Strategy & Approach

THE ROAD AHEAD

In 2009 we outlined three strategies - Build It, Hedge It or Sell It. Although these paths are still available, in 2010 we picked the "Build It" path.

The Build It path had three core elements;

1. Drive for Ore: With the proceeds of the November 2010 financing we secured our interest in Maseve Investments 11 Pty Ltd., the operational level holding company of WBJV Projects 1 and 3, and established site infrastructure for the construction of a mine and quickly commenced construction. The initial objective of the mine construction is to drive a decline into ore and access the deposit. This objective provides risk mitigation by creating the potential to extract ore for custom milling as a fallback business case. If, as we suspect, the capital markets including debt, equity or other forms of funding are available, we plan to complete the full mine build and project financing.
    
2. Mine Authorization and Project Finance: We have filed our formal Mining Rights Application and are interacting with the Department of Mineral Resources for this permit, which covers all aspects of the potential mining operation from mining to environmental aspects, mining works program, safety and the social and labour plan. We have interacted with the Department over the past year to ensure our application is in good form. During the period of finalization of this Mining Authorization, we are working with project finance groups on completing the overall project finance. We expect to receive the Mining Authorization before the end of Q1 calendar 2012.
    
3. Community Relationship and Procurement:   While the project is advancing we will be working closely with community leaders and government to find ways that the project can be built efficiently and with maximum involvement by the local community. Our strategy is to build from the ground up with a detailed skills and needs assessment of the community rather than from the top down. We will look for opportunities to break contracts into smaller pieces whereby community members can participate. In our experience, this process is not only value added for the community, it builds community support for the project which is important during the permitting phase and it builds a stable and supportive basis in the community for the project. A healthy community relationship where the community has a vested interest in the project can also lower risk and save money. We have seen extraordinary levels of new construction activity in our area and we will endeavor to support community involvement in not only our project but in regional development as well.

AT THE CENTRE OF $4B IN NEW PLATINUM MINE DEVELOPMENT

Our extraordinary and strong strategic position has been confirmed by the activities around us.. The WBJV Project 1, with an estimated capital cost of $443M, is at the shallow edge of the same reefs or layers where three other large scale projects are in construction for approximately USD$3.6B in capital costs. As shown on the map and photos, the Impala 20 shafts, the Styldrift drift shafts and the Wesizwe / Jinchuan shafts are all down dip and near the WBJV Project 1. These shafts are in various stages of construction and underground development with planned depths of approximately 1100 meters at the shaft bottoms to meet the same Merenksy and UG2 reefs that we plan to mine.

Grades and thicknesses are similar at these parts of the deposit with the main differences being capital cost and lead-time. Deep vertical shafts take approximately six to seven years to develop whereas our Feasibility Study plans 2.5 years of development time.

Our area promises to be the center of platinum mining development for the next 20 years and beyond. The past year have seen take-over bids, retracted IPO's and the entry of new players. Our mineral rights and surface rights are in the centre of the activity.

Proposed water pipeline and power line infrastructure are shown on the map. Electrical power sub stations are also planned for our area. Over the past two years both utilities, Eskom for electricity and Magalies for water, have advanced their detailed engineering and planning for required infrastructure in the area of the WBJV. In planning for water and power, the utilities are estimating a further 25,000 people will move into this area over the next five years. This is not surprising given that more than 12,000 primary jobs are to be created by the planned mining developments in the area.

In 2011, we purchased a large area of surface rights, including an operating hotel and facilities. These surface rights will be essential for location of our mining infrastructure and tailings dams. These surface rights also play an important role in providing servitudes for water lines, power lines and substations. In addition, the hotel and facilities provide accommodations for up to 1,000 people. With the enormous amount of development planned in the area, surface rights will be at a premium and we have secured a significant land holding. In addition to our mining needs, community development will be considered as a use for some of the surface rights. The available accommodation and facilities also play an important role during Project 1 construction. In terms of community development, the existing hotel and facilities can provide a training centre for ensuring the community can participate in the jobs and opportunities with the mining development during this period. This is an area where we intend to make efforts to find synergies with the other developers in the region so that our facilities can have maximum community benefit.

Our shareholders are in an excellent position with a highly competitive project and a core holding in what promises to be the most active platinum development area in the world in the years ahead. We plan to drive the projects ahead towards production and build a safe, shallow, low cost mine.

PLATINUM GROUP ELEMENTS:
CARS, TRUCKS, CLEAN AIR AND EVERYTHING ELSE

We provide the updated chart we presented first in last year's annual report of the correlation between global vehicle sales and the price of platinum.

The impressive correlation continues. Continued tightening of emissions and clean air requirements effectively mandate increasing demand for PGE's (platinum, palladium and rhodium). Contrast this increasing demand with the problems facing the global production of these rare elements and one can see the challenge ahead to meet the world's need for these metals.

The platinum market continues to show tightness. In 2009 we saw a small surplus of 285,000 ounces. Overall demand dropped to 7.04 million ounces while supply dropped to 7.3 million ounces including recycling. Both supply and demand were impacted by fall out from the financial crisis in late 2008. The key driver for the platinum market continues to be auto sales. Auto sales have generally recovered and stabilized in the established markets of the United States and Europe. The growth story for auto sales and platinum consumption in comes from China, India, Brazil and other developing nations. Global auto sales look set to return to the 70 million unit mark with Chinese sales leading the way. China is now the world's largest market for automobiles. Apart from automobile demand we are witnessing very robust demand from the Chinese jewelry market. While the auto market suffered in 2009 much of the slack in platinum demand was picked up by Chinese consumption of platinum jewelry. Total jewelry demand in 2009 was just over three million ounces with a record two million ounces.