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Independent auditors' report to the shareholders of Assore Limited

for the year ended 30 June 2019

Report on the audit of the consolidated and separate annual financial statements

Opinion

We have audited the consolidated and separate annual financial statements of Assore Limited and its subsidiaries ("the group") and company set out in consolidated statement of financial position, which comprise the consolidated and separate statements of financial position as at 30 June 2019, and the consolidated and separate statements of profit or loss and other comprehensive income, the consolidated and separate statements of changes in equity and the consolidated and separate statements of cash flows for the year then ended, and notes to the consolidated and separate annual financial statements, including a summary of significant accounting policies.

In our opinion, the consolidated and separate annual financial statements present fairly, in all material respects, the consolidated and separate financial position of the group and company as at 30 June 2019, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the consolidated and separate annual financial statements section of our report. We are independent of the group and company in accordance with sections 290 and 291 of the Independent Regulatory Board for Auditors' Code of Professional Conduct for Registered Auditors (revised January 2018), parts 1 and 3 of the Independent Regulatory Board for Auditors' Code of Professional Conduct for Registered Auditors (revised November 2018) (together the IRBA Codes) and other independence requirements applicable to performing audits of annual financial statements of the group and company and in South Africa. We have fulfilled our other ethical responsibilities, as applicable, in accordance with the IRBA Codes and in accordance with other ethical requirements applicable to performing audits of the group and company and in South Africa. The IRBA Codes are consistent with the corresponding sections of the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA code) and the International Ethics Standards Board for Accountants' International Code of Ethics for Professional Accountants (including International Independence Standards) respectively. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate annual financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate annual financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context.

We have fulfilled the responsibilities described in the auditors' responsibilities for the audit of the consolidated and separate annual financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated and separate annual financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated and separate annual financial statements.

The key audit matters applies equally to the audit of the consolidated and separate annual financial statements.

Key audit matter		How the matter was addressed in the audit
Environmental rehabilitation
(This key audit matters apply only to the audit of the consolidated financial statements) The nature of the mining industry's mineral extraction is such that environmental disturbance is inevitable. In terms of NEMA regulations, IAS 37 and IFRIC 1, the group provides for the estimated costs of rehabilitation which include both restoration and decommissioning of associated assets. Management calculates a rehabilitation provision based on the present value of the estimated future decommissioning and restoration costs at the end of the group's mine and plant lives. The key risks associated with this provision are: the key uncertainty surrounding the future life of mines; the forward-looking nature of the provisions; and the uncertainty regarding the underlying assumptions. The disclosure associated with the environmental rehabilitation is set out in the consolidated financial statements in note 16.		Our audit procedures included the following: As the Assore group's only significant rehabilitation provision relates to the mining operations of the subsidiary Dwarsrivier Chrome Mine (Dwarsrivier), our review focused on Dwarsrivier's rehabilitation provision; We engaged, as part of our team, environmental valuation specialists to assist us in our assessment of the measurement of the environmental rehabilitation provision; We reviewed the work performed by Dwarsrivier management's independent environmental experts who were appointed to perform the evaluation of Dwarsrivier's environmental rehabilitation and mine closure costs. Our procedures included a review of: The experts' assessment of environmental risk; Their estimation of Dwarsrivier's environmental rehabilitation costs on the "current disturbance" and life-of-mine basis; The assessment of Dwarsrivier environmental rehabilitation, decommissioning and mine closure plan prepared by the experts; The robustness of the methodology and the underlying assumptions applied for calculation of the rehabilitation and closure costs and the related financial provision. We assessed the reasonability of the independent contractor rates used to perform the calculation of the closure costs (this is a proactive application of the impending new NEMA Regulations for financial provisioning (current draft: GNR 667 in GG 42464 of 17 May 2019)); and Dwarsrivier management's recorded long-term provision for rehabilitation costs to be included in Dwarsrivier's financial records and compared this with the expert's independent estimate of the NEMA financial provision relating to current mine closure rehabilitation and mine closure/decommissioning costs. We reperformed management's calculation of environmental rehabilitation provisions recorded; We assessed the reasonability of management's economic assumptions in their rehabilitation models. The most significant of these assumptions include the risk-free discount rates and the expected future inflation factors, as they have the most significant impact on the balance of the provision; We inspected the accuracy and completeness of the accounting entries; and We evaluated the adequacy of financial statement disclosures in compliance with IFRS.
Revenue recognition — presumed fraud risk
Following the first-time adoption of the new revenue recognition standard (IFRS 15: Revenue from Contracts with Customers) with effect from 1 July 2018, the group updated its accounting policies and elected to apply a full retrospective approach. Under IFRS 15, revenue is recognised when a performance obligation is satisfied by transferring control over a promised good or service. The group's revenue is primarily derived from the sale of commodity products. The timing of the revenue recognition is dependent on the sale contract terms as documented in the International Commercial terms (incoterms). The group's revenue recognised relates to the sale of mining and beneficiated products, other goods sold, commissions on sales and technical fees, as well as investment revenue. The application of IFRS 15 did not result in changes to the revenue recognised arising from commission income. The disclosure associated with revenue is set out in the separate and consolidated financial statements in notes 10 and 21 respectively. The key risks associated with revenue recognition are as follows: Improper revenue recognition as a result of incorrect application of revenue recognition principles under IFRS 15; Improper revenue recognition relating to sales made on behalf of Assmang including override of management controls due to the manual process followed on the revenue recognition and commission recognition on Ore & Metal.		Our audit procedures included the following: We engaged, as part of our team, our IFRS technical experts to review management's diagnostic impact assessment which identified the differences between IAS 18 and IFRS 15 across the group; We tested and reperformed management's calculation of the IFRS 15 assessment; On a sample basis, we tested whether revenue from the sale of mining and related products was recognised when the full criteria per IFRS 15 had been satisfied; We performed corroborative analytical review procedures including performing analytics on sales-related accruals and ageing; For Ore & Metal, we compared commissions earned on sales made on behalf of Assmang with actual Assmang recognised revenue. For Ore & Metal commissions earned we performed the following: Analytical reviews on commissions earned and sales made on behalf of Assmang with actual recognised revenue; Obtained third-party confirmation from the relevant third parties on the tonnages shipped during the financial year in respect of each commodity; Performed a recalculation on the commissions earned by Ore & Metal based on these confirmations and contracted rates; Performed journal entry testing of manual journals entered into the system by Ore & Metal; and Performed a reasonability assessment on commodity prices and the fluctuation thereof during the year as well as exchange rates. We evaluated the adequacy of financial statement disclosures in compliance with IFRS.

Other information

The directors are responsible for the other information. The other information comprises the information included in the 68 page document titled "Assore Limited Integrated Annual Report 2019", and in the 85 page document titled "Assore Limited Annual Financial Statements 2019" which include the approval of the consolidated and separate annual financial statements and the company secretary's certificate as required by the Companies Act of South Africa and corporate information. The other information does not include the consolidated or the separate annual financial statements and our auditors' report thereon.

Our opinion on the consolidated and separate annual financial statements does not cover the other information and we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the consolidated and separate annual financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate annual financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the consolidated and separate annual financial statements

The directors are responsible for the preparation and fair presentation of the consolidated and separate annual financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate annual financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated and separate annual financial statements, the directors are responsible for assessing the group and company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group and company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the consolidated and separate annual financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated and separate annual financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate annual financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated and separate annual financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the group and company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors' use of the going concern basis of accounting and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the group and company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated and separate annual financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the group and/or the company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated and separate annual financial statements, including the disclosures, and whether the consolidated and separate annual financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated and separate annual financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the consolidated and separate annual financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on other legal and regulatory requirements

In terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that Ernst & Young Inc has been the auditor of Assore Limited for 30 years.

Ernst & Young Inc.

Director — Dawid Petrus Venter

Registered Auditor

Chartered Accountant (SA)

18 October 2019

102 Rivonia Road

Sandton

2196