RELEVANT MATERIAL ISSUE/S

• Maintaining constructive communication channels with all our stakeholders
• Maintaining our legislative and regulatory compliance, focusing on the MPRDA and the Mining Charter

RELEVANT IDENTIFIED RISKS

• Licence to operate

STAKEHOLDER ENGAGEMENT

We define our stakeholders as those individuals, groups and entities directly affected, both positively and negatively, by our business activities.

External stakeholder engagement is the responsibility of Northam’s chief executive and chief financial officer, while internal stakeholder engagement is undertaken by the general managers at each operating mine, together with the executive officer human resources (HR).

Major impacts in the area of stakeholder relations are felt at operational level. For this reason, operational management is empowered to deal with concerns raised by stakeholders. Management is committed to reacting timeously to stakeholder concerns, and engages both formally and informally. External stakeholder concerns may be escalated to the chief financial and chief executive officers.

The group conducts a sustained programme of communication directed at its stakeholders, including shareholders and their advisors, employees, unions, communities, government and regulators and NGOs.

Northam is a member of the Chamber of Mines and actively participates in the Chamber’s industry initiatives.

Engaging with our stakeholders

Stakeholder engagement summary

Key stakeholders	Topics and concerns	Communication channels
Shareholders and investors	Operating and financial performance Share price performance and dividends Issues related to the sustainability of the company: risk mitigation legislation safety labour relations	Announcements on SENS Website Interim, preliminary and annual results presentations One-on-one investor meetings Investor site visits Roadshows AGMs and special shareholder meetings Annual integrated reports Carbon Disclosure Project (CDP) climate change submissions CDP water submissions
Employees	Wage negotiations Job security Training and development Health and safety Company performance	Group policies Collective bargaining practices Team briefings Two-way manager-employee communication Let’s Talk campaigns: recruitment HIV/AIDS education performance
Customers	Continued availability of supply Quality of supply Impact of any industrial action on supply	Announcements on SENS Group reports Website Formal presentations Roadshows Site visits CDP climate change submissions CDP water submissions
Suppliers and contracting companies	Sustainability of the company Financial performance Employment practices Local procurement practices Preferential procurement practices Quality control Impact of any industrial action on suppliers	Announcements on SENS Company practices and policies Preferential procurement policies Open days Dialogue
Media	Operating and financial performance Corporate activity Environmental issues Community-related topics Impact of any industrial action on the group, employees, the industry and the South African economy	Announcements on SENS Website Online presentations Media site visits Group reports and results Interviews
Communities and NGOs	Local economic development Corporate social investment Job opportunities and employment Skills development Health related issues Environmental impact Impact of any industrial action on local business	Community forums Stakeholder forums Industry partnerships Community engagement programmes Wellness campaigns Dialogue
Government and regulatory authorities	Labour relations Licence to operate Employment Education and training Environmental impact and rehabilitation BBE empowerment and ownership Compliance with legislation	Formal processes Participation in industry associations Social and labour plans Dialogue Group reports Site visits South African Revenue Services Department of Mineral Resources

SOCIAL AND LABOUR PLANS

The MPRDA of 2002 requires the submission and approval of SLPs as a prerequisite for the granting of mining or production rights. SLPs require the development and implementation of comprehensive human resources development programmes, a mine community development plan, housing and living conditions plan, employment equity plan and processes to save jobs and manage downscaling and/or closure.

Northam believes that these programmes are aimed at promoting employment and the advancement of the socio-economic welfare of all South Africans while helping ensure economic growth. In particular, we acknowledge the important role of the current Mining Charter, provision for which was made in section 100(2)(a) of the MPRDA, as an instrument of transformation in the industry with the help of set targets.

By our adherence to the MPRDA and the current Mining Charter, we share the value we create at our mining operations with stakeholders, as we strive to meet or exceed set targets.

MINE COMMUNITY DEVELOPMENT

APPROACH AND STRUCTURE

Northam recognises its responsibility to contribute to local communities and to major labour-sending areas, providing project and infrastructural support in pursuit of sustainable socio-economic upliftment. We maintain open and proactive communication channels with community structures and other stakeholders in order to deal with community concerns, expectations and developments. The group seeks to mitigate any negative impacts of our mining operations on local communities.

In compliance with the requirements of the MPRDA and the Mining Charter, Northam’s operations focus on contributing to mine, community and rural development. The operations, therefore, pay significant attention to the establishment of local economic development (LED) projects identified in SLPs.

Northam’s SLPs are aligned with the integrated development plans (IDPs) of local municipalities to address community needs effectively. In addition to LED, the group also supports several projects that are not necessarily in the ambit of its SLPs but are considered worthy causes. These are referred to as corporate social investment or CSI.

Compliance with aspects of the Mining Charter relating to LED and related issues is the responsibility of the executive officer HR under the guidance of the SE&HR committee. The committee updates the board on a quarterly basis on compliance with the Mining Charter.

Operational CSI committees comprise three members of management and one representative from each of the organised employee representative bodies. They meet on a monthly basis to identify, prioritise and allocate resources to sustainable projects. Key interventions are planned with local municipalities.

A community and rural development strategy is applied in identifying and implementing community projects. The strategy includes stakeholder mapping, an analysis of expectations and immediate risks, as well as protocol for constructive engagement with government and related stakeholders to ensure a co- ordinated approach to community development.

COMMUNITY DEVELOPMENT PERFORMANCE IN F2017

ZONDEREINDE

In F2017, a total of R3.9 million was spent on CSI and LED.

The identification of suitable LED projects and CSI activities in the areas surrounding the mine is guided by the Zondereinde SLP and the operation’s CSI committee. Responsibility for the operation’s SLP falls under the human resources department.

Zondereinde engages with traditional leaders, and with three municipalities:

• Thabazimbi Local Municipality in Limpopo
• Moses Kotane Local Municipality in North West Province, a labour-sending municipality
• OR Tambo District Municipality in the Eastern Cape, also a labour-sending municipality

A mining forum was established in F2016 in order to improve communication and coordination between the mines and municipal representatives on large-scale projects to improve infrastructure and delivery in the area. The lack of service delivery and poor follow-up and support from local municipalities remain a significant challenge, with the group sometimes having to contribute to service delivery instead of focusing on economic growth.

After prolonged engagement, Zondereinde’s updated SLP was aligned with the Thabazimbi Local Municipality’s IDP. SLP projects include:

• road infrastructure
• school infrastructure
• support services at the Spitzkop school for the disabled

Name of project	Focus/objective	Project details	Ongoing/ once-off	Spend (R000)
Community Development Centre	Income generation	An investment in a community skills development centre aimed at improving the education and skills levels of local communities. The focus is on an income generating agricultural project for the Thabazimbi community.	Ongoing	1 276
Community engagement	Establishment of a community trust	Consultancy fees for engagement with municipalities, local tribal leadership and for public participation. Also for the training and orientation of trustees.	Ongoing	671
Mojuteng home ownership scheme	Promotion of home ownership	Rates were subsidised as part of the Mojuteng home ownership scheme.	Ongoing	188
Bursary scheme	Education	Bursaries were specifically aimed at encouraging HDSAs and young women to pursue careers in mining-related fields.	Ongoing	340
Barney’s Nursery School	Early childhood development	Top-up funds were provided to cover the costs of the facility and educators’ salaries.	Ongoing	207
Thabang feeding scheme	Poverty alleviation	The provision of food parcels to needy school children in the community.	Ongoing	71
School lunch packs	Poverty alleviation	The provision of food parcels to needy school children in the community.	Ongoing	6
International Literacy Day	Education	Zondereinde hosted this event in conjunction with the MQA and NUM. Some 1 500 AET learners from across the country attended this event.	Once-off	106
Women in Mining Day	Women’s development, safety and health	A Women in Mining celebration took place at Zondereinde, focusing on women’s success stories and women’s safety and health.	Once-off	156
Donations	Poverty alleviation	Donations to organisations that fight poverty.	Once-off	912
Total spend in F2017				3 933

No LED projects were advanced in terms of Zondereinde’s revised SLP during F2017. These will be reported on in F2018.

BOOYSENDAL

In F2017, some R3.0 million was spent on CSI and LED.

Booysendal’s LED and CSI activities are coordinated by the divisional human resources manager, who is also responsible for oversight of community engagement in the area. The operation’s management team under the leadership of the general manager have oversight of both the SLP process and CSI.

Booysendal mine is located in a remote region of the Limpopo province where there are limited economic opportunities. Agriculture, forestry, mining and tourism are the region’s primary activities. A further major challenge is the low level of literacy and education in the area, which is rated among the lowest in South Africa.

The key areas to be developed in the Booysendal area as articulated in the Greater Tubatse and Sekhukhune District Municipalities IDPs are:

• Water and sanitation
• Electricity
• Roads
• Education, especially mathematics and science
• Income generation and job-creation projects, with the primary focus on women and people with disabilities

Stakeholder identification and engagement at Booysendal has been ongoing since the mine’s inception, but this is complicated by the scale, proximity and needs of local communities, and by historic interests in landholdings. Booysendal has sound working relationships with its stakeholders and engages with them mainly through the following structures:

• Sekhukhune District Municipality (SDM)
  • Executive mayor’s office
  • Socio-Economic Development Managers’ Forum
• Greater Tubatse Local Municipality
  • LED Forum
  • Greater Tubatse Mining Forum
  • Southern Cluster Mining Community Development Committee
• Thaba Chweu Local Municipality
  • Executive mayor’s office

Several forums have been set up in the area where Booysendal operates. These provide channels for Booysendal to facilitate the flow of meaningful benefits to communities, help the mine to keep abreast of concerns among community members and to address any issues raised. We also have a community complaints register in place.

Forums in the Booysendal area

Booysendal North

Forum	Structure and composition	Role
Booysendal Community	Comprises 15 families who have historical connections with the mine surface footprint Meets monthly with management representatives	Promotes economic growth, employment and advances socio-economic welfare of identified core communities Expands social development opportunities for HDSAs and women Facilitates consultation within the spirit of the MPRDA and the Broad-Based Black Economic Empowerment Amendment Act No 53 of 2003
Stakeholder Engagement	For all interested and affected stakeholders, including local municipalities, DMR, provincial government and other community forums Meets bi-monthly	Focuses on social and economic upliftment of local communities through positive engagement and contributions in support of sustainable projects and programmes.
Traditional Leadership	For communities within a 50km radius of the mine Meets quarterly	Focuses on: local recruitment supply chain business opportunities and supporting local entrepreneurs training opportunities including bursaries and learnerships infrastructure development

Booysendal South

Stakeholder Engagement	Established in F2017 to engage with a broad group of stakeholders
Traditional Leadership	Established in F2017 to engage with local traditional leaders to discuss recruitment, procurementand community development

Booysendal’s updated SLP was approved in F2017. SLP projects include:

• Electrification project in Matsosho village. Some 352 households will benefit from this R6.5 million project.
• Water and sanitation project. A local school will be upgraded in this R4.0 million project.
• PPE workshop. Consultation with beneficiaries has been completed and a business model is being developed.
• Ngwaabe Combined School science laboratory. Consultation with the Department of Education has been completed. Building plans are awaiting approval.
• Tarring of Potgieter Road in Mashishing. To be implemented in F2020.
• Tarring of road in Matsosho village. To be implemented in F2020.

Booysendal – corporate social investment spend in F2017

Name of project	Focus/objective	Project details	Ongoing/ once-off	Spend (R000)
South African Police Service	Safety and crime prevention	Crime awareness campaign to proactively prevent crime	Once-off	5
Dinalane Early Childhood Development Centre	Education	Project designed to contribute to early childhood development. The centre was completed and handed over to its beneficiaries	Once-off	25
Grave relocation	Development of Booysendal South mine	Assistance with the sensitive relocation of graves to places chosen by the families of the deceased	Once-off	182
Kutullo soccer fields	Sports development	Encouraging young people to take part in the healthy option of sport rather than spending time on the street where they are vulnerable to substance abuse	Once-off	48
Booysendal South traditional leadership	Stakeholder relations improvement	This initiative included token gifts as recognition for the important role traditional leaders play	Once-off	4
Stakeholder relations engagement	Community development	The provision of transport and refreshments during community engagements	Once-off	94
Total spend in F2017				358

Booysendal social and labour plan – local economic development spend in F2017

Name of project	Focus/objective	Project details	Ongoing/ once-off	Spend (R000)
SMME development	Development of local business/SMMEs	Project is designed to assist local SMMEs to access business opportunities emanating from mining activities	Ongoing	1 995
R577	Infrastructure development and the reduction of accidents	The R577 is used by people from the nearby farming communities and mine employees	Ongoing	613
Total spend in F2017				2 608

LOCAL COMMUNITY RELATIONSHIPS

Northam enjoys a reasonably healthy relationship with the communities where it operates. However, these relationships play out in areas of very low economic activity, among community members often with low education and skills levels and this inevitably brings challenges to bear on those relationships.

Both operations have developed databases of local skills to assist in recruitment requirements.

ZONDEREINDE

At Zondereinde, councillors and traditional leaders collaborate with the mine in respect of key interventions such as local recruitment, CSI and LED projects. Engagements with communities are on a needs basis and relationships to date can be reported as constructive and fruitful.

Some civil unrest took place in our Welgeval community in F2017, mainly relating to a lack of job opportunities. The mine engaged with the young people who were protesting and collected their CVs for future job opportunities and the cadetship programme.

BOOYSENDAL

As discussed under Human capital, some civil unrest took place around Booysendal in F2017, prompted in the main by the lack of job opportunities in the area. See table below for Northam’s response.

Northam is currently engaged with other companies in the area and initiatives led by local government leaders to deal with service delivery protests.

Northam’s response to community unrest in Booysendal area (F2017)

Community complaint	Steps taken to ease problem
Lack of job opportunities/mine recruitment	We used our engagement platforms to discuss this issue. Community engagement included the explanation of company policies and procedures.
Procurement	We used our engagement platforms to discuss this issue. Two business consultants were appointed to facilitate enterprise development initiatives among our local communities. Their role also includes promoting a clean and sustainable supply chain.
Infrastructure development	We used our engagement platforms to discuss this issue. Our SLP has been approved with the following projects ready to be implemented in F2018 electrification project water and sanitation project PPE workshop Ngwaabe Combined School science laboratory

LOCAL EMPLOYMENT AND PREFERENTIAL PROCUREMENT

As previously indicated, Northam’s mines are in areas of low economic activity where there are limited employment opportunities, resources and infrastructure. Northam is unable to meet all local employment and other requirements and also recognises the need to think beyond the operational lives of its mines. Northam works closely with municipal officials to manage community expectations and has assisted in identifying economic targets which could be developed by way of small, medium and micro enterprises (SMMEs) in collaboration with local entrepreneurs.

ZONDEREINDE

In F2017, 21% of permanent employees came from the Limpopo province, and 19% originated from the North West province.

In order to limit the dependence of communities on the mining industry for jobs, Zondereinde has prioritised key economic areas to be developed through the contributions of small businesses and local entrepreneurs. These areas include:

• Environment and waste management
• Agriculture
• Construction

In pursuit of developing a local supplier base, a supplier forum has been established at Zondereinde, with mining companies and municipal officials represented on the steering committee. Ongoing engagements are held with local community structures and with municipal council representatives during which specific issues relating to sustainable small business development and establishment of local economies are considered.

The incubation and training process of local SMMEs does take time before they are compliant which then enables us to procure their services. Zondereinde has identified all SMMEs and interviews have been conducted to assess any gaps which will be addressed via training and business support interventions.

BOOYSENDAL

As at the end of June 2017 an average of 60% of the total workforce of Booysendal mine came from the local community. Booysendal is committed to hiring people from our host communities at all levels of the workforce and encourages contracting companies to do the same in support of local development.

The mine strives to provide meaningful support to small and medium-sized businesses in nearby communities as well as those who are already providing services to the mine so that they can contribute to the development of the local economic base.

Booysendal supports some 13 local SMMEs who provide a range of services including transport, change house maintenance, landscaping, and printing.

In collaboration with the local municipalities around Booysendal, mine management has contributed towards the establishment of a dynamic database for appointment of local suppliers with the necessary skills and experience, particularly in the fields of engineering, trackless mining and plant operations. This database continues to provide a sound base for the recruitment of local labour.

GROUP PREFERENTIAL PROCUREMENT

In compliance with the Mining Charter, Northam is committed to giving preference to local businesses in the communities surrounding its operations. Northam’s procurement policy accordingly gives local BEE companies preferred supplier status. Northam accords preferred-supplier status to HDSA suppliers subject to commercial competitiveness. Northam spent R4.6 billion in F2017 (F2016: R3.5 billion) on procurement, of which 75.3% or R3.4 billion was allocated to BEE suppliers.

Consolidated report on HDSA expenditure

	Capital	Services and contracting companies	Consumables	Total
HDSA spend as % of total discretionary spend	43.20%	86.14%	57.89%	65.90%
	R000	R000	R000	R000	% spend
HDSA owned*	231 418	1 367 774	236 073	1 835 265	40.33
HDSA empowered**	364 234	360 564	438 138	1 162 936	25.56
HDSA influenced***	–	–	–	–	0.00
HDSA spend	595 652	1 728 338	674 211	2 998 201	65.89
Exempt micro enterprises	–	–	–	–	0.00
Multinational enterprises	370 954	22 610	32 451	426 015	9.36
Measured HDSA spend	966 606	1 750 948	706 662	3 424 216	75.25
Without HDSA	412 187	252 279	413 290	1 077 756	23.68
HDSA influenced***	628	3 278	44 610	48 516	1.07
Total discretionary spend	1 379 421	2 006 505	1 164 562	4 550 488	100.00
Non-discretionary spend
Electricity				670 820
Water				28 266
Municipal services				283
Total spend				5 249 857

• * >50% BEE equity
• ** >25% BEE equity
• *** >5% – <25% BEE equity

BEE TRUSTS

The two community beneficiary groups which participate in the Zambezi Platinum consortium are located in the neighbourhoods of the Zondereinde and Booysendal mines.

Northam has made progress in putting in place the Trusts to regulate the disbursements which will be paid to the communities in the future. The community trusts have already benefitted in the amount of R25.9 million each (a percentage of the R400 million lock-in fee paid to the BEE consortium at the time of the transaction), and like all other shareholders, will benefit further financially when Northam resumes dividend payments. Northam has not paid dividends in recent years owing to weak PGM prices and its large capital expansion programme.

The Booysendal Community Trust is operational. All trustee appointments have been registered with the Master of the High Court; have participated in a trustee orientation session and have held two meetings. After consultation with their constituencies, the community trustees have forwarded project proposals to the Trust for consideration.

With regard to the Zondereinde Community Trust, all the identified beneficiary communities have been consulted. Community, independent and Northam Platinum trustees have been identified and their appointments are in the process of being lodged with the Master of the High Court. Trustee training, orientation and the Trust’s first meeting are scheduled to take place before November 2017.

All is on track for the Trusts to disburse educational bursaries, fund community skills development programmes and consider health related projects in 2018.