South African tax considerations regarding the distribution of Northam ordinary shares

Allocation of the "tax cost" of the ordinary shares in the capital of Mvela Resources ("Mvela Resources ordinary shares") on the distribution of the Northam shares.

The purpose of this announcement is to advise Mvela Resources ordinary shareholders of the closing prices of the Northam shares and the Mvela Resources ordinary shares on 26 April 2011, and of the ratio in which the expenditure incurred in connection with the acquisition of the Mvela Resources ordinary shares, or their valuation date values, as the case may be, must be allocated to the Northam shares and the Mvela Resources ordinary shares (the "allocation ratio").

The distribution of the Northam shares by Mvela Resources on Tuesday, 26 April 2011 was an unbundling transaction as contemplated in section 46 of the Income Tax Act, No. 58 of 1962, as amended. Accordingly all Mvela Resources ordinary shareholders must determine the portion of the expenditure incurred in respect of the Mvela Resources ordinary shares that must be attributed to the Northam distribution shares as follows:

A = B x (C/(C +D))

Where:

  • "A‘ is the expenditure determined which must be allocated to the Northam distribution shares;
  • "B" is the expenditure incurred in relation to the Mvela Resources ordinary shares;
  • "C" is the market value of the Northam distribution shares determined at the close of business after the Northam distribution; and
  • "D" is the market value of Mvela Resources ordinary shares, determined at the close of business after the Northam distribution.

Mvela Resources shareholders are advised that the allocation ratio, based on the relative market values of the Northam shares and the Mvela Resources ordinary shares at the close of business on 26 April 2011, was as follows:

26 April 2011 Closing price (ZAR) Market value (ZAR) Ratio
Northam shares distributed 42.00 7 643 201 202 89.70%
Mvela Resources ordinary shares 4.03 878 060 837 10.30%
Total     100%

6 May 2011
Johannesburg