Assore Interim Results - FOR THE HALF-YEAR ENDED 31 DECEMBER 2009

COMMENTARY
Headline earnings for the six months to 31 December 2009 have decreased by 89,3% compared to the same period in the previous fiscal year, to R336,9 million due to the significant decrease in the earnings of Assmang Limited (Assmang), and the decreased commissions earned on the reduced sales of group products.Assore holds a 50% interest in Assmang,which is proportionately consolidated in accordance with International Financial Reporting Standards (IFRS).

Assmang’s headline earnings decreased by 89,3% to R601,7 million compared to the same period of the previous fiscal year, due to lower selling prices for all products.The global recession that set in during the last quarter of calendar 2008, resulted in prices reducing strongly for all the group’s commodities, combined with a strengthening in the South African Rand/US Dollar exchange rate, leading to lower revenues. Except for iron ore, market conditions for all products were weak but did show some improvement towards the end of the period under review.

SALES VOLUMES
Assmang’s turnover for the period under review declined significantly, and despite sales volumes for all products being higher compared to the same period for the previous fiscal year, amounted to R4,6 billion (2008: R10,9 billion), a reduction of 57,9%.The table below sets out Assmang’s sales volumes for the period:

	Half-year ended
	31-Dec	31-Dec
Metric tons ’000	2009	2008	% increase
Iron ore	4 452	3 455	29
Manganese ore*	1 582	1 291	23
Manganese alloys*	120	70	71
Charge chrome	75	65	15
Chrome ore*	99	80	24

* Excluding intra-group sales

CAPITAL EXPENDITURE
The bulk of the group’s capital expenditure occurs in Assmang. The major capital expenditure occurred in the iron ore and manganese divisions. A total of R772 million was spent on the Khumani Expansion Project (KEP) at Assmang’s Khumani Iron Ore Mine, while R194 million was spent at Assmang’s Black Rock Manganese Mine on the construction of a new enlarged beneficiation plant.The expenditure programme on the KEP is planned to meet the timing of Assmang’s increased allocation of railage capacity on the Sishen-Saldanha line from 10 to 14 million tons per annum by mid-2012, and is progressing according to schedule. A further R170 million was spent on furnace upgrades across Assmang’s Manganese and Chrome divisions. A total of R27 million was spent on further developing two underground shafts at the Rustenburg Chrome Ore Mine, with commercial production expected to meet local commitments upon depletion of the existing opencast resources over the next 18 months.

OUTLOOK
Trading conditions have shown further signs of improvement, and customers and agents are prepared to acquire more ore and alloy inventories. However, it remains unclear as to the degree of recovery in the markets in which the group trades. Commodity prices have increased from the lows experienced in early 2009, and the weak US Dollar continues to have a positive impact on these prices, however, with the SA Rand trading at relatively strong levels, group revenues remain depressed.The group’s performance continues to be significantly exposed to fluctuations in exchange rates as the bulk of the group’s sales remain in the export market.

DIVIDENDS
The results in the announcement include the final dividend relating to the previous financial year of 1 000 cents (2008: 1 000 cents) per share, which was declared on 26 August 2009 and paid to shareholders on 21 September 2009. Based on the decreased earnings for the current period the board has declared a lower interim dividend of 500 cents (2008: 1 000 cents) per share, which will be paid to shareholders on or about 29 March 2010. In accordance with IFRS, this interim dividend is not included in the results for the period under review as it was declared after 31 December 2009.

ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial results for the period under review have been prepared on the historical cost basis, except for financial instruments that are fairly valued,in accordance with IAS 34 – Interim Reporting,issued by the International Accounting Standards Board (IASB).The accounting policies applied are consistent with those adopted in the financial year ended 30 June 2009, with the exception of the adoption of the following policies in response to changes in IFRS:

IAS 1 (Amendment) – Presentation of Financial Statements; and

IFRS 8 – Operating Segments.

The adoption of this amendment and this standard has had no effect on the financial statements of the group except for the disclosure of additional information. In addition, further amendments to IFRS and interpretations as issued by the IASB, have also been considered and adopted by the group. These amendments and interpretations have not had any effect on the financial results for the period or any requirement for additional disclosure.

SUBSEQUENT EVENT
On 2 December 2009 shareholders were advised that, subject to certain conditions precedent, an empowerment transaction had been concluded which would result in share ownership by Historically Disadvantaged South Africans, increasing from the existing 15,26% to 26,07%.Shareholders approved the transaction at a shareholders’meeting convened for that purpose on 19 January 2010 and subsequently all the suspensive conditions applicable to the first phase of the transaction have been fulfilled. It is anticipated that the remaining conditions will be fulfilled on or about the end of February 2010. Had the transaction been implemented prior to 31 December 2009, earnings per share for the period under review would have decreased by 54 cents per share to 1 359 cents per share, due to the estimated costs of the transaction.

DIRECTORS
On 31 August 2009, Mr J W Lewis was withdrawn as alternate director, due to his impending retirement from the group on 31 December 2009.

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