Highveld Industrial Park Training Centre Information Memorandum Facility No. 37 at Highveld Industrial Park Training Centre Information Memorandum Highveld Steel EMALAHLENI (WITBANK), SOUTH AFRICA August 2016

HIGHVELD INDUSTRIAL PARK: TRAINING CENTER FACILITY

Highveld Steel and Vanadium was founded in 1960 with the objective of building a unique plant with the ability of beneficiating vanadium bearing Titaniferrous ore from the Bushveld Igneous mineral complex. Highveld remains the only company in South Africa with the processing facility to beneficiate this ore reserve for the production of steel as well as vanadium slag. For decades, Highveld was one of the largest employers of engineering and production related skills in the area, with a total workforce of close to 2500 employees at full scale production. Recent developments have resulted in the directors voluntarily filing for business rescue which amongst others opens the opportunity for the sale or leasing of assets as individual operating units. The sale or lease of the fully equipped Training facility offers investors an unique opportunity to acquire a versatile, state-of-the- art training facility, capable of hosting a wide range of training programs including both theoretical and practical training for trade tests.

INTRODUCTION Identified strategic assets for future Highveld Steel and Vanadium (“Highveld Steel”) was, prior to its business rescue proceedings, South Africa’s second largest steel maker and the only producer of medium and heavy structural sections. Highveld Steel has contributed significantly to the South African economy, supporting South Africa’s industrial and economic development. During April 2015, the directors of Highveld Steel filed for voluntary business rescue as a result of lack of funding in challenging market conditions and ceased operations during July 2015. Under the direction of the business rescue practitioners and management, Highveld Steel: Compromised with creditors to enable suppliers to continue business with Highveld when operations restarts. Successfully decommissioned the operations under a controlled environment and preserved assets for future start- up. Commenced with care and maintenance on strategic assets. Identified various assets as future strategic assets which can be sold or leased as loose standing operational units. Prepared the Training Centre Facilities for future start-up as part of a lease agreement. De-commissioned operations Preserved assets in care and maintenance mode Identified strategic assets for future sale and leasing Highveld Steel has identified the Training Centre Facility as a strategic asset which can be mobilised to offer an interested training provider a fully equipped training facility .

TRAINING CENTER: FACILITY overview The Training Centre formed an integral part of the steelmaker’s operations during full scale operations, Accommodating more than 400 trade learners at any give time, the training centre formed the heart of the skills development for Highveld’s operations. With numerous fully equipped training rooms the training centre was until recently accredited to provide the following trade qualifications: Millwright Instrumentation Electrician Boilermaker Fitter & Turner Welder Rigger Roll turner Refractory Mason Earth Moving Equipment Mechanic Capacity to train in excess of 400 trade learners at any time Fully equipped training centre Various trades successfully presented at centre

TRAINING CENTER: FACILITY overview (cont.) The well established training centre offers amongst others: 6 fully equipped lecture rooms for theoretical training. 15 separate training and assessment facilities for all major trades. 8 office spaces adequate for administration staff members. Combined total of 3285 sq. m of training facilities. Securely located in the centre of Steelworks. Centrally located close to all major routes and industry including, Eskom, various mines, range of smelter plants, etc. Established training venue supporting both Theoretical & Practical training Training Venue Facility Number of Areas Total SQM Lecture Rooms 6 420.4 Electrical Workshops 2 415.9 Boiler making Shop 4 800.4 Instrumentation 162.3 Fitting Workshop 3 343.2 Rigging and Tackle area 505.2 Machining & Turning Workshop 638.1 Total 21 3285.5 Close to 3300sqm covered training area. Centrally located close to major industry.

TRAINING CENTER : investment case The rental of the Training Facility has the following distinct advantages: Immediate access to market: A project to establish a new Training Facility can take up to 2 years to complete. The lease of the existing facility allows the investor immediate access to the market at a significantly discounted rate when compared to a green fields facility of similar size. Established : The existing facility has successfully hosted various training interventions and has a proven track record as a preferred training provider in the Emalahleni area. Strategic location: The training centre is strategically situated close to major routes which allows easy access to various industries and potential clients. Low Manning requirements: The well established training centre has been operated successfully with a low staff complement and skills required to operate the training centre is readily available in the Witbank area. Immediate access to market Strategically located to supply a range of industries Access to existing infrastructure

TRAINING CENTER : investment case (cont.) Established Infrastructure: Although the lease agreement will ultimately revolve around the rental of the Training Centre as an entire asset, the investor may have the option to access the following services, at a fee: Fire and rescue teams including medical station. Mechanical and electrical workshops to perform selected training related tasks. Information technology systems such as communication networks, data capturing systems and clocking systems. Roaming security including access control to site. Canteen and change-house facilities. Access to existing infrastructure

TRAINING CENTER : manning requirements A total compliment of 11 employees is required to operate the Centre at full capacity broken down as follows: The majority of the Training Centre ex employees are located in Witbank. Following the large scale retrenchment of workers in the broader smelter industry – particularly in Witbank and Middelburg – it is expected that the majority of ex-Highveld employees will still be available to re-employment. As part of the retrenchment agreement, a new owner / lessor shall reasonably endeavour preferential employment for retrenched Highveld employees. 11 employees required to operate the plant Unit Manager, Talent Management and Development Vacant Majority of work force based in Witbank Administrator x 3 Snr. Talent and Development Practitioner – Technical Technical Training Coordinator Trainer Driven Machinery Trainer Technical x 4

TRAINING CENTER : ADDITIONAL CONSIDERATIONS The following needs to be taken into consideration regarding funding of employees during training: MerSeta, through their standard grant awards, will fund up to R139 350 towards the training of each apprentice. This payment is made in 4 tranches according to the Memorandum of Understanding signed between the training provider and MerSeta. Typical trade training runs for approximately 24 months (6 months theoretical, 18 months practical). The minimum weekly allowance to be paid to apprentices amounts to on average R1500 per week. Based on the values stated above, the trainer should be able to cover all personnel related cost for the entire period by the grants awarded by MerSeta. MerSeta funds majority of training costs Typical Trade preparation requires 24 months of training

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