables are measured at subsequent reporting dates at fair value using the effective interest rate method, less provision for

impairment. A provision for impairment is established when there is objective evidence that the group will not be able to collect all amounts due

according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present

value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.

Cash and cash equivalents:

Cash and cash equivalents are measured at fair value.

Equity instruments:

Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

The group’s principal financial liabilities are interest bearing borrowings, accounts payable and bank overdraft.

Financial liabilities held-for-trading and derivative liabilities are measured at subsequent reporting dates at fair value. All other financial liabilities

are subsequently measured at amortised cost, comprising original debt less principal payments and amortisations, using the effective interest rate

method.

Convertible debentures:

Convertible debentures are regarded as compound instruments, consisting of a liability component and an equity component. At the date of

issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference

between the proceeds of issue of the convertible debentures and the fair value assigned to the liability component, representing the embedded

option to convert the liability into equity of the group, is included in equity.

Issue costs are apportioned between the liability and equity components of the convertible debentures based on their relative carrying amounts at

the date of issue. The portion relating to the equity component is charged directly against equity.

The interest expense on the liability component is calculated by applying the prevailing market interest rate for similar non-convertible debt to the

liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible

debenture.

Derivative financial instruments:

Derivative financial instruments are measured at fair value at subsequent reporting dates.

Derivative financial instruments, mainly interest rate swap contracts, commodity option contracts and forward foreign exchange contracts, are

used by the entity in its management of financial risks. The risks being hedged are fluctuations in interest rates, commodity prices and foreign

currencies.

The entity will classify a derivative financial instrument as a hedge if:

- The hedge is expected to be highly effective in achieving offsetting between changes in fair value of, or cash flows attributable to, the

hedged risk;

- The effectiveness of the hedge can be reliably measured throughout the duration of the hedge;

- At the inception of the hedge, formal documentation regarding the following exists:

- the hedging relationship;

- the entity’s risk management objective; and,

- the entity’s strategy for undertaking the hedge.

- In the case of a cash flow hedge, the forecasted transaction that is the subject of the hedge must be highly probable.

Gains and losses on subsequent measurement:

Gains and losses arising from a change in the fair value of financial instruments that are not part of a hedging relationship, other than available-

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for-sale financial assets, are included in net profit or loss in the period in which it arises. Gains and losses arising from a change in the fair value of

available-for-sale financial assets are recognised in equity, until the investment is disposed of or is determined to be impaired, at which time the net

profit or loss is included in the net profit or loss for the period.

For the purposes of hedge accounting, hedges are classified into two categories:

- Fair value hedges, which hedge the exposure to changes in the fair value of a recognised asset or liability; and,

- Cash flow hedges, which hedge exposure to variability in cash flows relating to a recognised asset or liability, an unrecognised firm

commitment or a forecasted transaction.

In relation to fair value hedges, which meet the conditions for hedge accounting, any gain or loss from re-measuring the hedging instrument at fair

value is recognised in net profit or loss. Any gain or loss on the hedged item attributable to the hedged risk is adjusted against the carrying amount

of the hedged item and recognised in net profit or loss.

In relation to fair value hedges, which meet the conditions for hedge accounting, the portion of the gain or loss on a hedging instrument that is

determined to be an effective hedge is recognised directly in equity and the ineffective portion is recognised in net profit or loss.

If a hedged firm commitment or forecasted transaction results in the recognition of an asset or a liability, then the associated gains or losses

recognised in equity is adjusted against the initial measurement of the asset or liability. For all other cash flow hedges amounts recognised in equity

are included in net profit or loss in the same period during which the commitment or forecasted transaction affects net profit or loss.

Derecognition

A financial asset or a portion thereof is derecognised when the group realises the contractual rights to the benefits specified in the contract,

the rights expire, the group surrenders those rights or otherwise loses control of the contractual rights that comprise the financial asset. On

derecognition, the difference between the carrying amount of the financial asset and the sum of the proceeds receivable and any prior adjustment

to reflect the fair value of the asset that had been reported in equity, is included in net profit or loss for the period.

A financial liability or a part thereof is derecognised when the obligation specified in the contract is discharged, cancelled, or expires. On

derecognition, the difference between the carrying amount of the financial liability, including related unamortised costs, and the amount paid for it is

included in net profit or loss for the period.

Fair value considerations

The fair values at which financial instruments are carried at the balance sheet date have been determined using available market values. Where

market values are not available, fair values have been calculated by discounting expected future cash flows at prevailing interest rates. The fair

values have been estimated using available market information and appropriate valuation methodologies, but are not necessarily indicative of

the amounts that the group could realise in the normal course of business. The carrying amounts of financial assets and financial liabilities with a

maturity of less than one year are assumed to approximate their fair values due to the short-term trading cycle of these items.

1.24 Dividend declared

Dividends are recognised as a liability in the period in which they are declared.

1.25 Comparative figures

Where necessary, comparative figures have been adjusted to conform to changes in presentation in the current year. Where comparative figures

have been adjusted, the nature, amount of, and reason for, such reclassification has been disclosed. Refer to Note 26.

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GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

2. REVENUE

Government grants 88,632,000 82,439,000 88,632,000 82,439,000

Commercial income 150,549,549 121,960,854 150,549,549 121,960,854

Contract research 84,403,493 64,514,610 84,403,493 64,514,610

Public sector 9,620,506 14,106,276 9,620,506 14,106,276

Manufactured products 24,292,425 10,538,714 24,292,425 10,538,714

Service income 22,759,476 24,103,531 22,759,476 24,103,531

Material sales 9,473,650 8,697,723 9,473,650 8,697,723

239,181,549 204,399,854 239,181,549 204,399,854

3. OTHER OPERATING INCOME

Special projects 10,800 1,463,080 10,800 1,463,080

Library services 145,525 295,053 145,525 295,053

Breach of contract 101,323 440,054 101,323 440,054

Commission 315,606 149,675 315,606 149,675

Conferences 920,621 1,320,200 920,621 1,320,200

Mintek cafeteria 712,650 791,023 712,650 791,023

Sundry income 2,023,290 396,112 2,023,290 396,112

Other 309,265 607,450 309,265 607,450

Rental income – properties 2,647,455 2,525,116 2,647,455 2,525,116

7,186,535 7,987,763 7,186,535 7,987,763

4. INCOME FROM INVESTMENTS

Interest earned: fixed deposits 7,733,443 10,002,866 7,733,443 10,002,866

Interest earned: bank balances 841,142 749,725 841,142 749,725

8,574,585 10,752,591 8,574,585 10,752,591

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GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

5. PROFIT FROM OPERATIONS

Profit from operations is arrived at after taking into account the following items:

Auditors remuneration 1,217,623 643,908 1,190,553 628,908

Audit fees 1,212,920 642,777 1,187,350 627,777

Expenses 4,704 1,131 3,204 1,131

Fees for services 2,826,026 1,392,667 2,826,026 1,392,667

Consultants 2,392,460 979,828 2,392,460 979,828

Legal 433,566 412,839 433,566 412,839

Cost of sales 160,367,724 133,348,680 160,367,724 133,348,680

Staff costs 103,009,612 96,330,822 103,009,612 96,330,822

Repairs and maintenance 1,959,224 1,563,001 1,959,224 1,563,001

Consumables 31,854,441 22,178,747 31,854,441 22,178,747

General running expenses 22,801,958 11,039,612 22,801,958 11,039,612

Other 742,489 2,236,498 742,489 2,236,498

Administrative costs 75,800,172 74,597,533 75,787,738 74,610,068

Staff costs 41,089,683 31,011,062 41,089,683 31,011,062

Provision for post-retirement medical aid 4,532,773 1,419,109 4,532,773 1,419,109

Consumables 4,312,856 3,157,370 4,312,856 3,157,370

Provision for and amounts written off 2,461,335 3,609,458 2,461,335 3,609,458

General running expenses 6,456,432 20,972,230 6,443,998 20,972,230

Administration overheads 9,304,457 11,039,612 9,304,457 11,039,612

Other 7,642,637 3,388,692 7,642,637 3,401,227

Depreciation 8,868,498 8,675,290 8,868,498 8,675,290

Buildings and investment property 469,150 469,150 469,150 469,150

Plant 2,678,932 2,550,054 2,678,932 2,550,054

Equipment 5,326,844 5,237,070 5,326,844 5,237,070

Vehicles 314,253 338,173 314,253 338,173

Furniture and fittings 79,319 80,843 79,319 80,843

Number of employees 493 524 493 524

Proceeds on disposal of property, plant and equipment

Proceeds from disposal of property plant and equipment 34,953 798,648 34,953 798,648

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

GROUP MINTEK

Opening Balance

RAdditions

RTransfers

RDisposals

R

Closing Balance

R

Opening Balance

RAdditions

RTransfers

RDisposals

R

Closing Balance

R

6. PROPERTY, PLANT AND EQUIPMENT

2005COST

Land 4,927,776 — — — 4,927,776 4,927,776 — — — 4,927,776

Buildings 16,266,961 — — — 16,266,961 16,266,961 — — — 16,266,961

Plant 27,508,403 5,286,979 — — 32,795,382 27,508,403 5,286,979 — — 32,795,382

Equipment 82,095,682 3,834,792 — (321,600) 85,608,874 82,095,682 3,834,793 — (321,600) 85,608,875

Vehicles 2,443,835 — — (121,198) 2,322,637 2,443,835 — — (121,198) 2,322,637

Furniture and fittings 1,844,530 73,630 — (3,283) 1,914,877 1,844,530 73,630 — (3,283) 1,914,877

Assets under construction — 24,344 — — 24,344 — 24,344 — — 24,344

135,087,187 9,219,746 — (446,081) 143,860,852 135,087,187 9,219,746 — (446,081) 143,860,852

ACCUMULATEDDEPRECIATION

Opening R

Current Year

DepreciationR

TransfersR

DisposalsR

ClosingR

OpeningR

Current Year

DepreciationR

TransfersR

DisposalsR

ClosingR

Land — — — — — — — — — —

Buildings 9,109,498 325,339 — — 9,434,837 9,109,498 325,339 — — 9,434,837

Plant 18,634,507 2,678,932 — — 21,313,439 18,634,507 2,678,932 — — 21,313,439

Equipment 56,304,727 5,326,844 — (321,222) 61,310,349 56,304,727 5,326,844 — (321,221) 61,310,350

Vehicles 1,536,440 314,253 — (121,198) 1,729,495 1,536,440 314,253 — (121,199) 1,729,494

Furniture and fittings 1,349,966 79,319 — (3,283) 1,426,002 1,349,966 79,319 — (3,283) 1,426,002

Assets under construction — — — — — — — — — —

86,935,138 8,724,688 — (445,703) 95,214,122 86,935,138 8,724,688 — (445,703) 95,214,122

GROUP 2005

R

MINTEK 2005

R

NET BOOK VALUE

Land 4,927,776 4,927,776

Buildings 6,832,124 6,832,124

Plant 11,481,943 11,481,943

Equipment 24,298,525 24,298,525

Vehicles 593,143 593,143

Furniture and fittings 488,875 488,875

Assets under construction 24,344 24,344

48,646,730 48,646,730

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Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

GROUP MINTEK

Opening Balance

RAdditions

RTransfers

RDisposals

R

Closing Balance

R

Opening Balance

RAdditions

RTransfers

RDisposals

R

Closing Balance

R

6. PROPERTY, PLANT AND EQUIPMENT (continued)

2004COST

Land 4,927,776 — — — 4,927,776 4,927,776 — — — 4,927,776

Buildings 16,266,961 — — — 16,266,961 16,266,961 — — — 16,266,961

Plant 26,760,779 747,624 — — 27,508,403 26,760,779 747,624 — — 27,508,403

Equipment 77,549,183 9,319,143 — (4,772,644) 82,095,682 77,549,183 9,319,143 — (4,772,644) 82,095,682

Vehicles 2,233,090 328,000 — (117,255) 2,443,835 2,233,090 328,000 — (117,255) 2,443,835

Furniture and fittings 1,894,075 121,630 — (171,175) 1,844,530 1,894,075 121,630 — (171,175) 1,844,530

Assets under construction — — — — — — — — — —

129,631,864 10,516,397 — (5,061,074) 135,087,187 129,631,864 10,516,397 — (5,061,074) 135,087,187

ACCUMULATED DEPRECIATION

Opening R

Current Year

DepreciationR

TransfersR

DisposalsR

ClosingR

OpeningR

Current Year

DepreciationR

TransfersR

DisposalsR

ClosingR

Land — — — — — — — — — —

Buildings 8,784,159 325,339 — — 9,109,498 8,784,159 325,339 — — 9,109,498

Plant 16,084,453 2,550,054 — — 18,634,507 16,084,453 2,550,054 — — 18,634,507

Equipment 55,808,930 5,237,070 — (4,741,273) 56,304,727 55,808,930 5,237,070 — (4,741,273) 56,304,727

Vehicles 1,315,522 338,173 — (117,255) 1,536,440 1,315,522 338,173 — (117,255) 1,536,440

Furniture and fittings 1,435,917 80,843 — (166,794) 1,349,966 1,435,917 80,843 — (166,794) 1,349,966

Assets under construction — — — — — — — — — —

83,428,981 8,531,479 — (5,025,322) 86,935,138 83,428,981 8,531,479 — (5,025,322) 86,935,138

GROUP 2005

R

MINTEK 2005

R

NET BOOK VALUELand 4,927,776 4,927,776

Buildings 7,157,463 7,157,463

Plant 8,873,896 8,873,896

Equipment 25,790,955 25,790,955

Vehicles 907,395 907,395

Furniture and fittings 494,564 494,564

Assets under construction — —

48,152,049 48,152,049

Freehold land and buildings comprise:

Acquired in the prior year – Land and Buildings 21,194,737 21,194,737

Directors valuation 21,194,737 21,194,737

Portion 203-175 Klipfontein, Johannesburg, with buildings thereon. The replacement value of the building complex was estimated at R321 674, 000 by Lyons Financial Solutions (Proprietary) Limited, an independent valuer, during 2004. The latest valuation report was issued on 31 May 2004.

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Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

7. INVESTMENT PROPERTIES

Buildings – Billiton

Cost at beginning of year 7,190,526 7,190,526 7,190,526 7,190,526

Additions — — — —

Disposals — — — —

Transfers — — — —

Cost adjustments — — — —

Cost as at end of year 7,190,526 7,190,526 7,190,526 7,190,526

Accumulated Depreciation (2,109,496) (1,965,685) (2,109,496) (1,965,685)

Depreciation for the year (143,811) (143,811) (143,811) (143,811)

Net Book Value as at 31 March 2005 4,937,219 5,081,030 4,937,219 5,081,030

The property comprising land and buildings is part of the remaining extent of portion 175 of farm Klipfontein 203, Registration Division IQ, District of Randburg measuring 22.2662 hectares, situated at 200 Hans Strijdom Drive, in which the Landlord is the registered owner.

Investment Property has been valued at cost less accumulated depreciation.

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8. INVESTMENT IN ASSOCIATES

Details of associates are as follows:

Name of associatePlace of

incorporationPortion of

ownership

Portion of voting

power heldFinancial year end

2005R

2004R

Apic Toll Treatment (Proprietary) Limited South Africa 40% 40% 30 June 2005 12,312,255 10,599,913

Mogale Alloys (Proprietary ) Limited South Africa 25% 25% 31 March 2005 15,632,804 5,336,687 Tollsort (Proprietary ) Limited South Africa 25% 25% 28 February 2005 — 2,363,500

Tollsort Phase II (Proprietary ) Limited Prepayment for pre-incorporation costs. 31 March 2005 84,768 —

28,029,827 18,300,100

GROUP

2005R

2004R

Cost of unlisted investments 1,850 2,850

Apic Toll Treatment (Proprietary) Limited (40% shareholding) 1,600 1,600 Mogale Alloys (Proprietary) Limited (25% shareholding) 250 250 Tollsort (Proprietary) Limited (25% shareholding) — 1,000 Share of acquisition reserves: Apic Toll Treatment and Mogale Alloys (Proprietary) Limited 11,839,521 5,575,256 Fair value of net assets acquired 5,212,452 5,212,452 Interest free loans 84,768 2,362,500 Apic Toll Treatment (Proprietary) Limited — 1,600,000 Tollsort (Proprietary) Limited — 762,500 Tollsort Phase II (Proprietary) Limited 84,768 — Interest bearing loans 10,891,236 5,147,042 Mogale Alloys (Proprietary) Limited 5,891,236

5,000,000 —

5,147,042 Apic Toll Treatment (Proprietary) Limited

Directors’ valuation: value at year end 28,029,827 18,300,100

Reconciliation between opening and closing balance:

Carrying value at the beginning of year 18,300,100 1,000 Loans to associates 1,426,033 7,509,542 Share of post acquisition profits 3,091,242 5,577,106

Fair value assets acquired 5,212,452 5,212,452

Carrying value at the closing of year 28,029,827 18,300,100

The following are details of the significant assets, liabilities, income and expenses of the associates

Long-term assets 171,617,405 64,453,349 Investment — 22,325,588

Current assets 125,788,341 36,336,470

Total Assets 297,405,746 123,115,407

Current liabilities 175,992,323 25,386,858 Long term liabilities 83,079,875 80,920,334

Total Liabilities 259,072,198 106,307,192

Income 295,765,936 176,098,913 Operating profits 105,931,073 32,040,664

Net operating profit 23,435,128 7,464,428

9. INVESTMENT IN SUBSIDIARYDetails of subsidiary are as follows:

Name of subsidiaryPlace of

incorporationPortion of ownership

Financial year end

Shares at cost 31 March 2005

R

Shares at cost31 March 2004

R

Indebtness31 March 2005

R

Indebtness 31 March 2004

R

Mindev (Propietary)Limited

South Africa 100% 31 March 100 100 11,017,411 7,522,412

100 100 11,017,411 7,522,412 Mindev is engaged in the commercialisation of Mintek’s patents and technology through the identification of suitable partners to advance such interests by way of direct investments in equity and through joint ventures.Mintek holds 100% of the issued share capital of Mindev (Proprietary) Limited. The loans granted are unsecured and do not have fixed repayments terms.

DISCOUNTINUED OPERATIONS: TOLLSORT (PROPRIETARY) LIMITEDTollsort (Proprietary) Limited ceased its operations at the end of September 2004. Mindev has included the operating losses from Tollsort (Proprietary) Limited to an amount of R1 193 043. This represents 25% of Mindev’s portion of the loan guarantee made to Standard Bank on behalf of Tollsort (Proprietary) Limited. The total amount outstanding as at 31 March 2005 is R4 772 174.

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

10. INVESTMENT IN SHORT-TERM FIXED DEPOSITS

Investments in short-term fixed deposits are held with various reputable financial institutions. 100,000,000 80,000,000 100,000,000 80,000,000

Fixed investments are held with various public financial institutions are partly earmarked as financing for the post retirement medical aid liability (refer to note 17).

11. INVENTORY AND CONTRACTS IN PROGRESS

Consumables 1,662,141 2,052,468 1,662,141 2,052,468

Finished goods 32,730 1,558,662 32,730 1,558,662

Contracts in progress 1,246,000 2,298,678 1,246,000 2,298,678

2,940,871 5,909,808 2,940,871 5,909,808

Less: Obsolete stock (850,000) (1,510,690) (850,000) (1,510,690)

2,090,871 4,399,118 2,090,871 4,399,118

12. LONG-TERM STAFF LOANS

Staff loans 2,183,523 3,226,394 2,183,523 3,226,394

Less: Short-term portion (Note 13) 910,070 790,048 910,070 790,048

1,273,453 2,436,346 1,273,453 2,436,346

Staff loans are granted to qualifying staff in terms of schemes approved by the Board of Mintek. These loans are subject to a maximum repayment term of 60 months, by way of fixed monthly instalments. The interest payable on these loans is calculated at the prevailing official interest rate as prescribed in the Seventh Schedule to the Income Tax Act, No. 58 of 1962.

13. TRADE AND OTHER RECEIVABLES

Trade Debtors 44,612,305 41,356,282 44,612,305 41,356,282

Current portion of staff loans( Note 12) 910,070 790,048 910,070 790,048

Other receivables 4,201,997 4,935,486 4,201,994 4,935,485

Less: Provision for bad debts 12,276,791 9,826,059 12,276,791 9,826,059

37,447,581 37,255,757 37,447,578 37,255,756

Two material debts totalling R7,741,877 (2003-2004 R6,915,457) included in trade debtors, are currently subject to legal recovery proceedings.The recovery of these debts is considered improbable and have been provided for in the provision for bad debts. Bad debts to the value of R476 837 ( 2003-2004 R29 448) was written-off during the year.

14. TRADE AND OTHER PAYABLES

Trade creditors 9,593,095 5,647,659 9,593,095 5,647,659

Other payables 5,096,486 3,097,219 5,096,486 3,097,219

Other creditors and accruals 2,265,179 1,222,649 3,492,179 1,209,619

16,954,759 9,967,527 18,181,759 9,954,497

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

15. DEFERRED INCOME

Deferred income 15,193,861 — 15,193,861 —

Advance client billing — 7,126,456 — 7,126,456

15,193,861 7,126,456 15,193,861 7,126,456

Deferred income arises as a result of contracts undertaken in terms of the Lead Fund and Innovation fund administered by the Department of Science and Technology in respects of amounts received in cash not yet accounted for as revenue.Advance client billing income arise as a result of contracts undertaken in terms of commercial work in respect of invoices raised but for which no substantial work has been made to justify the recognition of any revenue.

Opening Balance

R

Additional provisions

R

Utilised and reversed

R

Closing Balance

R

16. PROVISIONS

GROUP

Provision for leave pay 8,259,236 12,325,226 7,711,050 12,873,412

Provision for bonus 1,097,738 7,293,214 3,245,800 5,145,152

9,356,974 19,618,440 10,956,850 18,018,564

MINTEK

Provision for leave pay 8,259,236 12,325,226 7,711,050 12,873,412

Provision for bonus 1,097,738 7,293,214 3,245,800 5,145,152

9,356,974 19,618,440 10,956,850 18,018,564

The provision for leave pay relates to vested leave pay to which employees become entitled upon leaving the employment of the entity. The provision arises as employees render a service that increases their entitlement to future compensated leave. The provision is utilised when employees who are entitled to leave pay, leave the employment of the entity or when the accrued leave due to an employee, is utilised.The provision for bonus consists of amounts elected by the employees from their total cost of employment package and a performance bonus. Bonuses become payable in November annually. The provision represents management’s best estimate of the liability at year end. The performance bonus is calculated on a specific formula based on the consolidated annual financial results.

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

17. RETIREMENT BENEFITS OF EMPLOYEES

Post retirement medical benefits

The amounts included in the balance sheet arising from Mintek’s obligation in respect of post retirement medical benefits is as follows:

Present value of obligations as at 31 March 2005 52,231,647 49,300,000 52,231,647 49,300,000

Fair value of planned assets as at 31 March 2005 — — — —

Post retirement benefit obligation 52,231,647 49,300,000 52,231,647 49,300,000

Fixed investments held with various public financial institutions are partly earmarked as financing for the post retirement medical aid liability (refer to note 10). Mintek has not assigned a specific fund to hedge against the post retirement medical aid liability.

Movement in the net liability recognised in the balance sheet

Net past service benefit liability: as at 31 March 2005 49,300,000 19,375,330 49,300,000 19,375,330

Interest cost — — — —

Amounts charged to the income statement 4,191,876 423,801 4,191,876 423,801

Contributions received by the fund (1,260,228) — (1,260,228) —

Restatement of liability — 29,500,869 — 29,500,869

Net past service benefit liability as at 31 March 2005 52,231,648 49,300,000 52,231,648 49,300,000

Key assumptions

Expected long term rate of return on plan assets 9.0% 9.5% 9.0% 9.5%

Expected increase in health care costs 6.0% 6.5% 6.0% 6.5%

Amounts recognised in income in respect of the scheme are as follows:

Current cost — — — —

Benefits paid 2,713,776 2,361,081 2,713,776 2,361,081

Contributions paid 1,260,228 2,784,882 1,260,228 2,784,882

Expected average remaining life of employees (years) 16 15 16 15

Medical cover is provided through a number of different schemes. Post-retirement medical cover in respect of qualifying employees is recognised as an expense over the expected remaining service lives of the relevant employees. The group has an obligation to provide medical benefits to certain pensioners and dependants of ex-employees. These liabilities have been provided in full, calculated on an actuarial basis. The liabilities are unfunded. Periodic valuation of this obligation is carried out by independent actuaries every two years, the latest one being 31 March 2005.Pension benefits are provided by membership of the Mintek Retirement Fund (MRF) and the Mintek Employees Retirement Fund (MERF).The MRF and MERF are defined contribution plans, and are registered in terms of the Pensions Fund Act, 1956. These funds are managed independently by an insurance company. A valuation of the MRF was carried out by independent actuaries during the 2003 – 2004 financial year and no opinion was issued on the financial position of the fund as it is currently an unfunded plan with no planned assets. As at 31 March 2005, 442 employees were members of the fund.Employer contributions are charged against income in the period in which they are incurred. Contributions so charged were as follows:

MRF and MERF 9,682,030 8,429,049 9,682,030 8,429,049

Employee contributions to the funds were as follows:

MRF and MERF 3,760,054 3,749,733 3,760,054 3,749,733

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

18. LONG-TERM LIABILITIES

Rentals received in advance – Billiton

Payable within one year 75,642 75,642 75,642 75,642

Payable within 2 – 15 years 1,692,576 1,768,219 1,692,576 1,768,219

Net rental lease liability 1,768,218 1,843,861 1,768,218 1,843,861

Mintek has entered into a long-term lease for the rental of part of its premises to Billiton (Proprietary) Limited. The average term of the lease is fifteen years. For the year ended 31 March 2005 the average effective borrowing rate was 11.00%. Interest rates are fixed at the contract date. All leases are on a fixed repayment basis and no arrangements have been entered into for contingent rental repayments.

19. FUTURE LEASE LIABILITY

Future operating lease charges for vehicles

Payable within one year 324,276 291,396 324,276 291,396

Payable between two and five years 160,203 — 160,203 —

Net operating lease liability 484,479 291,396 484,479 291,396

It is the group’s policy to lease certain of its vehicles under operating leases. The group has a vehicle operating lease agreement with an average lease term of three to four years. All leases are on a fixed repayment basis and no arrangement have been entered into for contingent rental repayments.

20. CONTINGENT LIABILITIES

Guarantees

Guarantees are in respect of loans offered by Mintek through Standard Bank to certain associate companies. The balance of R1,193,043 represents 25% of Mintek’s share of the total obligation. 1,193,043 — 1,193,043 —

No material claims have been filed against the group.

21. TAXATION

Taxation on entity share in associate post acquisition reserves 2,410,641 98,881 — —

No deferred taxation is raised on the assessed losses of Mindev (Proprietary) Limited due to the uncertainty regarding taxable income to utilise the assets in the foreseeable future.No provision for income tax was made as Mintek is exempted in terms of section 10(1)(CA)(i) of the Income Tax Act, No. 58 of 1962. Tax provision liabilities are with respect to Mindev and its associated companies and are payable through those entities.

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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GROUP MINTEK

2004 – 2005R

2003 – 2004R

2004 – 2005R

2003 – 2004R

22. FINANCING COSTS

Interest paid (vendor charges) 2,489 2,384 2,489 2,384

Net realised foreign currency losses 568,371 841,525 568,371 841,525

570,860 843,909 570,860 843,909

23. COMMITMENTS

Contracted for:

Capital expenditure 216,346 205,694 216,346 205,694

Authorised and not contracted for — — — —

Internal funds will be provided to meet the expenditure in respect of these commitments, which have been approved and contracted for.

24. CASH GENERATED FROM OPERATIONS

Profit from operations 5,862,627 4,482,130 5,902,131 4,484,595

Adjusted for:

Income from investments (8,574,585) (10,752,591) (8,574,585) (10,752,591)

Depreciation 8,868,498 8,675,290 8,868,498 8,675,290

Adjustment for overstatement of prior year staff costs (refer to note 25) 6,442,779 — 6,442,779 —

(Profit)/Loss on disposal of fixed assets (34,575) (762,897) (34,575) (762,897)

Net realised foreign currency losses 568,371 841,525 568,371 841,525

Bad debts written off 476,837 29,448 476,837 29,448

Cash flow from operations before working capital changes 13,609,951 2,512,905 13,649,455 2,515,370

Working capital changes:

Decrease/(increase) in inventories 2,308,247 3,307,585 2,308,247 3,307,585

Decrease/(increase) in receivables (191,826) 668,910 (191,823) 668,910

Decrease/(increase) in short-term investment interest accrual (1,062,145) 1,381,711 (1,062,145) 1,381,711

Increase/(decrease) in payables 8,249,668 (2,288,886) 6,977,262 (2,279,381)

Increase/(decrease) in provisions 8,661,590 (500,425) 8,661,590 (500,425)

Increase/(decrease) in deferred income 8,067,405 (4,476,249) 8,067,405 (4,476,249)

39,642,890 605,551 38,409,991 617,521

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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25. FUNDAMENTAL ERRORS

The prior year figures have been adjusted with the correction of an error relating to the over provision of obsolete or slow moving stock, depreciation of buildings and investment property, staff costs and the impairment of negative goodwill. The effect of the change is as follows:

GROUP2004 – 2005

MINTEK2004 – 2005

Prior to adjustment

RAdjustment

RTaxation

R

After adjustment

R

Prior to adjustment

RAdjustment

RTaxation

R

After adjustment

R

Obsolete stock adjustments

Increase in accumulated funds 131,644,312 2,098,768 — 133,743,080 131,644,312 2,098,768 — 133,743,080

Decrease in obsolete stock (3,609,458) 2,098,768 — (1,510,690) (3,609,458) 2,098,768 — (1,510,690)

Adjustment for the overstatement of staff costs — 3,221,390 — 3,221,390 — 3,221,390 — 3,221,390

Understatement of Depreciation for Buildings and Investment property

Decrease in accumulated funds 133,743,080 11,218,994 — 122,524,086 133,743,080 11,218,994 — 122,524,086

Increase in accumulated depreciation (77,825,634) (11,218,994) — (89,044,628) (77,825,634) (11,218,994) — (89,044,628)

(see Statement on changes in equity)

The prior year figures have been adjusted with the correction of errors relating to the elimination of intercompany interest and transactions in the consolidated income statement and cashflow statement:

GROUP 2004

MINTEK2004

Previously Reported

RAdjustment

RTaxation

RRestated

R

Previously Reported

RAdjustment

RTaxation

RRestated

R

Income Statement

Other operating income 19,789,380 (1,049,026) — 18,740,354 — — — —

Finance costs (1,051,410) 1,049,026 — (2,384) — — — —

Cashflow Statement

Cashflows from operating activities

Interest received — (1,049,026) — (1,049,026) — — — —

Interest paid (1,051,410) 1,049,026 — (2,384) — — — —

Cashflows from investment activities

Decrease/(Increase) in investment in associate — (7,338,455) — (7,338,455) — — — —

Cashflows from finance activities

(Decrease)/increase in shareholder’s loan (7,338,455) 7,338,455 — — — — — —

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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26. RECLASSIFICATIONS AND RESTATEMENTS

The reclassifications were made to the comparatives to improve compliance with the requirements of South African Statements of Generally Accepted Accounting Practice.

Reconciliation 2004

Balance previously

reportedR

Investment income

R

Expenses by function

R

Contract income

R

Short-term investment

R

Investment in associate

RReceivables

R

Fundamental error

R

Cashflow restatements

R

Balance as reclassified

R

GROUP

Income statementOther operating income 19,789,380 (10,752,591) (1,049,026) 7,987,763 Income from investments 10,752,591 10,752,591 Administrative expenditure (77,463,377) 2,493,469 (74,969,908)Other operating expenses (8,218,396) 8,218,396 Auditors remuneration (643,908) (643,908)Fees for other services (1,392,667) (1,392,667)Depreciation (8,675,290) (8,675,290)Financing costs (1,051,410) 1,049,026 (2,384)Royalties 83,004 (83,004)

Balance sheet

AssetsNon-current assets

Investment: fixed deposits 80,000,000 (80,000,000) Investment in subsidiary 15,937,600 (15,937,600) Shareholders loans to subsidiary 2,362,500 (2,362,500)Investment in associate 18,300,100 18,300,100

Current assetsInvestment in short-term fixed deposits 80,000,000 80,000,000 Trade and other receivables 35,615,479 1,640,277 37,255,756 Deposits and prepayments 1,640,277 (1,640,277)

LiabilitiesCurrent liabilities

Advance client billing 7,126,456 (7,126,456) Deferred income 7,126,456 7,126,456

Cashflows from operating activities

Cash received from customers 208,284,731 (677,188) 207,607,543 Cash payment to suppliers (205,597,830) (1,404,162) (207,001,992)Interest received 9,370,880 9,370,880 Interest paid (1,051,410) 1,049,026 (841,525) (843,909)

Cashflows from investment activities

Decrease/(Increase) in investment in associate (7,338,455) 14,695,615 7,357,160 Decrease/(Increase) in investment in subsidiary 10,807,236 (10,807,236) Interest received 11,801,617 (1,049,026) (10,752,591) Decrease/(Increase) in staff loans (416,207) 416,207

Cash flows from financing activities

(Decrease)/increase in shareholder’s loan (7,338,455) 7,338,455

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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26. RECLASSIFICATIONS AND RESTATEMENTS (continued)

Reconciliation 2004

Balance previously

reportedR

Investment income

R

Expenses by function

R

Short term investment

R

Shareholders loan

RReceivables

R

Deferred income

R

Cashflow restate-

mentsR

Balance as reclassified

R

MINTEKIncome statement

Other operating income 18,740,354 (10,752,591) 7,987,763 Income from investments 10,752,591 10,752,591 Administrative expenditure (77,448,377) 1,996,784 (75,451,593)Other operating expenses (8,230,931) 8,230,931 Auditors remuneration (628,908) (628,908)Fees for other services (1,392,667) (1,392,667)Depreciation (8,206,140) (8,206,140)

Balance sheetAssetsNon-current assets

Investment: fixed deposits 80,000,000 (80,000,000) Investment in subsidiary 5,160,012 (5,160,012) Shareholders loans to subsidiary 2,362,500 (2,362,500) Cost of investment shares 100 100

Current assetsInvestment in short-term fixed deposits 80,000,000 80,000,000 Loans advanced to subsidiary 7,522,412 7,522,412 Trade and other receivables 34,825,431 2,430,325 37,255,756 Deposits and prepayments 2,430,325 (2,430,325)

LiabilitiesCurrent liabilities

Advance client billing 7,126,456 (7,126,456) Deferred income 7,126,456 7,126,456

Cashflows from operating activitiesCash received from customers 204,408,322 3,199,221 207,607,543 Cash payment to suppliers (205,597,830) (1,392,192) (206,990,022)Interest received 9,370,880 9,370,880 Interest paid (2,384) (841,525) (843,909)

Cashflows from investment activitiesInterest received 10,752,591 (10,752,591) Decrease/(Increase) in staff loans (416,207) 416,207

Reclassifications:Operating incomeThe entity reclassified a portion of its other income included under “Other operating income” to “Income from investments”. The change in classification does not impact the entity’s tax position or results, however a reclassification of cashflow information for “Interest received” was made from “Cashflows from investment activities” to “Cashflow from operating activities” for the year ended 31 March 2004.Operating expensesThe entity reclassified its operating expenses initially included under “Administrative expenditure” and “Other operating expenses” to “Auditors remuneration”, “Fees for other services” and “Deprecation”. The change in classification does not impact the entity’s tax position, results or cashflow information for the year ended 31 March 2004.Investment: fixed depositsThe entity reclassified its investment in short-term fixed deposits initially included under “Non-current assets” to “Current assets”. The change in classification does not impact the entity’s tax position, results or cashflow information for the year ended 31 March 2004.Investment in subsidiary and shareholder loanThe entity reclassified a portion of investment in its subsidiary from “Investment in subsidiary” and “Shareholder loan to subsidiary” included under “Non-current assets” to reflect as “Current assets” under “Loan advanced to subsidiary” and “Cost of investment shares” included under “Non-current assets”. The change in classification does not impact the entity’s tax position, results or cashflow information for the year ended 31 March 2004.Trade and other receivablesThe entity reclassified its other receivables included under “Deposits and prepayments” to “Trade and other receivables”. The change in classification does not impact the entity’s tax position, results or cashflow information for the year ended 31 March 2004.Advanced billingThe entity reclassified its deferred income relating to “Advance client billing” to “Deferred Income”. The change in classification does not impact the entity’s tax position, results or cashflow information for the year ended 31 March 2004.Restatement:Cashflow from operating activitiesThe entity has restated its cashflow information relating to “Cashflow from operating activities” and “Cashflow from investment activities” due to incorrect classification between the categories. The adjustment affected “Cash receipts from customers”, “Cash payments to suppliers and employees”, “Interest Paid” and “Decrease/(Increase) in staff loans”. The change in classification does not impact the entity’s tax position or results for the year ended 31 March 2004.

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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27. BOARD MEMBERS AND EXECUTIVE MANAGEMENT REMUNERATION

GROUP AND MINTEK 2004-2005

EntityBasic

Salary

Fees for services as

director

Performance bonus and

other expenses TOTAL

Executive Management

MINTEK

Dr P.P. Jourdan Mintek 996,728 — — 996,728

Dr R.L Paul Mintek 850,324 — — 850,324

Dr N.A Barcza Mintek & Mindev 834,277 — — 834,277

Dr F Petersen (resigned 28.02.2005) Mintek 777,447 — — 777,447

Ms K. Mzondeki (resigned 30.04.2005) Mintek 532,000 — — 532,000

Non Executive Management Board members

MINTEK

Mr M. Khumalo (Chairman) Metallon Corporation — 4,554 — 4,554

Dr F. Crundwell CM Solutions — 3,382 — 3,382

Ms T. Mosery-Eboka Standard Bank — 3,382 — 3,382

Dr N.P Mjoli Hlathi Development — 3,382 — 3,382

Ms L. Mojela WIPHOLD — 1,691 — 1,691

Mr. R Havenstein Anglo American Platinum — 1,691 — 1,691

Ms G. Mthethwa Standard Bank — 1,691 — 1,691

Mr V. Pillay CSIR — — — —

Prof PE Ngoepe University of North — 1,691 — 1,691

Mr A. Mngomezulu DME — — — —

MINDEV

Mr. N. Morrison Mindev — 1,691 — 1,691

Mr G. Mosinyi Mindev — 1,691 — 1,691

3,990,776 24,846 — 4,015,622

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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30. RELATED PARTY

Controlling entityThe group comprises of Mintek and its wholly owned subsidiary Mindev (Proprietary) Limited. Mindev is engaged in the commercialisation of Mintek patents and technology through the identification of suitable partners and investments in equity associates, namely Mogale Alloys (Proprietary) Limited, Apic Toll Treatment ( Proprietary) Limited and Tollsort ( Proprietary) Limited .The group, in the ordinary course of business, enters into various sale and purchase transactions on an arm’s length basis at market rates with related parties.None of the directors, officers or major shareholders of Mintek group or, to the knowledge of Mintek, their families, had any interest, direct or indirect, in any transactions which have affected or will materially affect Mintek or its investment interest or subsidiaries.

AssociatesDuring the year the group advanced interest bearing loans to Associates.

GROUP MINTEK

2005R

2004R

2005R

2004R

Interest bearing loans

Mogale Alloys (Proprietary ) Limited 5,891,236 — 5,891,236 —

Apic Toll Treatment (Proprietary) Limited 5,000,000 5,147,042 5,000,000 5,147,042

Tollsort (Proprietary) Limited — 762,500 — 762,500

Tollsort (Proprietary) Limited ceased its operations at the end of September 2004. Mindev has included the operating losses from Tollsort (Proprietary) Limited to an amount of R1,193,043 which represents twenty-five percent of Mindev’s portion of the loan guarantee made to Standard Bank on behalf of Tollsort (Proprietary) Limited.

Related party transactionsRelated party transactions exist within the group. During the year all selling transactions were concluded at arm’s length. Details of material transactions with related parties not disclosed elsewhere in the financial statements are as follows:

Mintek sales to

Department of Minerals and Energy 537,998 552,980 537,998 552,980

Department of Science and Technology 9,987,661 9,559,613 9,987,661 9,559,613

Financial statements and notesNOTES TO THE ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2005

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28. INSURANCE AND RISK MANAGEMENT

The insurance and risk management policies adopted by Mintek are aimed at obtaining sufficient cover at the minimum cost to protect its asset base, earning capacity and legal obligations against acceptable losses.All property, plant and equipment are insured at current replacement value. Risks of a possible catastrophic nature are identified and insured while acceptable risks.

29. FINANCIAL INSTRUMENTS

Credit riskFinancial assets that could subject the group to credit risk consist principally of bank balances and cash, deposits, trade and other receivables and loans to associates. The group bank balances are placed with high credit quality financial institutions. Trade and other receivables and loans to associates are presented net of the allowance for doubtful receivables or loan write-offs. Credit risk with respect to trade receivables is limited due to the large number of customers comprising the group’s customer base and their dispersion across different industries and geographic areas. Accordingly the group does not have significant concentration of credit risk.The carrying amounts of financial assets included in the balance sheet represent the group’s exposure to credit risk in relation to these assets.The group does not have any significant exposure to any customer or counter party.

Interest riskThe valuation of interest rate exposure and investment strategies is done by management on a regular basis. Interest bearing investments are held with reputable banks to minimise exposure.

Fair valuesAs at 31 March 2005 the carrying amount of bank balances and cash, deposits, trade and other receivables, trade and other payables, contracts in progress, advances received and short term borrowing approximated their fair values due to the short term maturities of these assets and liabilities.Long term loans to associates and subsidiaries are interest free with no fixed terms and therefore the fair value of these loans cannot be calculated.The fair value of the loans to outside shareholders cannot be determined as the loans are interest free with no fixed terms of repayment.

Foreign currency riskThe group undertakes certain risk in certain denominated foreign currencies, hence exposures to rate fluctuations arise. The group manages this risk by use of a foreign bank account. The group does not currently enter into forward foreign exchange contracts to buy and sell amounts of various currencies in the future at predetermined exchange rate, as the foreign currency amounts are not significant in relation to the entity’s income, however, forward exchange contracts are entered into with large commercial contracts denominated in foreign currency. As a matter of principle, the group does not enter into foreign currency exchange contracts for speculative reasons.The estimated fair value/value gain/(loss) per income statement was determined by comparing the contracted value rate to an equivalent spot rate on the settlement or at year end rate for outstanding foreign currency .

mintek

annual report

2005

Publicatio

ns

Mintek publications1 APRIL 2004 to 31 MARCH 2005

Deeplaul V Mintek, a national resource of minerals and Bryson MAW processing expertise for platinum ores. Presented at the International Platinum Conference “Platinum Adding Value”, Sun City, Pilanesberg, South Africa, 4-7 Oct. 2004.

Demuru D, Tshikhudo Oriented pseudorotaxane capped gold TR, Wang Z, Brust nanoparticles, in preparation.M, Secchi A, Arduini A and Pochini A

Doty RC, Tshikhudo TR, Extremely stable, water-soluble, Ag nano- Brust M and Fernig DG particles. Submitted to Journal of Materials Chemistry.

Douglas A, Neethling JH Dislocation distribution in a Pt-based and Cornish LA analogue of Ni-based superalloys. Microscopy Society of Southern Africa: Proceedings, vol. 34. 2004. p.12.

Douglas A, Neethling JH, Application of computer simulation to High Santamarta R, Resolution Transmission Electron Microscopy Schryvers D and (HRTEM) of Pt-based superalloy analogues. Cornish LA Presented at the 9th Materials Modelling Meeting, University of Limpopo, Limpopo, 16 Mar. 2005.

Du Preez AC and Separation of nickel and cobalt from calcium, Preston JS magnesium and manganese by solvent extraction with synergistic mixtures of carboxylic acids. Journal of the South African Institute of Mining and Metallurgy (SAIMM), vol. 104, no. 6. Jul. 2004. pp. 333-338.

Gericke M and Pinches A Biosynthesis of metal nanoparticles. Presented at Nano Africa I, Stellenbosch, Western Cape, South Africa, 7 Apr. 2004.

Glaner L and Investigation of the Ni-Pt-Ru phase diagram. Cornish LA Microscopy Society of Southern Africa: Proceedings, vol. 34. 2004. p. 9.

Green BR, Smit DMC, Leaching and recovery of platinum group Maumela H and metals from UG-2 concentrates. Journal of Coetzer G the South African Institute of Mining and Metallurgy (SAIMM), vol. 104, no. 6. Jul. 2004. pp. 323-331.

Horvath UEI, Cronje S, Mono- and binuclear gold(I) amido compounds McKenzie JM, Barbour LJ of purine derivatives. Z. Naturforsch., vol 59b.and Raubenheimer HG 2004. pp. 1605-1617.

Hulbert DG Getting the most out of online measures. Presented at New Developments in Instrumentation and Automation, Cape Town, South Africa, 4 Aug. 2004.

Jones RT JOM world nonferrous smelter survey, part II: Platinum group metals. JOM, Dec. 2004. pp. 59-63.

Jones RT and Kotze IJ DC arc smelting of difficult PGM-containing feed materials. Presented at the International Platinum Conference “Platinum Adding Value”, Sun City, Pilanesberg, South Africa, 4-7 Oct. 2004.

Jordaan L, Singh A, Application of advanced control to flotation. Muller B and Knights BDH Presented at Mineral Processing 2004, Somerset West, Western Cape, South Africa, 5-6 Aug. 2004.

Kaliprasad M Proactive risk management - a project management perspective. Presented at the Cost Engineering Association of Southern Africa (CEASA), Rosebank, Johannesburg, South Africa, 17 Mar. 2005.

Abdel-Latif MA Atmospheric thermal magnesium extraction. Presented at Pyrometallurgy ‘05, Cape Town, South Africa, 14-15 Mar. 2005.

Auchterlonie A The South African platinum industry. Mining Review Africa, no. 4. 2004. pp. 10, 12, 14-16,18.

Baartjes N Development of the industrial mineral sector in South Africa. Presented at the Industrial Minerals Applications Conference, Dar es Salaam, Tanzania, 7-11 Mar. 2005.

Biggs T, Cornish LA, Revised phase diagram for the Pt-Ti system Witcomb MJ and Cortie MB from 30 to 60 at.% platinum. Journal of Alloys and Compounds, vol. 375. 2004. pp. 120-127.

Biggs T, Taylor SS and The hardening of platinum alloys for Van der Lingen E potential jewellery application. Platinum Metals Review, vol. 49, no. 1. 2005. pp. 2-15.

Bowen RJ, Caddy J, Synthesis, crystal structures and reactionsCoyanis EM, of 2-oxo-malonyl bis(aryl-imidoyl) chlorides Fernandes MA, Layh M, and hydroxy-methane tris(arylimidoyl)Linganiso LZ, Maboya WK chlorides, Aust. J. Chem., vol. 58. 2005. and Omondi B pp. 1-9

Bowen RJ, Caddy J, Synthesis of phosphine stabilised group 11 Fernandes MA, Layh M 1-azaallyl complexes; molecular structure of and Mamo MA bui

3PAuCH(R)C(but) = NR (R = SiMe

3). Poly-

hedron, vol. 23, no. 14. 2004. pp. 2273-2280.

Bryson MAW Mineralogical control of minerals processing circuit design. Journal of the South African Institute of Mining and Metallurgy (SAIMM), vol. 104, no. 6. Jul. 2004. pp. 307-309.

Bryson MAW New technologies in the concentration of PGM values from UG-2 ores. Journal of the South African Institute of Mining and Metallurgy SAIMM), vol. 104, no. 6. Jul. 2004. pp. 311-313.

Chetty D, Gutzmer J, Boron in braunite-rich ores of the Kalahari Van Staden A and Beukes NJ Manganese Field. Geoscience Africa 2004, Abstract Volume. Ashwal LD and Hofmann A (eds.). Johannesburg: University of the Witwatersrand, 2004. pp. 116-117.

Chown LH, Cornish LA Structure and properties of Pt-Al-Co alloys.and Joja B Microscopy Society of Southern Africa: Proceedings, vol. 34. 2004. p. 11.

Cornish LA Aluminium-indium. MSIT WorkPlace, 2004.

Cornish LA, Süss R, Platinum-based alloys for high temperature Chown LH, Douglas A, applications: a review. Presented at the US-Glaner L, Matema M Africa Workshop Materials & Mechanics, and Taylor SS Cape Town, South Africa, 24-28 Jan. 2005.

Cornish LA, Süss R, Platinum-based alloys for high temperature Chown LH, Taylor S, and special applications. Presented at theGlaner L, Douglas A International Platinum Conference “Platinum and Prins SN Adding Value”, Sun City, Pilanesberg, South Africa, 4-7 Oct. 2004.

Cornish LA, Süss R, Thermodynamic database for Pt-based Prins SN and Glatzel U alloys and Pt-based coatings: trials and tribulations. Presented at the 9th Materials Modelling Meeting, University of Limpopo, Limpopo, 16 Mar. 2005.

Cornish LA, Süss R, Intermetallic compounds and alloy develop- Taylor S, Chown LH, ment. Presented at the Wits Metallurgy Compton DN, Douglas Metallurgy Centenary Conference “100 Years A and Witcomb MJ of Excellence”, Johannesburg, South Africa, 11-12 Oct. 2004.

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Publications

Lang C and Cornish LA Physical metallurgy of platinum alloys. Presented at the Wits Metallurgy Centenary Conference ‘100 years of excellence’, Johannesburg, South Africa, 11-12 Oct. 2004.

Luckos A and Den Hoed P The carbochlorination of titaniferous feed- stocks in a fluidised bed. Fluidization XI: Present and future for fluidisation engineering - proceedings of the 11th International Conference on Fluidisation, Arena U et al.(eds.). Brooklyn, NY: Engineering Conferences International, 2004.

Luckos A and Den Hoed P Fluidisation and flow regimes of titaniferous solids. Ind. Eng. Chem. Res., vol. 43. 2004. pp. 5645-5652.

Matema M, Douglas A, Preliminary investigation of the microstructure Süss R, Joja B and of complex Pt-based alloys. Microscopy Cornish LA Society of Southern Africa: Proceedings, vol. 34. 2004. p. 8.

McKenzie A A new process for the thermal refining of zinc: A case study of technology development at Mintek. Journal of the South African Institute of Mining and Metallurgy (SAIMM), vol. 104, no. 6. Jul. 2004. pp. 315-322.

Nzula MP and Lang CI Order-hardening in platinum 10 at.% chromium. Microscopy Society of Southern Africa: Proceedings. Vol. 34. 2004. p. 18.

Padayachee D, Au/MnxOy catalysts for low-temperature CO Roberts SJ, Tshikhudo oxidation: effect of preparation method on TR, Klingbiel I, Van der activity. Presented at the 13th International Lingen E and Scurrell MS Congress on Catalysis, Paris, France, 11-16 Jul. 2004.

Pattrick G, Van der The potential for use of gold in automotiveLingen E, Corti CW, pollution control technologies: a short review. Holliday RJ and Topics in Catalysis, vols. 30/31. Jul. 2004.Thompson DT pp. 273-279.

Petersen FW Maximising the PGM value matrix towards a strategic economic advantage for South Africa. Presented at Mineral Processing 2004, Somerset West, Western Cape, South Africa, 5-6 Aug. 2004.

Pretorius A and Application of a model predictive controller onVandayar V a milling circuit. Presented at Mineral Processing 2004, Somerset West, Western Cape, South Africa, 5-6 Aug. 2004.

Reynolds QG and Semi-empirical modelling of the electrical Jones RT behaviour of DC-arc smelting furnaces. The Journal of the South African Institute of Mining & Metallurgy (SAIMM), May 2004. pp. 345-351.

Reynolds QG & Jones RT Twin-electrode DC smelting furnaces in theory and photographic testwork. Presented at Pyromet 05, Cape Town, South Africa, 14-15 Mar. 2005.

Scott SA and Matchett K MINATAUR: the Mintek alternative technology to gold refining. The Journal of the South African Institute of Mining and Metallurgy (SAIMM), vol. 104, no. 6, Jul. 2004. pp. 339-343.

Singh A Elutriator applications. Presented at Mineral Processing 2004, Somerset West, Western Cape, South Africa, 5-6 Aug. 2004.

Smith GC, Jordaan L, Innovative process control technology for Singh A, Vandayar V, milling and flotation circuit operations. The Smith VC, Muller B and Journal of the South African Institute of Hulbert DG Mining and Metallurgy (SAIMM), May 2004. pp. 353-365.

Süss R, Cornish LA Comparison of experimentally determined and Glatzel U and CALPHAD-determined results of the Pt-Cr-Ru system. Presented at CALPHAD XXXIII, Krakow, Poland, 30 May to 4 Jun. 2004.

Süss R, Douglas A and An electron microscope investigation of Cornish LA tensile samples of Pt-based superalloys. Microscopy Society of Southern Africa: Proceedings, vol. 34. 2004. p. 10.

Süss R, Van der 18 carat yellow gold alloy with increased Lingen E and Glaner L hardness. Gold Bulletin, vol. 37. no. 3-4. 2004. pp. 196-207.

Tshikhudo TR, Molecular Recognition by Calix[4]arene-Demuru D, Wang Z, Modified Gold Nanoparticles in Aqueous Brust M, Secchi A, solution, Angew. Chem. Int. Ed. 2005, 44, 2 Arduini A and Pochini A,

Tshikhudo TR, Wang Z Biocompatible Gold Nanoparticles, Materials and Brust M Science and Technology, 2004, 20, 980.

Van der Lingen E, Metallography and microstructures of Cornish LA, Taylor S precious metals and precious metal alloys. and Süss R ASM Handbook. Volume 9: Metallography and microstructures. Vander Voort GF (ed.). Materials Park, Ohio: ASM International, 2004. pp. 860-876.

Wenderoth M, Cornish LA, On the development and investigation of Süss R, Vorberg S, quaternary Pt-based superalloys with Ni Fischer B, Glatzel U additions. Metallurgical and Materials and Voelkl R Transactions, . vol. 36A. 2005. pp. 567-575.

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GlossaryNEA Nuclear Energy Act

NEPAD New Partnership for Africa’s Development

NIOSH National Institute of Occupational Safety and Health

NNR National Nuclear Regulator

NRF National Research Foundation

NSTF National Science and Technology Forum

NUM National Union of Mineworkers

PFMA Public Finance Management Act

PGMs Platinum group metals

PLC Programmable logic controller

QES Quality, environment and safety

RBTS Resource-based technology strategy

RIP Resin in pulp

S&T Science and Technology

SA South Africa

SABS South African Bureau of Standards

SADC Southern African Development Community

SAG Semi-autogenous grinding

SBUs Strategic business units

SDIs Spatial Development Initiatives

SET Science, engineering and technology

SETP Science, engineering and technology promotion

SSM Small-scale mining

StarCS Star Control System

THRIP Technology and Human Resources for Industry Programme

TRG Technical Reference Group

WAD Weak acid dissociable

ASSM Artisanal and Small-scale Mining

BEE Black economic empowerment

BioPad Biotechnology Partnership and Development

BPC Bateman Pulsed Column

CDC Coega Development Corporation

CDFR Client Dissatisfaction Frequency Rate

CMT Copper Mines of Tasmania

COHORT Committee of Heads of Organisations of Research and Technology

CVRD Companhia Vale do Rio Doce

DFS Definitive feasibility study

DME Department of Minerals and Energy

DMS Dense-media separation

DRC Democratic Republic of Congo

DST Department of Science and Technology

ECSA Engineering Council of South Africa

EU European Union

FP6 The European Union’s Sixth Framework Programme

HBI Hot briquetted iron

HDSAs Historically disadvantaged South Africans

ICP Idaho Cobalt Project

MDS Mineral Density Separator

MEAP Mintek Engineering Awareness Programme

MOU Memorandum of Understanding

MTMP Mintek Thermal Magnesium Process

MQA Mining Qualifications Authority

NACI National Council for Innovation

Contact detailsFinancial Affairs Contact Number

Internal auditors Ernst & Young Ngubane 011 498 1000

External auditors Auditor-General 011 276 1800

Company Secretary Ms Erna Harmse 011 709 4256

General Managers Contact Number

Technology Dr Roger Paul 011 709 4908

Research and Dr Molefi Motuku 011 709 4906

Development

Mineral Policy & Mr Petrus Fusi 011 709 4779

Sustainable Development

Corporate Services Mr Vimlan Govender 011 709 4906

Area Contact Number

Advanced Materials Dr Elma van der Lingen 011 709 4918

Analytical Science Mr Monde Mtakati 011 709 4047

Biotechnology Dr Tony Pinches 011 709 4617

Bursars and Ms Bon Mathibe 011 709 4797

SET Promotion

Conferences & Ms Theresa Ditsie 011 709 4266

Events

Area Contact Number

Engineering Mr Nick Maritz 011 709 4093 Support

Finance Mr Naresh Patel 011 709 4794

High Temperature Dr Johan Nell 011 709 4930 Technology

Human Resources Mr Monobe Manaka 011 709 4910

Hydrometallurgy Dr Johan Nell 011 709 4930

Information and Ms Erna Harmse 011 709 4914 Communications

Information Mr Doctor Gule 011 709 4282 Technology

Library & Ms Manil Kanniappen 011 709 4277 Information Services

Measurement and Dr Dave Hulbert 011 709 4382 Control

Mineral Economics Mr Sodhie Naicker 011 709 4414& Strategy Unit

Minerals Processing Mr Agit Singh 011 709 4617

Mineralogy Ms Dorrit De Nooy 011 709 4744

Pyrometallurgy Mr Tom Curr 011 709 4610

Small-Scale Mining Dr Nellie Mutemeri 011 709 4902

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Addendum

Table 1. Attendance of Board Members at Board Meetings

Name Mar Jul Dec Apr

2004 2004 2005 2005

Mr Mzilikazi Godfrey Khumalo (Chairperson) Y Y Y Y

Mr Morake Abiel Mngomezulu (appointed Jul 2004) N/A Y Y Y

Dr Frank Crundwell (appointed Jul 2004) N/A Y Y Y

Ms Louisa Mojela N Y N Y

Prof Phuti Esrom Ngoepe Y N Y Y

Ms Tina N. Mosery-Eboka (appointed Jul 2004) N/A Y N Y

Dr Nozibele Pauline Mjoli (appointed Jul 2004) N/A Y Y Y

Ms Gugu Mthwethwa (appointed Nov 2004) N/A N/A Y Y

Mr Ralph Havenstein (appointed Nov 2004) N/A N/A Y Y

Mr Vinogaren Pillay ( appointed Nov 2004) N/A N/A N Y

Ms C Minnitt (ended term Jul 2004) Y N/A N/A N/A

Mr N Moloi (ended term Jul 2004) Y N/A N/A N/A

Ms Z Ramos (ended term Jul 2004) N N/A N/A N/A

Mr S Shezi (ended term Jul 2004) Y N/A N/A N/A

Note: All the above are non-Executive Members

Table 2. Attendance of Audit Committee Members at Audit Committee Meetings

Name Mar Jul Oct Mar

2004 2004 2005 2005

Ms Louisa Mojela (Chairperson) (resigned Dec 2005) N Y Y A

Mr Mzilikazi Godfrey Khumalo Y Y A A

Dr Frank Crundwell (alternate: appointed Chairperson, effective Jan 2006) N N Y Y

Ms Gugu Mthwethwa (alternate: effective Oct 2005) N/A N/A N/A N/A

Mr Vinogaren Pillay ( appointed effective Oct 2005) N/A N/A N/A N/A

Y Attended meeting

N Did not attend meeting

A Alternate attended meeting

N/A Not a member at the date of meeting

Table 3. Attendance of Corporate Risk Management Committee at Board Meetings

Name Apr May Jun Mar

2004 2004 2004 2005

Dr Roger Paul (Chairperson) Y Y Y Y

Dr Francis Petersen (GM) N Y A N/A

Ms Kholeka Mzondeki (GM) N/A N/A N/A Y

Mr Nick Maritz1 Y N Y Y

Mr Glen Joyce2 Y Y Y N/A

Mr Vernon von Dam2 N/A N/A N/A Y

Mr Gary Gillespie3 Y Y Y Y

Mr Naresh Patel4 Y Y Y Y

Mr Vimlan Govender5 Y Y Y Y

Mr Basil Eddy (Secretary)5 Y Y Y Y

Mr Afzal Patel7 N/A N/A N/A N

Ms Celestine Munda8 N/A N/A N/A Y

Mr Leon Stroebel8 N/A N/A N/A Y

1 Estate and products 5 Business risk

2 Information technology 6 Safety, health and environment

3 Transformation, skills retention, succession planning, HIV/Aids, etc. 7 Security

4 Financial risks 8 Interrnal auditors: Ernst & Young, Ngubane Consortium

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Note 1. Human Resources Committee

No meetings of the Human Resources Committee were held during the 2004-2005 financial year. However, a meeting

was held in March 2004.

The members of the Human Resources Committee were:

Mr Morake Mngomezulu (joined the Committee during 2004)

Dr Frank Crundwell (joined the Committee during 2004)

Prof. Phuti Ngoepe (joined the Committee during 2004)

Dr Nozibele Mjoli (joined the Committee during 2004)

Mr Sipho Shezi (term of office ended March 2004)

Ms Louisa Mojela

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