o Corporate Financial Solutions is a registered Financial Service Provider with FSP Number:
38099 o We are a group of specialist partners specialising in mining rehabilitation solutions. The founder, Fanie Kruger, has extensive knowledge of all aspects regarding rehabilitation provision and has been involved in the administration and management of this aspects of mining for more than 25 years o Fanie Kruger developed, in close collaboration with numerous product providers, an insurance product whereby financial guarantees (as required in terms of the Mineral and Petroleum
Resources Development Act, 2004) (MPRDA) are issued to the Department of Mineral
Resources o We have sourced additional facility and are able to issue rehabilitation, Eskom, Construction and other guarantees o These products are cost as well as tax efficient

o Additional to the guarantees, our services entitles the following: o Preparation and setting up and registration of rehabilitation trusts o Investment advice o Liaison with the Department of Mineral Resources, Eskom and participating insurers o Assisting with the DMR procedures and compliance relating to the guarantee o Management of renewal process o Collection of existing guarantees o Optimizing surety for guarantees o Optimizing the quantum in the EMP by using the Act that governs provision to its fullest o Preliminary discussions and evaluation o We pride ourselves in the delivery of a professional and quality service at all times.
We also strive in providing clients with the one-stop-shop option in the mining and construction industry

o Since 2001 we have been in consultation with the Department of Minerals & Energy
(now Department of Mineral Resources) in order to achieve a better understanding of the process/requirements and investment guidelines regarding environmental rehabilitation o We at Corporate Financial Solutions have a clear understanding of all the requirements of the
DMR and our investment advice meets requirements set by the Department and SARS o Our unique, DMR approved solution involves a dramatic cost saving from traditional funding methods because we have realized that most mines want to optimally deploy their capital resources o With the banks you have to give 100% security for rehabilitation provision guarantees but with our product you only have to give 20% as security. The product is very cost and tax effective o We have found that these ancillary services are sometimes welcome and cost saving because it leaves you to do the business you do best – mining

o Funding for the Rehabilitation of mines can be done in different ways and via different instruments o Primarily our legislation allows for 3 methods: o Cash paid into the DMR Trust o A section 37 (A) Trust o Provision of a guarantee o The purpose of this document is to address a combination of the last two options o The method of paying funds into the DMR Trust will usually only be used by the smaller operations as you will lose all the interest on your investment o You will also not be allowed the freedom of investment that is offered with the option of a Trust

o Different structures can be combined to address your specific circumstances and needs o Our solution is based on the fact that we use your Trust (as a legally approved entity) to provide the investment that will be used as security for the Short Term Guarantee.
o In terms of the Income Tax Act (as amended during February 2007) the previous section
10(1)c(H) trust was replaced by a new section 37(A) trust

o The effect of this is that : o Your current trust must be changed to the newly worded section 37 (A) trust o Tax-deductible contributions to the trust are not done according to a prescribed formula as previously. This means that in theory any amount paid into the trust will be deductible from tax o The changed legislation provides for more investment options and/or instruments where one may invest o Any returns within the trust will not be taxed, but the funds may only be used for rehabilitation purposes in future o This said Trust has one specific purpose and that is that the trustees must see to it that the trust fund for their future and present rehabilitation liability o If we consider the new prescribed wording of the trust as well as the purpose of the trust, it is our opinion that the trust may apply for a Short Term Rehabilitation
Guarantee and provide the surety for such a transaction

o We thus have two options when we apply for a Short Term Guarantee: o Change your current Trust [(10 (1)c (H)], to the new section 37(A) trust and offer your current funds as security, or o Set up a new trust, determine the necessary contributions to the trust, and offer these funds as security

o We can also retain and manage your current Trust and use the funding in your
Trust as security for the guarantee o Before this can be done we must change your current trust to the section 37(A) trust and register the trust with SARS>
1.
Payments allocated to your Trust for the purpose of rehabilitation funding will be tax deductible
2.
In terms of current tax legislation returns in your Trust do not attract tax if the trust conforms to the requirements set by the receiver, and
3.
If your Trust Deed allows for it, funds may be ceded to the insurer that provides the guarantee

o As mentioned the solution provides for tax benefits o Because the solution is flexible, we can manage the risk of overfunding in your trust o The section 37 (A) trust is a legal instrument provided for by SARS and the DMR o The “cost of capital” is low and this leads to improved cash flow for the Company whilst addressing the requirements set by the DMR o We provide a consultation service where we assist the Trustees and manage the investments o Most other options do not provide these services and leads to the fact that the Company and or Shareholders must provide security or collateral security o Other options may also lead to over funding or does not provide for any form of funding

o The DMR prescribes the wording of the guarantee that they are prepared to accept.
This guarantee entails that the provider of the guarantee shall provide for or see to the rehabilitation of a specific area up to a specific amount if the specific permit holder
(mining operation) can not continue their operations o This Guarantee can only be recalled with written prior notice to all the parties and then only if the guarantee is replaced by another or with the required cash equivalent o Although we can advise you on ways to fund for mine Rehabilitation we do not provide rehabilitation guarantees and we can only refer you to a Short Term Provider for these services. Such a provider will take our offer to the different Short Term Insurers and return with a quotation o Normally the short term insurer will require you to provide security for the guarantee or some form of financial provision as back up for such a guarantee o Guarantees may be provided by Deposit Taking Institutions (banks) or Short Term Insurers.
As the DMR may accept or deny the Guarantee these entities must be approved as product providers to the DMR

o We have vast experience in this specific industry and can assist you with this process.
Managing the investment that is offered as security according to a mandate that is negotiated with the specific guarantee provider, is our speciality o We can assist you in such provision as referred to above. Our Investment Solutions that are acceptable to the various Short Term Insurers include: o Sinking Fund Policies / Endowment Policies o Here you will be offered a choice of funds as well as a choice of term. We can accommodate lump sums or recurring payments o We can invest according to the risk profile requested by the Guarantee Provider and can also provide minimum guarantees in respect of the investment, depending on the investment product chosen

o Our investment guarantees include: o Minimum premium guarantees. Also known as a 0% guarantee where we guarantee a minimum amount equal to all the premiums paid into the policy over a determined term o Minimum return guarantees o In this case you invest a lump sum and we guarantee a specific contractual amount after a set term: o Capital guarantees usually available for lump sum investments where the capital that is invested will be guaranteed after a prescribed investment term ( usually 5 years) o Kindly note that in most instances these guarantees will only take effect at the end of the policy term and that guarantees imply added cost because risk is transferred to the insurer o Linked Product Investments

o This investment is not linked to a fixed term. You will have 24 hour access to your funds.
This product also offers flexibility and choice of investment according to a prescribed mandate.
o This type of investment is preferred for larger investment amounts where the term of investment is limited to less than 5 years, or where costs determine that this is the better option o We can use and combine different options. For example an Endowment Policy for your recurring premium combined with a lump sum investment in the Linked Product Company o This will be determined by your specific needs and will be discussed during consultation

o In the case of a rehabilitation Guarantee being provided by a Short Term Insurer you as the client must take cognisance of certain aspects:
1.
The Short Term Insurer will indicate the type of security that is required. They may set minimum investment standards. We may only assist you in an offer made to the Short
Term Insurer.
2.
Issues regarding taxability of the Guarantee or the deductibility thereof may only be addressed with the Short Term Insurer we can advise you on the taxability of your investments
3.
The investment will be ceded to the provider of the Guarantee
4.
The term of the investment will be linked to the life of mine and indicated by the Short Term Insurer
5.
The cost of Investments must be negotiated and addressed with us,
Guarantee costs must be addressed with the Short Term Insurer

o The base of this method of provision is a guarantee issued by a short term insurance company o The cost for this guarantee will be between 1% and 2%. This is the only pay away cost in terms of the process, as this is regarded as an insurance premium, it will be tax deductable o This will compare favourably with the cost charge by the bank o As surety for the guarantee, the normal reinsurance treaty is a 20% upfront investment as well as a 1% of guarantee recurring investment per month ceded to the guarantor o Should a 37A Rehabilitation Trust be the applicant, and owner of the investment, the amount going into the investment will be tax deductable and the growth will be tax free

o The fees on the once-off investment, is paid by the investor and is deducted from the investment o By law this fee could be 5%. I will however negotiate this fee o The fees on the recurring investment are 2,5% upfront and 2,5% recurring service fee o These fees are payable by the product provider as it is part of the reduction in yield of the product provider o The aim is to have a tax effective, cost effective method of doing the financial provision for rehabilitation as well as accumulating the capital that will be used to do the eventual rehabilitation o This whole process will be done and managed by myself and no additional fees are payable