MASTERS DIVERSIFICATION CONTINUES TO PAY OFF OPERATION AND MAINTENANCE MINOPEX MINING ELITES IN AFRICA 2017

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1 MINOPEX OPERATION AND MAINTENANCE MASTERS DIVERSIFICATION CONTINUES TO PAY OFF Minopex has extended its service offering into underground contract mining 16

2 managed to add further value to its client s operations by enhancing its overall service offering, not only within their minerals processing plant, but throughout their mining value chain. SECONDARY SPONSORSHIP O utsourced minerals processing plant operations and maintenance specialist Minopex has diligently continued along its path of DIVERSIFICATION during 2016, a strategy that the company expects will start paying off as soon as the global commodity market turns with signs of an uptick already starting to show. Since its establishment 20 years ago after identifying a gap in the industry trend for outsourcing the operational aspects of minerals processing, Minopex has since grown to become a leading specialist in the field of outsourced operation and maintenance of metals and minerals processing facilities. The company currently operates and maintains 13 minerals processing plants in the phosphate, coal, platinum, gold, iron ore, chromite and diamond industries in South Africa, Lesotho, Botswana, Mozambique, Tanzania and Saudi Arabia. Minopex has worked tirelessly over the past two decades to diversify itself into several divisions each specialising in a field which complements the Minopex service offering. It is this continued diversification that enables the company to provide its clients with a holistic service offering, and is also what sets it head and shoulders above its competition. In light of the trend by mining companies to use outsourced operations and maintenance specialists as a means to de-risk a mining project, Minopex through its diversification drive has MINOPEX GOES UNDERGROUND Minopex has extended its service offering into underground contract mining, leveraging its operation and maintenance prowess in this field. What started out as a fledgling division within global multidisciplinary engineering firm DRA Global (a sister company to Minopex) specialising in the servicing of underground mining equipment was later taken over by Minopex, following a decision in early 2016 that the fit would be better suited to that of an operations and maintenance company rather than that of an engineering company. The new mining division, dubbed MINOPEX MINING OPERATIONS, specialises not only in the maintenance of underground mining equipment, but also in actual underground mining operations. At the helm of Minopex Mining Operations is mining executive Jacques Pretorius, a specialist in underground mining, who believes that the division is a good fit in the existing Minopex service offering and that of the DRA Global group. The part of the value chain that has been missing is offering the same service QUALITY LABORATORY SERVICES Minopex acquired Quality Laboratory Services (QLS) to offer specialised laboratory services and analytical facilities to various industries. The range of expertise offered by QLS encompasses everything from mineral sample preparation and screening, waste water, acid mine water and potable water treatment, through to microbiological analysis of river systems, dams and effluent proceses. QLS has a SANAS accredited containerised laboratory based in Tanzania which services the surrounding areas professionally and efficiently, processing over samples a month with a turnaround time of less than 24 hours on most samples. 17

3 MINOPEX ENGINEERING SERVICES SOUTH AFRICA (ENSERSA) At the heart of Minopex s reputation for excellence, lies a team of highly qualified and expertly skilled engineers. Through Ensersa, Minopex is able to provide its clients with a range of engineering solutions including: Specialised engineering; Small project engineering; Mobile field services; Care and maintenance; Design and detailing; and Condition monitoring. Ensersa aims to provide clients with a team of experts and equipment for anything from planned and unplanned maintenance shutdowns, emergency breakdown support to engineering commissioning anytime and anywhere. The outsourced contractor industry is becoming increasingly difficult to compete in Renira Reddy when it comes to mining operations as we have in the minerals processing space. This is the gap we re filling with the new division, notes Pretorius. In line with the global mining industry s move to that of mechanised mining over conventional mining, Minopex Mining Operations expertise lies in servicing the operations and maintenance needs of trackless and semi-trackless mining operations. As a result, we are looking at the development and mining of underground hard rock, tabular, bord and pillar mines using mechanised and semi mechanised mining machinery and equipment, Pretorius highlights. The reason this partnership model between DRA and Minopex works so well is that the synergies benefit the client greatly in terms of reducing the costs as a result of shared services a cost that would be duplicated if sourced from different contractors, all while improving the overall value chain between plant and mine, he explains. He also notes that this model acts as an enabler for smaller mining companies with smaller operations greatly assisting smaller players get their operations off the ground. Having taken this new division to market and tendered for work has enabled Minopex to benchmark itself against the larger players in this field. Feedback from the industry has also been positive, the company notes. BUSINESS MODEL EVOLUTION Minopex Business Development Executive Renira Reddy notes that the outsourced contractor industry is becoming increasingly difficult to compete in. In the past doing a good job was sufficient to secure long-term relationships with clients this is no longer the case. Clients are becoming more aware and sensitive to cost factors as a result of commodity price fluctuations and labour unrest, which has further been compounded by the fact that clients themselves are under pressure to give their shareholders a return on investment, she notes, adding that the clients themselves have ironically become Minopex s biggest competitors. Minopex has managed to add further value to its client s operations by enhancing its overall service offering Resultantly, Minopex has had to reassess where it stands with its clients and has had to adopt an open book model where all costs are declared to the client and margin is agreed upon. This model settles the possibility of tensions as everyone knows where they stand with one another. It gives client peace of mind and also drives us to make sure that wherever we can be lean, we are. We also tie this in with an incentive model (based on key performance indicators) so that the benefits are shared between us and the client too, Reddy explains. GOING ABOVE AND BEYOND Over and above the Minopex suit of services, which can be tailor-made into a suitable service package, one of the added benefits of partnering with a company like Minopex is its Operational readiness capability. Operational readiness encompasses all of the work that is required to equip a mining operation to start the minerals processing plant it ultimately analyses the operation from various angles and determines whether the processing operation can begin. Given the fact that Minopex has commissioned a significant number of minerals processing plants in the past, the company has developed its own intellectual property on how to do so successfully. 18

4 SECONDARY SPONSORSHIP The step-by-step operational readiness handbook holistically factors in all of the components at a specific site required to prepare the site up to the point of being operationally ready before mineral processing operations can begin, Reddy illustrates. This value added service is a significant benefit to all Minopex clients because with the in-house handbook in hand, Minopex is able to start the plant up as quickly as possible. SMALL PROJECTS TO AFRICA AND BEYOND The next step along its sustainability journey is that of GLOBALISATION notes, Rafael Abela, business development director at Minopex. Our strategy going forward will be to continue servicing the areas and regions in which we currently do business while also evaluating the options of expanding these. The company has adopted a twopronged approach to this globalisation strategy in which it will grow by means of internal and natural organic growth as well as growth through mergers and acquisitions specifically to enter international markets. Because our current strength and focus is in southern Africa and other central time zone regions, our next focus will be on growth in the East and West, where our successes have been limited to date. It is here where will grow through inorganic means, Abela notes. MINOPEX S GLOBAL COVERAGE Minopex s dedicated Specialised Work And Training (SWAT) teams will assist with the efficient ramp up and commissioning to nameplate capacity of any mineral processing plant. Whether a Greenfield or Brownfield operation, the Minopex SWAT teams are considered unrivalled in turning operations around in the quickest, most efficient and most cost effective way possible. With operating experience covering various commodities including coal, platinum, diamonds, iron ore and gold, the SWAT teams have every aspect of commissioning mineral processing plants covered. The teams are made up as per plant requirements, these often include shift superintendents, senior process operators and control room operators, who are tasked with bringing a recently constructed plant into production, while the client may still be training the personnel. Some of the projects that Minopex s SWAT teams have assisted in commissioning include: Assmang s Khumani iron ore project; Glencore s Tweefontein coal project; South32 s Douglas-Middelburg Optimisation (DMO) project; Randgold Resources Kibali and Tongon gold projects; Asanko Gold s Asanko gold project; Vale s Moatize Phase II coal project; and Aureus Mining s (now Avesoro Resources) New Liberty gold project. South Africa Lesotho Botswana Mozambique Tanzania Saudi Arabia 19

5 MINOPEX Minopex has successfully undertaken two coal processing plant operation and maintenance contracts in Mozambique ENGINEERING SERVICES MOZAMBIQUE (ENSERMO) SERVICING THE DIAMOND MINING INDUSTRY IN BOTSWANA AND LESOTHO If it s operable and maintainable we can do it Rafael Abela MINOPEX MOZAMBIQUE COAL COMPETENT Since its establishment in late 2011, Minopex Mozambique has grown from strength to strength with 2016 being the year it was awarded the largest ever operation and maintenance contract to be undertaken across the entire Minopex group. Having already successfully undertaken two coal processing plant operation and maintenance contracts in Mozambique, the contract signed in February 2016 with the major coal producer, was a major milestone for the local entity, notes Minopex Mozambique country manager Piet Otto. The contract, which entails the operation and maintenance of a modular coal processing plant that produces high-quality coking coal and a thermal coal by-product, is just the first phase of a bigger project by the coal producer. We are now looking forward to expanding that into a full operation and maintenance function encompassing the second phase of this project, Otto enthuses. To further develop and foster its longterm presence in the country, Minopex formed a separate specialised engineering company called Ensermo (Engenharia e Serviços de Moçambique). Operating out of a locally based workshop in the Tete province, Ensermo was established in order to provide quality engineering services to mines and industries in Mozambique including ports, harbours, steel works and production facilities. The workshop, with a staff complement of more than 100 workers, has capacity to fabricate up to 200 t of steel fabrication each month. Ensermo s capabilities expand a full array of engineering services as and when clients need them, including motor rewinds, civil construction, pipe installations, steel fabrications and analysis activities and pump refurbishment. The Ensermo workshop has grown substantially since it was established in 2014 as a result of the maintenance contract it signed with the major coal producer in early Besides that project, Ensermo is working on 10 other substantial projects ranging from maintenance contracts to chute and liner fabrication work. Besides doing work for the coal mining sector in Mozambique, the subsidiary has also undertaken work for several sugar mills ad well as for the Cahora Bassa dam, with potential work in the power generation industry on the horizon. A SHINING EXAMPLE OF MINOPEX IN BOTSWANA AND LESOTHO Having originally established the company in South Africa and as a result of growing interest throughout southern Africa, Minopex established separate operating divisions and offices in Lesotho and Botswana to overcome cross-border challenges and ensure smooth operations in these countries specifically to service the diamond mining industry. 20

6 A MESSAGE FROM THE MD SECONDARY SPONSORSHIP GLOBALISATION STRATEGY ENSERMO operates out of a locally based workshop in the Tete province This first step towards growing and diversifying provided clients with the full Minopex quality service offering, with the added advantage of being localised and therefore adapted to each country s specific regulations, in terms of labour and mining and other governing laws. THE GOLDEN MIDDLE EAST Minopex entered the Middle East two years ago when it was awarded a contract by Saudi Arabian gold and base metals miner Ma aden Gold and Base Metals Company, for the operation of their gold mine in Saudi Arabia. Since then, Minopex has identified the region as holding exceptional growth opportunities in light of the issues surrounding the oil industry which has resulted in an apparent shift in focus to mining a market that is still in its infancy. In response to this growing market, Minopex is in the process of establishing an office in the Saudi Arabian capital of Riyadh to service the country which will in time act as a gateway for the company into the rest of the Middle East, notes Abela, who adds that several opportunities exist in the countries of Oman, Iran, Turkey and several more opportunities in Saudi Arabia. THE GOLDEN MIDDLE EAST Minopex MD Gerhard Hendriksz sums up 2016 as a tough year which it managed to overcome all while maintaining its client base AND growing it with two extra clients. Despite the tough year, not only for Minopex, but the global mining industry, Hendriksz remains confident in the slight upswing that 2017 holds for the future sustainability of the group in helping it meet its 2020 strategy of doubling the value of the business through its globalisation plans. In 2016 we successfully maintained our client base apart from one chrome project that we were working on which had to unfortunately close down as a result of prolonged weak chrome prices. Despite this, we were awarded two new projects an iron ore and magnetite project near Phalaborwa in Limpopo, AND a large coal contract in Mozambique which boosted our revenue and profit margins for the year. We have also tendered for a number of projects throughout 2016 which are expected to only bear fruit when they become operational in 2017/18. So Minopex is still standing strong despite the current tide of the mining industry, says Hendriksz. As part of Minopex s globalisation strategy, the company plans to grow the business in the Asia Pacific, Americas and further in the Middle East. To do so, Minopex will partner with its sister company DRA Global, who already has a foothold in some of these regions to collectively realise the 2020 group strategy. Despite South Africa still being our source of income at this point of time, because this is where we ve been established and where we have established an excellent track record exploration has slowly tapered out over the years. As a result, we re looking at entering Tanzania as well as expanding our business in Mozambique as well., as well as exploring Morocco and Algeria. We are also working on a project in Brazil, South America in Brazil a big iron deposit this will be done with our sister company DRA because it will involve a combination of various skills as it will be a pit to port operation, Hendriksz notes. Gerhard Hendriksz 21