1.

Geophysics and Geotechnical Studies

An airborne survey was recently flown over the area and, apart from aerial photography, a digital terrain model was created. This has subsequently been incorporated into the geological model as an accurate land surface.

Another geophysical survey of the project area was completed in August 2007 by the Institute of Groundwater Studies. This survey was carried out for the following reasons:- to identify and delineate geological features that could potentially influence the groundwater environment by forming preferential pathways or barriers to groundwater flow and contaminant transport; investigate the geohydrological environment in terms of the depth of the groundwater table and the possible presence of dissolution cavities in the vicinity of potential pollution sources at the planned cement factory; and identify targets for the drilling of high-yielding production boreholes that will be used for water supply at the cement factory.

The following conclusions and recommendations were made as a result of the study:- magnetic lineaments were identified in the vicinity of the planned mining and cement manufacturing areas and these were interpreted to be steep-dipping magnetic dykes; the thickness of the dykes range from >100m to <20m. The thick dykes are generally orientated in an E/W direction and the thin dykes having a SE/NW orientation, occurring as a dyke swarm; the thick dykes are expected to form barriers against groundwater flow and to compartmentalise the groundwater environment, whilst the thinner dykes are expected to be associated with preferential pathways to groundwater migration; and based on the geophysical investigations and information on the local drainage patterns, eight drilling targets were selected for an initial drilling programme. The purpose of the boreholes will be to allow for monitoring of the impact that mining will have on the groundwater environment as well as to act as production boreholes supplying water to the plant.

1.1

Geological Mapping

Detailed geological mapping is limited as surface exposures are few due to the relatively flat terrain. During the bulk sampling operations, observations were made of the calcrete profile. Very little significant changes in the profile existed between sample sites, apart from minor subtle changes in layer thicknesses and depths to bedrock. Numerous profiles were used to demonstrate chemical continuity in the deposit.

1.2

Exploration Drilling

Bayah Cement reviewed the results obtained from the Anglo drilling and used this information to plan further drilling programmes to be carried out under their own supervision. . (.) was chosen as the drilling contractor on the basis of previous work on similar projects. For phase one of Bayah Cements exploration drilling, Percussos role was to undertake the infill and extra exploration drilling and sampling work required to boost the confidence limits obtained from the Anglo data. Percusso subcontracted Champ Drilling (Pty) Ltd (Champ) to do the actual drilling on site. Champ has conducted most of the exploration drilling in the Lichtenburg area, including drilling for Holcim (Pty) Ltd (now AfriSam). Champ has also drilled for Pangaea Diamondfields Plc and Etruscan Resources Inc, who also have prospecting rights on Bayah Cements properties. Champ was also later contracted to carry out phase two of Bayah Cements drilling programme.

The additional information obtained from these drilling phases played an important role in increasing the confidence of the resource and hence, the limestones suitability for cement manufacture. SRK Consulting (SRK) was responsible for checking and verifying the drilling programme and the results obtained.

The quality of the drilling carried out was summarised in an SRK memorandum stating that the drilling and sampling process controls are of a very high standard. In terms of the positioning of the drill sites, Bayah Cement was able to provide resource data on a 100m grid, purely by infilling the 200m grid drilled by Anglo. The borehole logs and assay results were comparable with the data obtained from the Anglo data. This provides extra confidence in the quality of the Anglo data. Figure 16 shows the position and density of the Anglo and Bayah Cement exploration drilling, the proposed mining blocks and the environmental concerns created as a result of mining through a water course.

Geological logging of the borehole samples was supervised by a qualified representative of . Limited (.), which has the necessary experience of dealing with limestone geology. Logging of limestone lithologies was neither particularly difficult nor critical to the outcome of the project. However, the overburden thickness and depth to bedrock were important for tonnage calculations. The geochemical qualities obtained from assaying samples were the most important features of the exploration programme

1.3

Sampling Methodology and QA/QC Procedures (SR T3.1, T3.2, T3.4)

Venmyn is satisfied that the findings of the high level due diligence audit ensure that quality results of the exploration drilling can be relied upon, based on the geological reports prepared Anglo on the prospecting activities conducted on the Lichtenburg Limestone Project. The detailed methodology, field sampling process verification and validation procedures were not available. Venmyn believes that a large corporation like Anglo has appropriate work standards that have to comply with when conducting such exercises. Therefore, the results of this exploration exercise can be relied upon and the samples are considered to be representative of the orebody. In addition, these results have been confirmed by the second phase drilling conducted by Bayah Cement. Analysis of sufficient chemical compounds was undertaken for cement suitability. However, the laboratories did struggle to meet the request for the full suite of tests on all the chemical compounds selected. Appropriate checks and balances were carried out to ensure accurate and reliable results as shown in Table 6. The results of the check assays and standards of 5% of the total number of samples assayed were provided to Venmyn for verification. Both laboratories used were certified to ISO 14001. The following are the assaying methods and the laboratories that conducted the assaying including the accreditation numbers:a. XRF- SGS Lakefield Research Africa Accreditation no.T0169; b. XRF - M&L Inspectorate Accreditation no.T0040; and c. Wet Chemistry - M&L Inspectorate Accreditation no.T0040.

The numbers of samples analysed per laboratory are given in the Table 6:-

The checks sampling/check assaying programmes were considered adequate. Venmyn confirms that the sample recoveries were properly executed and recorded. The sampling procedures are believed to provide accurate grade results, reducing sample bias.

1.4

Mineral Resource Estimation Methodology (SR T4.1, T4.2)

The initial mineral resource dated 31st January 2008 was estimated using the traditional manual polygonal method. The polygonal method of mineral resource estimation has been in use since the early 1900s, and is still used by some companies, especially when manually preparing mineral resource estimates although it has been largely superseded by computer based software. The polygonal method is unique since the polygons drawn around each drill hole define both the volume of ore and grade in each polygon. As an estimator of the boundary of a deposit, the polygon defines sharp boundaries rather than the smooth gradational boundaries generated by interpolation methods such as inverse distance. The results from the manual method were maintained for comparison purposes whilst more sophisticated computer based methods have been adopted.

Bayah Cement has recently completed geological modelling and resource estimation in SurpacTM, with results presented in Section 6.7.6. The mineral resource estimate was calculated using the following basic methodology: The overburden was coded in the database in such a way that it would be constrained out from the actual limestone layers, as it would be mined and stored separately; The block model was constructed in Surpac by extracting composites of all variables in first 1m then 2m up to 25m increments using inverse distance cubing; Create an attribute of the true elevation of the final cumulative floor by subtracting half-block thickness from the true thickness centroid elevation for that block; Determine the main grade controlling criteria for the target area and assign the cut-off criteria to each of the dumped files ie apply a minimum LSF of 107, a maximum MgO content of 2.5% and a maximum SiO2 of 14% to the 1m to 25m centroid dumps; Conduct a sequential block filling of the blank model using the limited centroids previously created and to which LSF, MgO and SiO2 cut-offs had been applied by keeping the last input per centroid and starting with the shallowest cumulate ending with the deepest cumulate; and

Use the cumulate, cut-off specific block model to do a mineral resource estimate for the specific cut-off scenario. Repeat the process and locate the correct cumulative cut-off scenario to enable definition of an optimised mineral resource estimate.

The mineral resources estimate based on geological boundaries are irregular and are impractical to mine. Mining would take place over a flat floor elevation predominantly for water control. The floor of the Aganang resource, was based on the geological boundaries of LSF>107, MgO<2.5% and SiO2 <14%, was extracted and flattened (removal of peaks and troughs) to produce a flat mining floor and a mineable Mineral Resource that was then converted to Mineral Reserves.

1.5

Mining of Limestone

The Aganang limestone deposit consists of a near surface calcrete, varying in thickness from 3m to 12m and will be exploited by surface mining methods. The overburden material that requires pre-stripping varies in thickness from 0m to 0.5m. The proposed mining method and mining sequence closely resembles the mining methods currently in progress at the three other cement producers in the region, namely PPC, AfriSam and Lafarge SA. Mining will be carried out on a single mining level with a variable bench height, depending on the thickness of the mineralisation and the chemical composition, which is determined by face sampling and on-going drilling prior to extraction. 1.5.1 Mining Method and Sequence

The mining method proposed in the FSR was based on a standard open strip mining method. The waste overburden will be removed by bulldozer. The ore will be fragmented using a drill and blast technique that employs ANFO (Ammonium Nitrate - Fuel Oil) as a blasting agent. Blast-hole cuttings will be sampled and analysed for additional grade information. Topsoil (overburden) will be loaded into haulage trucks and transported and dumped into the mined out areas as on-going environmental rehabilitation. The mining sequence will be as follows: Overburden removal; Blast-hole drilling and charging; Blasting; and Loading and hauling broken ore to the primary crusher.

The mining method and sequence was considered to be appropriate for the extraction of shallow and wide laterally extensive deposits. The mining system will also have built-in flexibility by providing the opportunity to blend the material by varying the volumes extracted from different mining faces.

1.5.2

Mine Design and Planning

Three open pits will be in operation simultaneously to ensure correct blending takes place. These three mining areas will be separately sited within Mineral Reserve blocks A, B and C shown in Figure 18. Table 9 is a summary of tonnage, blend and average chemical composition of Mineral Reserve blocks .., and .-

A mining sequence was outlined so that the mining will always occur uphill. This will ensure that the mining faces are always dry. The mining sequence formed the base for the schedule direction. Another important scheduling criterion was to meet quality specifications over blending beds or 50,000t batches and a LSF of 111 was targeted throughout the schedule. A detailed schedule (blending by blending bed) was created for the first 3 years; thereafter a yearly schedule was produced. The mining block characteristics listed above can be altered slightly as additional information is fed into the model. Venmyn confirms that the mine design and schedule prepared by RHC, is technically sound.

Bayah Cement is in the process of comparing the cost and risk of in-house as against fully outsourced mining of its limestone resource. Once board approval has been given to the preferred option of outsourced mining, a suitable contractor will be appointed to conduct the mining function as a turnkey contract mining company. Bayah Cement will retain overall control of the quality of the run-of-mine product by overseeing the operation and by employing a dedicated manager responsible for quality control of limestone chemistry. Venmyn considers this mining method and approach to be appropriate. In light of the current skilled labour shortage in South Africa, this approach would reduce both the technical and operational risk on the mining activities, therefore enabling Bayah Cement to concentrate on the manufacturing and marketing of cement. The risk of Bayah Cement not being able to attract competent employees on site can result in the company failing to achieve the expected production targets. The amount of flexibility that has been built into the mine design to accommodate the geochemical variations in the mineral deposit and the consequential effects on mining costs, selected mining equipment and the ore blending requirements, should be sufficient to maintain quality control. Within

each Mineral Reserve Block, there are, as expected, small isolated ore blocks with unsuitable limestone, where the quality is too low for ordinary blending. These blocks would have to be mined and blended with high grade ore, in order for it to be used to make Portland cement. If this blend cannot be undertaken cost effectively, then depending on its size it is removed from the Mineral Reserve.

1.5.3

Mine Equipment and Production Schedules

The preferred strategy according to Bayah Cements management team is to appoint a mining contractor to do the mining using its own equipment and be responsible for its maintenance.. Bayah Cement envisages that using contract mining would save both capital and operational cost requirements. For example, there is no need to make provisions for an additional haul truck and loader as a backup. These back-up vehicles will not be required in the case of a mining contractor, since the contractor should have the ability to provide and share back-up between numerous mining operations. Using contract mining has the advantage of equipment back-up , reduced capital requirements and reduced staffing as well as the ability to increase equipment and production should the need arise in an emergency.

1.5.4

Mine Dewatering

The average annual rainfall for the Bayah district over the last 20 years was ..mm. Most of the precipitation occurs in the summer months (.. to .). A geohydrological study conducted by the Institute for Groundwater Studies established that the water is within 4m to 6m from surface At the depths they predicted the rate of water inflows will be approximately 7lps over a face length. In light of these conditions, the proposed mine is considered to be relatively dry. A provision of one sump per pit has been made in the mine design and schedule, to ensure that the pits are dewatered adequately during the mining operations.

1.5.5

Mine Manpower

The Bayah District and surrounding areas have local personnel who are familiar with the cement manufacturing industry. Additional skilled staff can be sourced from other provinces if required. A premium has been applied for this and has been factored in the economic model. The presence of other cement companies operating in the area, provide an advantage to Bayah Cement in attracting competent mine personnel. Bayah Cement has hired some key personnel and is planning to hire the

remaining key mine management and technical staff in due course, depending on their roles in the organisation. Adequate funds have been included in the projections to attract competent mine personnel

1.6

Mineral Processing : Manufacturing of Cement