2010 has been a very challenging year for your Company and particularly for its direct coal mining subsidiary in South Africa, Black Wattle, which operated at a loss during 2010. The reasons for the loss are as follows:

• the strengthening of the SA Rand against the US Dollar;
• a shortage of railway trucks at our coal loading siding; and
• lower prices for our coal.

To overcome the effect of the strong SA Rand, we increased production by expanding our washing plant and buying in high quality coal. Our railway siding was also expanded and markets were found for this increased production. However, the shortage of railway trucks to deliver this coal to our customers meant that during the second half of the year we built up unacceptable levels of stock. In order to reduce these stock levels we had to stop buying in coal, which in turn had a material effect on our earnings. Despite this, the investments that we have made in 2010 in terms of mine expansion and new reserve acquisitions will reap substantial benefits in years to come."