IMP 201502260004A
Strategic Review

Impala Platinum Holdings Limited
(Incorporated in the Republic of South Africa)
Registration No 1957/001979/06
JSE share code: IMP
ISIN: ZAE000083648
(“Implats” or “the Company” or “the Group”)
Strategic review 

Strategic review
- Implats will continue to drive the Respect, Care and Zero Harm initiatives
- Platinum group metal (PGM) market fundamentals are sound over the longer term, but overall prices are likely to
  remain “lower for longer”
- Within this context, Implats will position the Group strategically to conserve cash while restoring and optimising
  operational performance and profitability
- In doing so, Implats has endeavoured to maintain strategic optionality to safeguard the long-term value potential of
  its assets in an environment where metal prices are expected to recover 
- The Group will invest R30 billion across its operations over the next five years. However, the strategic target for
  2016 is to reduce the planned capital spend by R2.2 billion to R4.5 billion
- Impala Rustenburg will be repositioned and modernised:
  * Deliver on the new 16 and 20 shaft complexes, which contribute to Impala reaching its sustainable production level
    of 13.5 million tonnes and 850 000 platinum ounces per annum by 2019
  * Operating less vertical shaft systems
  * Better efficiencies and an improved cost structure
  * Improved Merensky: UG2 mining mix leading to higher grades 
  * Slowing 17 Shaft capital expenditure to critical path shaft-sinking activities (saving R2.5 billion over the 2015
    and 2016 period)
  * All resulting in improved profitability
- Ultimately restore Zimplats to 6 million tonnes per annum and 260 000 platinum ounces per annum
  * Through open-pit mining while the Bimha mine is redeveloped
- Maintain steady-state production at Mimosa
- Defer Afplats for four years
  * Reduced capital spend
- Build on the cash-positive IRS business model to grow profits through additional sources of PGM supply
- Optimise performance at Marula and seek to realise value through a disposal of this asset
- Maintaining and positioning the balance sheet to meet strategic objectives
- Reposition stakeholder engagement programmes and associated activities to maintain the social licence to operate

Market fundamentals remain sound and PGMs will continue to add substantial value to a growing global economy
(specifically by reducing emissions, improving global air quality and providing alternative green energy solutions).

Emerging markets are at the centre of an increase in PGM demand, supported to a large degree by ongoing urbanisation
in China and India, and rising consumer spend by a growing middle class in these countries, particularly with respect to
automobiles and jewellery. In the rest of the world, growing automobile sales and stricter emission controls will
continue to support future PGM demand in the medium to long-term, with the early signs of an emerging hydrogen economy
providing longer-term support.

Some of the key demand drivers experienced include:
Automotive sales                                                                                                                               
- China                +10% growth in 2014 (LMC Automotive forecasts future growth of 9%)                                                       
- US                   +6% growth in 2014 (highest annual sales since 2006)                                                                     
- Europe               +5% growth in 2014 (18 months of consecutive growth)                                                                     
- Japan                +3.5% growth in 2014 (third consecutive year of growth)                                                                  
- Globally             LMC Automotive forecasts +40 million vehicles in the next 10 years 
Platinum jewellery                                                                                                                            
- China                Unchanged from 2013, despite an economic slowdown                                                                        
- India                Growing at 30% off a low base (key future market)                                                                        
- Globally             Unchanged (lower global sales compensated by growth in India) 
- Platinum             +155 000 ounces in 2014                                                                                                  
- Palladium            +900 000 ounces in 2014                                                                                                  
- Future               Demand to be prioritised and supported by recently formed World Platinum 
                       Investment Council (WPIC)   
- Globally             Supported by emerging market growth                                                                                      

Fuel cells                                                                                                                                   
- New market           Japan intends using fuel cells for the 2020 Olympics, while car manufacturers 
                       are starting to roll out the technology    

PGM market fundamentals are further underpinned by primary supply constraints in southern Africa, principally as a
result of policy uncertainty, power constraints, under-investment in new/replacement projects and safety/labour work
stoppages in South Africa. This is mitigated to some extent by an increasing secondary platinum supply, growing by
approximately 7% per annum. However, this growth is forecast to slow and stabilise from 2021 as a result of relatively lower 
metal loadings for autocatalysts that will be recycled. This is as a direct result of ongoing PGM thrifting since the early

Despite our strong long-term PGM market view, near-term metal prices continue to be impacted by available metal
inventories. In addition, a range of global economic factors also impact near-term price certainty, specifically the economic
recovery in Europe (European Central Bank stimulus and Greek debt refinancing), Chinese economic contraction and the
risk that global economic growth could be further impacted by continued geopolitical conflict and/or currency uncertainty.
This impact/uncertainty is also evident in the recent strengthening of the US dollar, the drop in resource prices
including oil, and the linkage of the platinum price to movements in the gold price. In this environment, Implats expects
long-term prices to improve as metal inventories are eroded and longer-term supportive market fundamentals start to
dominate. It is expected that the rand/US$ exchange rate will continue to weaken, impacting rand PGM basket prices, but
oversupply concerns may naturally cap the rand basket prices in the near term. 

The PGM market requires constant market support and market development to secure long-term sustainable value creation.
This is especially relevant when one considers the unique physical attributes of PGMs and the fact that PGMs are
typically not consumed, but rather used and reused in key market segments - slowly eroding demand growth as recycling develops
in each market segment.

Some key strategic focus areas to grow the market include:
- The International Platinum Association (IPA), which supports stricter emission standards and the broader use of
  PGMs, including the life cycle assessment to incentivise the use, and demonstrate the benefits, of the metals
- The Platinum Guild International (PGI), which focuses on bridal and non-bridal jewellery demand in China and broader
  jewellery demand in India
- The World Platinum Investment Council (WPIC), which is a new initiative to develop exchange traded funds (ETF)
  investments in more diverse geographical locations (China, Malaysia and other regions), as well as growing investor demand
  and appetite to hold bullion and/or coins. WPIC also advocates policy change for countries to hold bullion (South Africa,
  Russia and China)
- Fuel cells, which is a potential growth area for automotive demand. Toyota and Hyundai are leading the way and South
  Africa is implementing government incentives for hydrogen research. Implats is investigating using this technology in
  its refinery, while the Chamber of Mines already runs its corporate office through the use of fuel cells. The Olympics in
  Japan in 2020 will also use this technology.

Implats’ strategic focus areas
Implats has to be prudent in its strategic assumptions and believes that metal prices could remain lower for longer,
but must retain flexibility to take advantage of longer-term PGM prices.

Within this context, the Group is positioning itself strategically to conserve cash, while at the same time restoring
and optimising operational performances and profitability.

The Group has implemented stringent capital allocation and cash preservation measures based on a lower-for-longer
metal price risk mitigation strategy. In doing so, management have endeavoured to maintain strategic optionality to
safeguard the long-term value potential of its assets in an environment where metal prices are expected to recover. 

The overarching strategic outcome targets five key focus areas:
- Maintaining prudent investment through the cycle
- Maintaining strategic optionality and positioning the Group for the future 
- Improving efficiencies/profitability through operational excellence and safe production 
- Conserving cash, especially while metal prices remain depressed
- Maintaining our social licence to operate.

Investment through the cycle
Long-term sustainable stakeholder value can be achieved in the platinum industry only with prudent capital investment
through the cycle, especially as we are mining an ever-decreasing mineral resource with long project time lines and high
capital intensity. The right balance needs to be found between short-term returns and longer-term sustainability and

Despite the need to conserve cash while prices remain depressed, significant capital resources will still be deployed
over the next five years to sustain future value creation and maintain strategic optionality. A total of R20 billion
will be spent at Impala Rustenburg over five years (2015 - 2019), including R6.6 billion at 17 Shaft. At a Group level, 
R30 billion will be invested over the same period. However, the strategic target for 2016 is to reduce the planned capital
spend by R2.2 billion to R4.5 billion. This is in addition to a R1.3 billion capital reduction in 2015.

Implats will also continue to explore and remain alert and open to all value-accretive investment opportunities that
hold the potential to unlock shareholder value. 

Maintain strategic optionality
Implats’ strategic response specifically aims to reposition and modernise Impala Rustenburg into a smaller, more
concentrated mining operation with access to new, modern shaft complexes, with new Merensky ore reserves, producing 850 000
platinum ounces per annum at much higher mining efficiency and lower unit cost. 

To do this, the completion and ramp-up of 16 and 20 shaft complexes and further ore reserve development will be
prioritised. Full production from these shafts is expected from 2019, one year later than previously targeted and is due to
the impact of the prolonged strike and cash conservation measures implemented during the strike and restart period. Over
the next two cash-constrained years a total of R1.5 billion will be spent on both shafts.

The benefits of these two new shafts are that they provide access to significant new concentrated Merensky ore, which
allows Impala to attain a mining mix of 49% Merensky to UG2 ore. Furthermore, there are investigations into
mechanisation at 20 Shaft.

At the same time, the profitability of existing operations will be improved through targeted interventions to improve
mining efficiencies and reduce embedded fixed costs. The old shafts (E/F, 4, 6, 7, 7A, 8 & 9 shafts) will be
consolidated under one overhead structure to optimise costs and improve synergies. These shafts will be mined out and closed as
quickly as possible as they are among the lowest-cost operations at the lease area due to their relatively shallower mining
depth and low capital requirements. The mid-life shafts (1, 10, 11, 12 & 14 shafts) are becoming more reliant on UG2
reef and require increased mineable face length to improve mining flexibility and efficiencies to optimise half-level and
shaft capacities. The planned transition at these shafts is underpinned by a targeted operational excellence programme. 

The collective benefit of all of the Impala initiatives will be to increase mining flexibility and efficiency and
increased volume throughput without any increase in labour. The commissioning and ramping up of the new shaft complexes and
the closure of old shaft infrastructure will result in mining teams being increased from 550 to 620 teams. At the same
time, there will be reduction in the support staff required for the mining operation.

The 17 Shaft capital expenditure programme has been reduced to R415 million in 2015 and R537 million for 2016. A
capital saving of R1.1 billion will be realised in 2015, and of R1.4 billion in 2016. The shaft remains essential to
sustaining future production from Impala as it is designed to deliver 180 000 ounces per annum. To this end, the board of directors 
has prioritised the completion of the main shaft sinking programme with the optionality to review the project, the PGM market and
the Group’s financial position on an ongoing basis. If the 17 Shaft project is not further slowed then it is expected
to come into production in 2021. This will enable the Impala lease area to maintain production at 850 000 platinum ounces
per annum beyond 2020.

The strategy also aims to restore mining flexibility at Zimplats and to ultimately grow output to 260 000 platinum
ounces per annum at a milling throughput rate of 6 million tonnes per annum by 2016 through initiating opencast mining and
redeploying Bimha’s mining crews at the other operations, while redeveloping the mine. The sustainability of operations
at these levels is contingent upon PGM market prices, power supply and regulatory certainty.

The Government of Zimbabwe has confirmed that Mimosa will be subject to the 15% export levy on platinum. This has a
material impact on Mimosa’s profitability. As a consequence, the strategy for this asset is to maintain operations and
shelve all potential expansions, which would have enhanced production, profitability and job creation possibilities.

Afplats remains a quality resource with significant potential to develop a low-cost mechanised mine in the
well-serviced western Bushveld Complex. Moreover, significant synergies can be realised through the use of Impala’s above-ground
infrastructure. However, the project requires significant capital investment, and the board has resolved to defer the
project for four years to conserve cash and protect the balance sheet.

The strategic review also brought into sharp focus the significant value still being delivered by the Group’s toll
refining business (IRS), despite the impact of lower metal prices. The Group has spare capacity available that positions it
well to benefit from new opportunities, especially given the anticipated shift over time from the Western Bushveld
Complex to the base-metal-rich northern limb. The strategy specifically aims to maintain and grow the Group’s position as
the leading player in this space to further grow and/or diversify its portfolio over time to unlock shareholder value.

Marula is a relatively new, shallow, long-life ore body with good infrastructure and we have made progress in recent
times in unlocking some of this asset’s potential. This progress was severely impacted in the first half of the 2015
financial year as a result of industrial action and safety stoppages at the operation. We remain confident that the lost
momentum can be recovered and that output can be grown to 90 000 platinum ounces per annum by 2020. However, having
critically assessed the fit of this asset into Implats' South African portfolio, as well as the need for management’s focus 
on the large integrated Impala operations, the board believes that more shareholder value could be unlocked through disposal of
the mine. 

An additional advantage of selling the asset is the realisation of cash to strengthen the Implats balance sheet. The
concentrate offtake agreement will remain with IRS and Implats will ensure that our existing business partners are
consulted throughout. 

Operational excellence
Unlocking value at an operational level is a key part of this strategic response. These interventions are specific to
each operation and have specifically targeted measures to improve mining efficiencies and reduce operating costs.

Key initiatives include:
- The safety strategy has been revisited and introduces a range of new health and safety initiatives, aimed at
  achieving the Zero Harm target. These initiatives specifically target critical safety behaviours and are closely aligned with
  agreed industry safety responses.
- Implats’ strategy specifically aims to introduce new technology to modernise our mining operations over time to
  improve safety performance, mining efficiencies and profitability, and is closely supported by the implementation of
  state-of-the-art-mine planning technology (MineRP).
- An in-house team mobilisation programme has been introduced to underpin operational delivery. The initiative aims to
  equip each production team and its supervisory/management contingent with the required knowledge, skill and
  motivational support to achieve safe production targets at an individual team level. The initiative also aims to inculcate respect
  among team members and a duty of care to rebuild relationships and ultimately deliver safe production.
- A set of targeted short-cycle management controls have been revised and prioritised under a new Fixco initiative to
  measure, report on and ultimately manage all critical mining parameters at individual team level. 

The Fixco initiative specifically targets the following key focus areas:
- Increasing ore reserve flexibility
- Increasing team efficiencies
- Improving the quality of mining
- Driving down overhead costs.

Cash conservation and balance sheet
The lower-for-longer risk mitigation price assumptions necessitate a range of strategic responses, aiming to conserve
cash in the nearer term, without impacting long-term value generation. However, the strategic target for 2016 is to
reduce the Group’s planned capital spend by R2.2 billion to R4.5 billion.  

Notwithstanding the reduction in capital, the Group’s ability to fund the business and generate free cash flow is
principally determined by operational performance and metal prices. To navigate through a difficult period where US dollar
PGM prices could remain depressed in the near term, cognisance has been taken of the strategic imperative to balance
shareholder returns, long-term growth and balance sheet flexibility. 

To this end, the Group:
- Raised the convertible bond (February 2013) and has R1.6 billion of this cash remaining at 31 December 2014
- Has R3 billion in unutilised committed debt facilities
- Will continue to optimise costs and efficiencies
- Will realise value through the disposal of non-core assets (Marula)
- Will ensure the Zimbabwean operations remain self-funded.

Shareholder value is best secured through an efficient but conservative balance sheet, especially in a
single-commodity mining environment where financial returns remain vulnerable to commodity and financial market changes. It is clear
that the financial viability of the entire industry will be precarious should rand metal prices remain where they are
today. Despite the above measures, the business may require additional funding in order to ensure the long-term strategic
intent remains intact. 

The Group is currently examining a number of financing options. The impact of the strategic decisions taken (the
timing of which are not all under the Group’s control), as well as the fact that the balance sheet is under-geared relative
to industry peers (and the mining sector in general), will be taken into account if and when additional funding may be

Social licence to operate
The strategy also takes cognisance of the shifting socio-political environment facing mining companies today and
prioritises targeted employee initiatives to recapture their hearts and minds and community initiatives to build a shared
vision and social compact.

Key initiatives include:
- Employee equity ownership plan (profit share) at Impala Rustenburg
- Housing and accommodation strategy
- Team mobilisation
- Direct employee, community and stakeholder engagement
- Relationship building and shared values
- Local employment
- Skills development
- Local procurement
- Social investment

Corporate information
Registered office
2 Fricker Road, Illovo, 2196
(Private Bag X18, Northlands, 2116)

Transfer secretaries
South Africa: Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)

United Kingdom: Computershare Investor Services plc
The Pavilions, Bridgwater Road, Bristol, BS13 8AE

Deutsche Securities (SA) Proprietary Limited

KDK Mokhele (chairman), TP Goodlace (chief executive officer), B Berlin (chief financial officer),
HC Cameron, PW Davey*, MSV Gantsho, A Kekana, AS Macfarlane*, AA Maule, TV Mokgatlha,
BT Nagle, B Ngonyama, NDB Orleyn

Note: Mr TV Mokgatlha has resigned as a non-executive director with effect from 22 October 2014.

Group executive: corporate relations
Johan Theron
Tel: +27 (11) 731 9013

Group corporate relations manager
Alice Lourens
Tel: +27 (11) 731 9033

For additional information on the Group, please go to

Any forward-looking information contained in this announcement has not been reviewed or reported on by the Company's external auditors.
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