MATODZI

SUBSIDIARIES ASSOCIATES LISTED INVESTMENT

100% 35% 9,5%Brakfontein Diamante White Water Gold JCI (1)

100% 30%Consolidated Resources and

Exploration

White Water Exploration

(1) Trading of JCI shares on the JSE is suspended

100%Guild Hall No. 22

100%IEN Investments

100%Newlands Minerals

100%Witnigel Investments

100%

(2) The company has been struck off the British Virgin Islands register.

Ekuseni Resources (2)

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Matodzi’s principal activities include:

• Sourcing and evaluating new mining investment opportunities

• Investment in prospective mining ventures

Matodzi’s main assets include:

• A 9,5% shareholding in JCI

• New order prospecting rights: applied for and granted

DISCLAIMER AND FORWARD-LOOKING STATEMENTSCertain statements in this report contain forward-looking statements regarding Matodzi’s activities, economic performance and financial position. This includes those concerning the economic outlook for the mining industry, expectations regarding commodity prices, the completion and commencement of commercial exploitation of certain of Matodzi’s exploration and production investments, its liquidity, and capital resources and expenditure.

Although Matodzi is of the opinion that the expectations will prove to be correct, actual results could differ materially from those set out in the forward-looking statements. Among other factors, this could be as a result of changes in economic and market conditions, the success of business and operating initiatives, changes in regulatory environment and other government actions, fluctuations in commodity prices and exchange rates, and business and operational risks.

PROFILEMatodzi Resources Limited (“Matodzi” or “the Company”), is a mining investment company with interests in South Africa. The Group holds certain prospecting rights and has submitted applications for other prospecting rights, with the intention of exploring and acquiring other mineral interests in Southern Africa.

Matodzi was incorporated on 3 May 1933 as Witwatersrand Nigel Limited and changed its name to New Mining Corporation Limited on 20 January 1999, and then to Matodzi Resources Limited on 4 November 2002.

Matodzi is a subsidiary of JCI Limited (“JCI”), with 50,7% of the Company shares held by JCI Investment Finance (Pty) Limited and a further 6,4% held by JCI.

COMPANy PROFILE AND DISCLAIMER

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KEy FINANCIAL HIGHLIGHTS �008 R000’s

2007 R000’s

Revenue – 135 760

(Loss)/profit before taxation (5 486) 730 381

Net finance income 98� 12 895

Net (loss)/profit for the year (5 939) 616 725

Cash flows utilised in operating activities (7 596) (56 514)

Total assets 39 876 55 346

Investments 33 641 33 641

Non-current liabilities – (2 678)

SHARE PERFORMANCE (cents per share)

Basic (loss)/earnings per share (1.6) 70.7

Basic headline loss per share (1.8) (12.1)

Net asset value per share �0.0 11.9

FINANCIAL ANALySIS

Group operating margin (%) – 528.5

Return on capital employed (%) – 1 296.4

SuMMARy OF RESuLTS

4

I am pleased to report a relatively quiet year for our Group. Last year I said that we were well positioned to capture the most attractive growth and profit opportunities in our industry with a mining investment portfolio, new order prospecting rights, an exploration programme and minimal borrowings.

Whether you look at our strategy, business model, processes or culture, Matodzi is a very different enterprise today than it was in 1998 when Professor Wiseman Nkuhlu chaired the board. We have prepared the Group for growth and leadership in a radically different future.

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1998 WL Nkuhlu 157 962 11 950 653 (788) 73 845 (2) 13

1999 WL Nkuhlu 157 962 498 4 439 820 109 673 2 12

2000 WL Nkuhlu 369 971 14 191 20 083 1 434 149 673 (98) 25

2001 SM Rasethaba 353 221 25 657 14 868 (2 556) 149 673 (20) 11

2002 SM Rasethaba 255 649 20 031 13 239 1 802 149 673 (2) 8

2003 A Mlangeni 200 147 1 593 7 076 235 149 262 – 82

2004 A Mlangeni 273 838 424 077 153 97 149 262 (20) 42

2005 A Mlangeni 339 249 679 647 280 121 58 566 149 262 (87) 85

2006 A Mlangeni 153 227 278 339 401 523 20 355 370 547 87 115

2007 A Mlangeni 36 985 11 239 135 760 18 361 370 547 71 28

2008 A Mlangeni 37 119 2 942 – 1 222 370 547 (2) 26

On 30 October 2007 Sello Rasethaba resigned as Group Chief Executive Officer. His position has been filled in a caretaker roll by Andile Nkuhlu the current Chief Operating Officer.

Our balance sheet remains strong, and the Group is in a position to take advantage of new strategic opportunities in the resources field.

The Group has sufficient funds to meet its current obligations. The Board approved a business plan to enable the Group to position itself as “the BEE Finance House closest to Resource Operations.” This is proving more difficult than anticipated to implement, as Matodzi's association with JCI is hampering this progress.

Our strategy is to exploit our prospecting rights, with the possibility of embarking on new projects with new BEE partners. Our Group is also looking at disposing of certain other assets to generate funds necessary to facilitate the above.

The Group was intent on distributing the JCI shares it held as this would have facilitated the implementation of the strategy. However the JSE has ruled that this would amount to a share buy-back by JCI of these shares and therefore Matodzi is not in a position to proceed with the proposed distribution.

The Group is actively pursuing ways of decreasing JCI's stake in the Group in order to facilitate the Company progressing forward.

For Matodzi investors and anyone considering a relationship with our Group, either as a partner, an employee, or a shareholder, an understanding of what makes Matodzi tick is essential in gauging our prospects for the century ahead.

It is therefore useful to look at the way forward for Matodzi. The Group needs to rid itself of the shackles of JCI, which may be achieved in the following ways:

1. By procuring the disposal of the JCI shares by way of distribution or sale. The uncertainty regarding this

TO THE SHAREHOLDERS OF MATODzI

CHAIRMAN’S REvIEW

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asset has a negative effect on the ability of Matodzi to move forward with its agreed strategy. The JSE has ruled that a distribution would constitute a buy-back of shares by JCI, which JCI is not in a position to do at this stage.

2. Matodzi actively seeking and assisting JCI with the disposal or reduction of JCI's interest in Matodzi.

The Group has made significant progress towards these aims.

As we enter this new era for resources, business and global society, I am proud of our staff for bringing us to this point, and I am grateful to you, our shareholders, for your support in our journey. I hope and trust that you are pleased with how our Group is evolving. Our board is excited by the challenge of taking this Group into its next phase of leadership and discovery.

Andrew Mlangeni Independent Non-Executive Chairman Johannesburg

19 June 2008

CHAIRMAN’S REvIEW (continued)

6

CORPORATE GOvERNANCE REPORT

Principles of corporate governance and structures

The Board of directors affirms its commitment to the principles of openness, integrity, accountability, timeous, relevant and meaningful reporting to all stakeholders.

The Board of directors is committed to ensuring that the Group’s business is conducted in accordance with the highest standards of corporate governance. These standards are entrenched in the Group’s system of internal control by its procedures and policies governing business conduct.

The directors endorse and are of the opinion that the Group adheres to the Code of Corporate Practices and Conduct as set out in the King II Report.

The principles contained in King II are reflected in the Group’s corporate governance structures, and are reviewed from time to time to take into account organisational changes.

The Board of Directors

The Company has a unitary Board comprising one independent non-executive director, four non-executive directors, and one executive director.

All directors have the requisite knowledge, experience and ability to properly carry out their duties in meeting the requirements of the Company. All participate actively in the proceedings at meetings whether present personally or by teleconference facility. The Board is responsible for setting the direction of the Group through the establishment of strategic objectives and key policies.

The Board meets periodically, or more frequently if circumstances so require, to review matters specifically reserved for its decision, including financial results, issues of strategic direction, major acquisitions and disposals, approval of major capital expenditure, and any other matters having a material effect on the Group.

The Board has a Charter setting out its mission, role, duties and responsibilities and, in particular, important aspects concerning the following:

• the directors’ fiduciary responsibilities;

• leadership of the Board;

• induction of new directors;

• the Board’s relationship to staff and external advisors, as well as access to Company records; and

• board meetings and procedures.

The directors have a responsibility in terms of the Board Charter to become acquainted with all of their duties, as well as the issues pertaining to the operations and business of the Group, to enable them to fulfil their duties.

In terms of the Board Charter the directors are assessed annually both individually and collectively as a Board.

The Board as a whole approves the appointments of new directors on recommendation by the Nomination Committee, subject to shareholder ratification at the forthcoming annual general meeting.

In accordance with the Company’s Articles of Association, all directors are subject to retirement by rotation and re-election by shareholders every three years.

The Board has established a number of committees, which are ultimately answerable to the Board, namely:

• the executive committee;

• the audit committee;

• the nomination committee; and

• the remuneration committee.

These committees operate within the defined Terms of Reference laid down by the Board. The audit, nomination and remuneration committees are each chaired by a non-executive director and consist entirely of non-executive directors.

Chairperson and Chief Operating OfficerIn terms of King II, the roles of the chief operating officer and the chairperson are separated to facilitate the smooth and efficient functioning of the Board.

Board Committees

The Board has established a number of committees to enable it to properly discharge its duties and responsibilities and to effectively manage its decision-making process.

The following reflects the composition and activities of these committees:

Executive Committee

The executive committee, comprising the executive director, and senior managers, meets periodically to monitor strategic objectives and policies through a structured approach to reporting on the basis of agreed performance criteria and for the detailed planning and implementation of such objectives.

Members of the committee contribute a diverse range of professional skills across the spectrum of the Company’s activities.

CORPORATE GOvERNANCE REPORT

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Audit Committee

The primary responsibility of the audit committee is to assist the Board of Matodzi in carrying out its duties relating to reviewing financial results, accounting policies, internal controls, financial reporting practices and identification of exposure to significant risks.

The audit committee evaluates the performance, independence and effectiveness of the external auditors and considers any non-audit services to determine whether or not such services substantively undermine their independence as external auditors. The audit committee discusses and reviews with the external auditors their engagement letter and the terms, scope and nature of the audit function, procedure and engagement, as well as the audit fee.

The audit committee members are Messrs S Swana (chairman) and LA Maxwell, who meet periodically, primarily to review results and any financial reports, and at any other time if required. The executive directors may attend by invitation. Subsequent to year end, the audit committee met on two occasions.

The purpose of the audit committee is to assist the Board in discharging its duties relating to the safeguarding of assets, the operation of adequate systems, financial control and reporting processes, and the preparation of accurate financial reports and financial statements in compliance with all applicable legal requirements and accounting standards. The audit committee also provides a forum for discussing business risk and control issues, for developing relevant recommendations for consideration by the Board, and for overseeing the activities of the Group’s audit function.

Accountability and control

To enable the directors to meet their responsibilities, the Board sets standards and requires management to implement systems of internal control aimed at reducing the risk of error, fraud or loss in a cost-effective manner. These controls include the proper delegation of responsibilities within a clearly defined framework, effective accounting procedures and adequate segregation of duties.

The controls are monitored throughout the Group, and all employees are required to maintain the highest ethical standards in ensuring that the Group’s business practices are conducted in a manner which is beyond reproach.

The audit approach entails a thorough comprehension of the Group’s financial and accounting objectives and analysis of the underlying systems and procedures. The audit plan is determined annually, based on the relative degrees of inherent risk of each function. The audit

committee is in the process of outsourcing the internal audit function to a suitable audit firm, taking into account benchmarks set for Black Economic Empowerment (“BEE”) procurement .

All important findings arising from audit procedures are brought to the attention of the audit committee and, if necessary, to the Board.

The directors are of the opinion, based on the information and explanations given by management, that the internal accounting controls are adequate so that the financial records may be relied on for preparing the financial statements and maintaining accountability for assets and liabilities.

Nomination Committee

The nomination committee has the responsibility of making recommendations to the Board on the appointment of new executive, independent non-executive, and non-executive directors, including the responsibility for making recommendations on the size, structure and composition of the Board generally.

The nomination committee is also charged with the responsibility of identifying and nominating suitable candidates, for the approval of the Board, to fill Board vacancies as and when they arise. The nomination committee identifies candidates of a suitable calibre, possessing the skills required to act as directors and having the expertise to enhance the skills and knowledge base of the Board as a whole.

The nomination committee is required to put in place succession plans for the chairperson of the Board and chief executive officer of Matodzi.

Members comprising the nomination committee are Messrs A Mlangeni (chairman) and PH Gray.

Remuneration Committee

The remuneration committee sets and monitors remuneration for the Group. This is achieved through a Remuneration Policy which has as its objectives to:

• attract, reward and retain staff and executives of the highest calibre;

• align the behaviour and performance of executives and staff with the Group’s strategic goals, and the interests of shareholders ; and

• ensure the appropriate mix of short, medium and long-term rewards and incentives, with the latter being closely linked to Group performance targets and strategic objectives that are in place.

CORPORATE GOvERNANCE REPORT (continued)

8

Remuneration Committee (continued)

In particular the remuneration committee is responsible for the remuneration packages for executive directors of the Company.

The following principles are applied in determining executive remuneration:

• annual remuneration being a combination of basic salary and short, medium and long-term incentives, pension and other benefits;

• salaries are targeted at the median for the relevant comparable companies; and

• incentive schemes to align performance targets with shareholder interests.

The remuneration committee members are Messrs PH Gray (chairman) and TS Kwinana.

Particulars relating to directors’ emoluments and their interests in the issued share capital of the Company are set out in the Directors’ Report on page 14 and 15.

SuSTAINABILITy REPORT

Employment equity

The Board believes in the elimination of all discriminatory practices, direct or indirect, and all forms of unfair gender discrimination. Matodzi is also committed to removing any barriers that unfairly restrict employment and development opportunities, and to improving representation of all groups at all levels to meet its long-term objective of reflecting the demographics of the country in which it operates. Matodzi is committed to the employment and promotion of all people.

Black Economic Empowerment (“BEE”)

Matodzi is committed to the economic development of South Africa and its people and is continually looking at ways of enhancing its compliance with BEE requirements. Matodzi is confident that its BEE partners will derive economic benefits from their partnerships.

ENvIRONMENTAL POLICy

The Group complies with the relevant government environmental policies and regulations in the various jurisdictions in which it operates. The Group periodically revisits its policy to ensure compliance with the relevant laws.

HEALTH AND SAFETy

The Company complies with the relevant government health and safety regulations.

SPONSOR

Sasfin Capital, a division of Sasfin Bank Limited, acts as sponsor to the Company in compliance with the Listings Requirements of JSE Limited (“JSE”).

WEBSITE

The Company maintains a website containing the latest public information, and the website address is www.matodzi.co.za.

SuPPLEMENTARy INFORMATION

Computershare Investor Services (Pty) Limited (“Computershare”) is the Company’s transfer secretaries. All enquiries and correspondence concerning shareholdings should be directed to the transfer secretaries. Computershare’s contact details are listed on the inside back cover of the Corporate Directory section of this report. Shareholders should notify Computershare promptly in writing of any change in address.

COMPANy SECRETARy

The company secretary is required to provide the directors of the Company, collectively and individually, with detailed guidance as to their duties, responsibilities and powers.

The company secretary is also required to ensure that the directors are aware of all laws, legislation, regulations and matters of ethics and good governance relevant to, or affecting the Company.

The company secretary is required to ensure that minutes of all shareholders’ meetings, directors’ meetings and meetings of the various committees of the Board of directors are properly recorded in accordance with the Companies Act. These minutes are circulated to all members of the Board.

All directors have access to the advice and services of the company secretary, and with the prior approval of the non-executive Chairman, are entitled to seek independent professional advice concerning the affairs of the Company at its expense. The company secretary of Matodzi is Mr DO Jones.

CORPORATE GOvERNANCE REPORT (continued)

9

Directors’ attendance at board and committee meetings during the year under review

Director Board AuditRemunera-

tionSub-

committee

Number of meetings held during the year 6 6 � �

Andrew Mlangeni (Independent Non-Executive Chairman) appointed 22.01.2003 (chairman of the nomination committee) 5/6 1/1

Sello Mashao Rasethaba (Chief Executive Officer) appointed 31.03.2001 (chairman of the executive committee); resigned 30.10.2007 4/4

Peter Henry Gray (Non-Executive) appointed 24.08.2005 (chairman of the remuneration committee and a member of the nomination committee) 6/6 3/3 1/1

Thabo Sindisa Kwinana (Non-Executive) appointed 05.02.2007 (member of the remuneration committee) 5/6 3/3 1/1

Andile Reeves Nkuhlu (Executive) (Chief Operating Officer and acting Chief Executive Officer) appointed 31.10.2006 (member of the execu-tive committee) 5/6

Sandile Swana (Non-Executive) appointed 31.10.2006 (chairman of the audit committee) 6/6 6/6

Leslie Arthur Maxwell (Non-Executive) appointed 05.02.2007 (member of the audit committee) 6/6 4/6

CORPORATE GOvERNANCE REPORT (continued)

MARKET LISTINGS AND SHARE PRICESThe principal market for Matodzi’s shares is the JSE. Matodzi shares trade through the STRATE system.

Closing JSE share prices are published in many national and regional South African newspapers. Share prices are also available on I-Net Bridge, Reuters and Bloomberg.

PRICE SENSITIvE INFORMATIONIn accordance with JSE’s guidelines on price-sensitive information, the Company has a policy dealing with the determination of information as price-sensitive, confidentiality undertakings and discussions with the press, institutional investors and analysts.

The Company follows a ‘closed-period’ principle, during which period employees, consultants, executive and non-executive directors are prohibited from dealing in the Company’s shares.

DIRECTORS’ APPROvAL

The directors are responsible for the preparation and fair presentation of the group annual financial statements and annual financial statements of Matodzi Resources Limited, comprising the balance sheets at 31 March 2008 and the income statements, the statements of changes in equity and cash flow statements for the year then ended, and the notes to the financial statements, which

include a summary of significant accounting policies and other explanatory notes, and the directors’ report, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa.

The directors’ responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

The directors’ responsibility also includes maintaining adequate accounting records and an effective system of risk management as well as the preparation of the supplementary schedules included in these financial statements.

The directors’ have made an assessment of the group and company’s ability to continue as a going concern and there is no reason to believe the businesses will not be going concerns in the year ahead.

The auditor is responsible for reporting on whether the group annual financial statements and annual financial statements are fairly presented in accordance with the applicable financial reporting framework.

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Approval of group annual financial statements and annual financial statements

The group annual financial statements and annual financial statements of Matodzi Resources Limited, as identified in the first paragraph, were approved by the Board of directors on 19 June 2008 and signed on their behalf by:

A Mlangeni AR Nkuhlu

Chairman Chief Operating Officer

Independent Non-Executive

Johannesburg

DECLARATION By THE COMPANy SECRETARy

I declare that, to the best of my knowledge, in terms of Section 268 (G)(d) of the Companies Act, 1973 (Act 61 of 1973), as amended, (“the Companies Act”) the Company has lodged with the Companies and Intellectual Property Registration Office all such returns as are required of a public company in terms of the Companies Act and that all such returns are true, correct and up to date in respect of the financial period reported upon.

DO Jones

BA LLB

Company SecretaryJohannesburg

19 June 2008

APPROvAL OF ANNuAL FINANCIAL STATEMENTS

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Independent auditors’ report ��

Directors’ report ��

Income statements ��

Balance sheets �8

Cash flow statements �9

Statements of changes in equity �0

Notes to the annual financial statements ��

Annexure 1 – Property, plant and equipment ��

Annexure 2 – Investment in subsidiaries �8

Annexure 3 – Segmental analysis �9

Page

ANNuAL FINANCIAL STATEMENTS - CONTENTS

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To the members of

MATODzI RESOuRCES LIMITED

We have audited the group annual financial statements and the annual financial statements of Matodzi Resources Limited, which comprise the balance sheets at 31 March 2008, and the income statements, the statements of changes in equity and cash flow statements for the year then ended, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes, and the directors’ report as set out on pages 13 to 39.

DIRECTORS’ RESPONSIBILITy FOR THE FINANCIAL STATEMENTS The company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AuDITOR’S RESPONSIBILITy Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of Matodzi Resources Limited at 31 March 2008, 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 in the manner required by the Companies Act of South Africa.

KPMG Inc.

Registered Auditors

Per WJS van der Merwe

Chartered Accountant (SA)

Registered Auditor

Director

19 June 2008

INDEPENDENT AuDITORS’ REPORT

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The directors submit their report and the audited annual financial statements for the year ended 31 March 2008.

NATuRE OF BuSINESSThe Group’s main business is that of a mining investment company. Its subsidiaries are primarily engaged in the resource sector.

The Group’s principal activities include the identification and evaluation of mining investment opportunities as well as operational and executive involvement in selected mining ventures.

FINANCIAL RESuLTS

The results for the year under review are set out in the income statements on page 17 of the financial statements.

The Group’s loss for the year under review amounted to R5 939 000 (2007 profit: R616 725 000). The Company's loss amounted to R4 796 000 (2007 profit: R281 644 000). The net aggregate loss and profit from all subsidiaries was R1 143 000 (2007 profit: R335 081 000)

DIVIDENDSIn accordance with the Memorandum and Articles of Association of the Company, dividends are proposed and approved by the Board of directors of Matodzi, based on the interim and year end financial performances.

Payments of dividends will depend upon the Board’s ongoing assessment of Matodzi’s earnings, financial position, including its cash requirements, future earnings prospects and other relevant factors.

No dividends were declared by the Company during the current year (2007: R0,76 per share).

MATERIAL RESOLuTIONS

Details of special resolutions and other resolutions of a significant nature passed by the Company and its subsidiaries during the year under review, requiring disclosure in terms of the Listings Requirements of JSE Limited (“JSE”), were as follows:

Nature of resolutions

At the Annual General Meeting held on 25 October 2007, shareholders passed resolutions relating to:

Special Resolution No.1

• General approval for the repurchase by the Company of its own shares

Ordinary resolutions

• the adoption of the annual financial statements for the year ended 31 March 2007;

• the re-election of Messrs AR Nkuhlu, TS Kwinana,

LA Maxwell and S Swana as directors of the Company; and

• the re-appointment of KPMG Inc. as auditors of the Group for the 2008 financial year and authority for the directors to approve their remuneration.

• Placing the unissued ordinary shares under the control of the directors; and

• Authority to issue shares for cash.

ANNuAL GENERAL MEETING

Notice of the forthcoming Annual General Meeting, which is to be held in Sandton at 10h00 on Thursday, 31 July 2008, is set out on page 46. Additional copies of the notice of meeting may be obtained from the Company’s corporate contact, and the transfer secretaries or may be accessed from the Company’s website.

SHARE CAPITAL

The Company’s authorised ordinary share capital of 750 000 000 ordinary shares of 25 cents remained unchanged during the year under review.

The Company’s issued ordinary share capital of 370 547 286 ordinary shares of 25 cents each remained unchanged during the year.

The unissued shares at 31 March 2008 were as follows:

unissued shares Shares Rand

Authorised share capital 750 000 000 187 500 000

Shares in issue at 31 March 2008 370 547 286 92 636 821

Unissued shares at 31 March 2008 379 452 714 94 863 179

The Company has not exercised the general approval to buy back shares from its issued ordinary share capital, granted at the Annual General Meeting held on 25 October 2007.

DIRECTORS’ REPORT

14

DIRECTORATEDirectors in office at the date of this report are as follows:

Andrew Mlangeni Independent Non-Executive Chairman

Andile Reeves Nkuhlu Executive

Peter Henry Gray Non-Executive

Thabo Sindisa Kwinana Non-Executive

Leslie Arthur Maxwell Non-Executive

Sandile Swana Non-Executive

Directors’ details are set out on page 45.

During the year under review, the following directorate change occurred:

Name Date appointed Date resigned

Sello Rasethaba 31.03.2001 30.10.2007

DIRECTORS’ SERvICE AND EMPLOyMENT CONTRACTS

Other than the joint venture agreement entered into in December 2006 between Consolidated Resources and Exploration Ltd (a subsidiary of the Company), Orlyfunt Holdings (Pty) Ltd and Itsuseng Mining (Pty) Ltd in which Messrs A Mlangeni and AR Nkuhlu have an interest, no contract of significance with the Company, and in which a director was materially interested, arose during the year under review. The non-executive directors do not have service contracts with the Company.

Mr AR Nkuhlu has an employment contract with the Company effective from 1 June 2007 with termination notice period of 30 days.

Mr S Swana is a director of White Water Gold (Pty) Ltd and White Water Exploration (Pty) Ltd.

DIRECTORS’ EMOLuMENTS

The table below provides an analysis of emoluments to executive and non-executive directors of the Company as at 31 March 2008.

Directors fees Salaries

Total �008 Total 2007

Name R000’s R000’s R000’s R000’s

Executive

Nkuhlu AR 20 823 843 20

Rasethaba SM – 1 617 1 617 2 581

Total executive �0 2 440 2 460 2 601

Non-Executive

Mlangeni A 200 – �00 681

Gray PH 152 – ��� 424

Kwinana TS 152 – ��� –

Maxwell LA 152 – ��� –

Swana S 168 – 168 20

Mkwanazi ME – – – 404

Mosololi T – – – 356

Total non-executive

824 – 824 1 885

TOTAL 844 2 440 3 284 4 486

SM Rasethaba was paid the following amounts, which have been included in his salary disclosed above.

Total 2008 Total 2007

Rasethaba SM R000’s R000’s

Package on resignation 835 –

Travel allowance �0� 180

TOTAL 940 180

There were no other directors emoluments paid by any of the subsidiary companies.

DIRECTORS’ REPORT (continued)

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DIRECTORS’ INTERESTS

As at 31 March 2008, the total interest of directors in the issued share capital of Matodzi, was as follows:

Name

�008Indirect

beneficial

�008Indirect non-

beneficial

�008Direct non-

beneficial

�008Direct

beneficial�008Total

2007Total

ExecutiveNkuhlu AR 6 777 947 – – – 6 777 947 6 777 947Rasethaba SM – – – – – 13 117 834Non-ExecutiveGray PH – – – 100 000 100 000 100 000Kwinana TS – 6 777 947 – – 6 777 947 6 777 947Mlangeni A – 6 800 – 81 000 87 800 87 800TOTAL 6 777 947 6 784 747 – 181 000 13 743 694 26 861 528• Other than as disclosed on page 14, there were no contracts of any significance, during or at the end of the financial year, in which

any director had a material interest.

• There has not been any material change in the above holdings since the end of the financial year.

BLACK ECONOMIC EMPOWERMENT (“BEE”) SHAREHOLDINGS

as at 31 March 2008

No. of Shares

% of Shares

Phomella Investments (Pty) Ltd 47 445 628 12.80

Mosololi T 9 013 523 2.43

Abathothe Family Trust 6 521 517 1.76

Matodzi Family Trust 6 521 517 1.76

MLZZ Family Trust 6 152 587 1.66

Sactwu Mining Investments (SPV) (Pty) Ltd 4 083 289 1.10

Orlyfunt Holdings (Pty) Ltd 170 000 0.05

Mlangeni A 81 000 0.02

Total 79 989 061 ��.�8

• The Company is in discussions with its holding Company, JCI, to rectify the dilution of its BEE shareholding.

• Discussions with other potential acquirers of JCI’s shareholding in Matodzi have also been held.

DIRECTORS’ REPORT (continued)

16

HOLDING COMPANy

The Company’s holding company is JCI Investment Finance (Pty) Ltd and its ultimate holding company is JCI, both companies are incorporated in South Africa.

BORROWINGS

The Group’s borrowing powers are unlimited. At the end of the year the Group’s borrowings totalled R1 247 000 (2007 : R2 701 000).

SuBSIDIARy COMPANIES

Details of the Company’s subsidiaries are set out on page 38 in Annexure 2.

The Company has signed letters of support, and where required, subordination agreements for the following companies:

• Brakfontein Diamante

• Consolidated Resources and Exploration

• Ekuseni Resources

• Guild Hall No. 22

• IEN Investments

• Newlands Minerals

• Witnigel Investments

LITIGATION

The directors are not aware of any legal or arbitration proceedings (including any such proceedings that are pending or threatened) which may have, or have had, a material effect on Matodzi or its subsidiaries' financial position during the past 12 months preceding the date of this annual report.

SuBSEQuENT EvENTSThere are no subsequent events of a material nature that have taken place after the date of this report.

AUDITORSKPMG Inc. are the auditors of the Company appointed on 2 November 2005. The audit committee are of the opinion that the auditors are independent.

SECRETARy AND REGISTERED ADDRESSDO Jones

BA LLBCompany Secretary10 Benmore Road, Morningside, Sandton, 2146

(PO Box 11165, Johannesburg, 2000)

DIRECTORS’ REPORT (continued)

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s Notes R000’s R000’s

– – Revenue 1 – 135 760

– – Cost of sales – (66 685)

– – Gross profit – 69 075

– �� Other operating income �� 178

(44 668) (7 623 ) Operating expenses (7 069) (38 209)

2 000 161 Fair value adjustment of investment property 161 2 000

– 417 Profit on sale of unlisted investment 417 –

– � Profit on sale of subsidiary � 684 442

(74 530) (31 788) Impairment of investment in subsidiaries

(117 198) (38 809) Operating (loss)/profit 2 (6 467) 717 486

403 640 34 033 Finance income 3 1 326 28 591

(4 798) (20) Finance costs 4 (345) (15 696)

281 644 (4 796) (Loss)/profit before tax (5 486) 730 381

– – Income tax expense 5 (453) (113 656)

281 644 (4 796) (Loss)/profit for the year (5 939) 616 725

Attributable to:

– Equity holders of the Company (6 035) 261 822

– Minority interest 96 354 903

Loss/earnings per share (cents) 6

– Basic loss/earnings per share (1.6) 70.7

– Diluted loss/earnings per share (1.6) 70.7

Weighted average number of ordinary shares in issue 370 547 286 370 547 286

Number of ordinary shares in issue 370 547 286 370 547 286

�� INCOME STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008

COMPANY GROuP

2007 �008 �008 2007

R000’s R000’s Notes R000’s R000’s

ASSETS

36 875 37 118 Non-current assets 37 119 36 985

33 6 Property, plant and equipment 7 � 34

3 310 3 471 Investment property 8 3 471 3 310

33 532 33 641 Investments 9 33 641 33 641

8 037 2 757 Current assets 2 757 18 361

– 1 535 Other receivables 10 1 535 –

8 037 1 222 Cash and cash equivalents 11 1 222 18 361

44 912 39 875 TOTAL ASSETS 39 876 55 346

EQuITy

41 737 36 941Capital and reserves attributable to equity holders of the Company 36 934 42 969

92 637 92 637 Ordinary share capital 12 92 637 92 637

201 552 201 552 Share premium 12 201 552 201 552

(252 452) (257 248) Accumulated loss (257 255) (251 220)

– – Minority interest – 1 138

41 737 36 941 Total equity 36 934 44 107

LIABILITIES

434 – Non-current liabilities – 2 678

434 – Loans and borrowings 13 – 2 678

2 741 2 934 Current liabilities 2 942 8 561

2 173 1 425 Trade and other payables 15 1 433 2 181

545 262 Accruals 262 545

– – Taxation 16 – 5 812

23 1 247 Loans and borrowings 13 1 247 23

3 175 2 934 Total liabilities 2 942 11 239

44 912 39 875 TOTAL EQuITy AND LIABILITIES 39 876 55 346

�8 BALANCE SHEETS AS AT 31 MARCH 2008

COMPANY GROuP

2007 �008 �008 2007

R000’s R000’s Notes R000’s R000’s

(15 845) (7 629)

CASH FLOWS uTILISED IN OPERATING

ACTIVITIES (7 596) (56 514)

(13 391) (7 964) Cash (utilised in)/generated from operating activities

17.1 (8 347) 39 322

(4 798) (20) Finance costs (345) (15 696)

2 344 ��� Finance income 17.2 1 326 28 591

– – Taxation paid 17.3 (230) (108 731)

8 958 8��

CASH FLOWS GENERATED FROM/(uTILISED IN)

INvESTING ACTIvITIES (9 520) 984 917

– (3) Acquisition of property, plant and equipment (3) –

– – Proceeds/(cash out) on disposal of subsidiary (11 073) 881 692

– ��� Proceeds on sale of unlisted investment 417 –

10 102 – Decrease in loans receivable – 113 380

– 8�� Proceeds from loans from related parties 1 139 –

(1 144) (90) Loans to group companies

Movement in disposal group held for sale – (10 155)

14 635 (23)

CASH FLOWS GENERATED FROM/(uTILISED IN)

FINANCING ACTIvITIES (23) (930 397)

(281 616) – Dividends paid – (658 624)

– (23) Repayment of short-term loans (23) –

(80 757) – Repayment of long-term borrowings – (271 773)

377 008 – Dividends received from unlisted subsidiaries 17.2

7 748 (6 815)NET INCREASE/(DECREASE) IN CASH AND CASH EQuIvALENTS (17 139) (1 994)

289 8 037

Cash and cash equivalents at beginning of the year 18 361 20 355

8 037 1 222CASH AND CASH EQuIvALENTS AT END OF THE yEAR 11 1 222 18 361

�9 CASH FLOW STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008

Attributable to equity holders of the Company

Ordinary share capital R000’s

Share premium

R000’s

Accumulated loss

R000’s

Minority interest R000’s

Total equity R000’s

GROuP

Balance as at 31 March 2006 92 637 201 552 (231 426) 66 036 128 799

Net profit for the year – – 261 822 354 903 616 725

Dividends paid – – (281 616) (377 008) (658 624)

Minority share of subsidiary sold – – – (42 793) (42 793)

Balance as at 31 March 2007 92 637 201 552 (251 220) 1 138 44 107

Net loss for the year – – (6 035) 96 (5 939)

Dividends paid – – – (1 234) (1 234)

Balance as at 31 March 2008 92 637 201 552 (257 255) – 36 934

COMPANY

Balance as at 31 March 2006 92 637 201 552 (252 480) – 41 709

Net profit for the year – – 281 644 – 281 644

Dividends paid – – (281 616) – (281 616)

Balance as at 31 March 2007 92 637 201 552 (252 452) – 41 737

Net loss for the year – – (4 796) – (4 796)

Balance as at 31 March 2008 92 637 201 552 (257 248) – 36 941

�0 STATEMENTS OF CHANGES IN EQuITy FOR THE yEAR ENDED 31 MARCH 2008

Statement of compliance

The consolidated and separate annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and Schedule 4 of the Companies Act, 61 of 1973, as amended.

Significant accounting policies

Matodzi is a company domiciled in South Africa. The consolidated annual financial statements of the Company for the year ended 31 March 2008 comprise the Company and its subsidiaries (together referred to as the “Group”).

Basis of preparation

The annual financial statements are presented in Rands, rounded to the nearest thousand, which is the Company’s functional currency and the Group's presentation currency. They are prepared on the historical cost convention except for investment properties and listed investments, which are measured at fair value.

The preparation of annual financial statements in conformity with IFRS requires management to exercise its judgement, make certain estimates and assumptions in the process of applying the Group’s accounting policies to reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions, are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Changes to estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the annual financial statements, are disclosed in note 22 of the annual financial statements.

The accounting policies set out below have been applied consistently to all periods presented in these annual financial statements and by all Group entities.

BASIS OF CONSOLIDATION

Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are

currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and de-consolidated from the date that control ceases.

Associates and joint ventures (equity accounted investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Associates and joint ventures are accounted for using the equity method (equity accounted investees).

The consolidated annual financial statements include the Group’s share of income and expenses of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Transactions eliminated on consolidation

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated in preparing the consolidated financial statements. Unrealised losses are also eliminated, but only to the extent that there is no evidence of impairment.

PROPERTy, PLANT AND EQuIPMENT

Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour and other costs incurred directly in the construction of the asset.

Subsequent costs are included in the asset’s carrying amount only when it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in operating profit.

Statement of compliance

The consolidated and separate annual financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and Schedule 4 of the Companies Act, 61 of 1973, as amended.

Significant accounting policies

Matodzi is a company domiciled in South Africa. The consolidated annual financial statements of the Company for the year ended 31 March 2008 comprise the Company and its subsidiaries (together referred to as the “Group”).

Basis of preparation

The annual financial statements are presented in Rands, rounded to the nearest thousand, which is the Company’s functional currency and the Group's presentation currency. They are prepared on the historical cost convention except for investment properties and listed investments, which are measured at fair value.

The preparation of annual financial statements in conformity with IFRS requires management to exercise its judgement, make certain estimates and assumptions in the process of applying the Group’s accounting policies to reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions, are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and underlying assumptions are reviewed on an ongoing basis. Changes to estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the annual financial statements, are disclosed in note 25 of the annual financial statements.

The accounting policies set out below have been applied consistently to all periods presented in these annual financial statements and by all Group entities.

BASIS OF CONSOLIDATION

Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are

currently exercisable or convertible are considered when assessing whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and de-consolidated from the date that control ceases.

Associates and joint ventures (equity accounted investees)

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. Joint ventures are those entities over whose activities the Group has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Associates and joint ventures are accounted for using the equity method (equity accounted investees).

The consolidated annual financial statements include the Group’s share of income and expenses of equity accounted investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. When the Group’s share of losses exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-term investments) is reduced to nil and the recognition of further losses is discontinued except to the extent that the Group has an obligation or has made payments on behalf of the investee.

Transactions eliminated on consolidation

Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated in preparing the consolidated financial statements. Unrealised losses are also eliminated, but only to the extent that there is no evidence of impairment.

PROPERTy, PLANT AND EQuIPMENT

Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets includes the cost of materials, direct labour and other costs incurred directly in the construction of the asset.

Subsequent costs are included in the asset’s carrying amount only when it is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in operating profit.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008

PROPERTy, PLANT AND EQuIPMENT (continued)

Depreciation

Depreciation on other assets is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Depreciation of an item of property, plant and equipment begins when it is available for use and ceases at the earlier of the date it is classified as held for sale or the date that it is derecognised. The estimated useful lives for the current and previous financial year are as follows:

Prospecting rights 10 yearsComputer equipment 3 yearsMotor vehicles 5 years

Where appropriate, and if significant, expected residual values are taken into account in determining the depreciable values of assets.

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. The assets’ residual values, methods of depreciation and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

Leased assets

Leases that transfer substantially all the risks and rewards of ownership are classified as finance leases. Property, plant and equipment subject to finance lease agreements are capitalised at the lower of fair value and the present value of the minimum lease payments at inception of the lease, and the corresponding liability to the lessor is raised. Lease payments are allocated using the effective interest rate method to determine the lease finance cost, which is charged against operating profit, and the capital repayment which reduces the liability to the lessor. These assets are depreciated on the same basis as property, plant and equipment owned by the Group.

DECOMMISSIONING AND REHABILITATION ASSETS

Group companies are generally required to restore mine and processing sites at the end of their production lives to a condition acceptable to the relevant authorities.

The expected cost of any committed decommissioning or restoration programme, discounted to its net present value, is provided and capitalised at the beginning of each project. The capitalised cost is depreciated over the expected life of the asset and the increase in the net present value of the provision for the expected cost is included in finance costs. Subsequent changes in the initial estimates of rehabilitation and decommissioning

costs are capitalised as part of the cost of the item and depreciated prospectively over the remaining life of the item to which they relate.

NON-CuRRENT ASSETS HELD FOR SALE

Non-current assets (or disposal group) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable, the assets (or disposal group) are available for immediate sale in its present condition and management is committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of the classification.

Upon initial classification as held for sale, non-current assets (or disposal group) are recognised at the lower of carrying amount and fair value less cost to sell. Any impairment losses arising are recognised in the income statement. A gain for any subsequent increase in the fair value less costs to sell is recognised in profit or loss to the extent that it is not in excess of the cumulative impairment loss previously recognised.

IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. Value in use is estimated taking into account future cash flows, forecast market conditions and expected lives of the assets. Such cash flows are discounted using pre-tax discount rates that reflect current assessments of the time value of money and the risks associated with the specific asset.

IMPAIRMENT OF FINANCIAL ASSETS

A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an available for sale financial asset is calculated by reference to its current fair value.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

Individually significant assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available for sale financial asset recognised previously in equity is transferred to profit and loss.

For purposes of assessing impairment of an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

REvERSAL OF IMPAIRMENT

All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an available for sale asset recognised previously in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost and available for sale financial assets that are debt securities, the reversal is recognised in profit or loss. For available for sale financial assets that are equity securities, the reversal is recognised directly in equity.

Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered an indicator that the securities are impaired. If any such evidence exists for available for sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

INvESTMENT PROPERTy

Investment properties are held to earn rentals or for capital appreciation or both and are not occupied by the companies of the Group.

Investment properties comprise freehold land and building and are carried at fair value. Those that are being redeveloped for continuing use as investment property, or for which the market has become less active, continue to be measured at fair value. Undeveloped property is valued at estimated net realisable value. Selected properties are valued every twelve months by a competent valuation company.

Any gain or loss arising from a change in fair value is recognised in profit or loss. Rental income from investment property is recognised in profit or loss on a straight line basis over the term of the lease.

When an item of property, plant and equipment is transferred to investment property following a change in its use, any difference arising at the date of transfer between the carrying amount of the item immediately prior to transfer and its fair value is recognised directly in equity if it is a gain. Upon disposal of the item the gain is transferred to retained earnings. Any loss arising in this manner is recognised immediately in profit or loss.

TRANSACTIONS WITH MINORITy SHAREHOLDERS

The Group applies a policy of treating transactions with minority shareholders that do not result in the gain or loss of control, as transactions with equity owners of the Group. For purchases of additional interests from minority shareholders, the excess of the purchase consideration over the group's proportionate share of the additional net asset value of the subsidiary acquired is accounted for directly in equity. For disposals to minority shareholders, the profit or loss on partial disposal of the group's interest in a subsidiary is also accounted for directly in equity.

INvESTMENT IN SuBSIDIARIES

In the Company's financial statements, investments in subsidiary companies are stated at cost less provision for impairment loss.

FINANCE COSTS

Finance costs that are directly attributable to qualifying assets are capitalised up to the date that the assets are substantially ready for their intended use. Qualifying assets are those that necessarily take a substantial period of time to prepare for their intended use.

Other finance costs are recognised in profit or loss in the period in which they are incurred.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

FINANCIAL INSTRuMENTS

Initial recognition and measurement

Financial instruments are initially recognised when the Group becomes party to the contractual terms of the instruments and are measured at fair value , except where the financial instrument is subsequently measured at fair value in which case transactions costs are expensed as incurred. Transaction costs are included in the initial measurement of the financial instrument.

Subsequent to initial recognition these instruments are measured as set out below.

Financial assets

The Group’s principal financial assets are investments, trade and other receivables and cash and cash equivalents:

Investments

Investments held for trading are classified as current assets and are measured at fair value, with any resultant gain or loss recognised in profit or loss.

Other non-current investments held by the Group are classified as being available for sale and are measured at fair value, with any resultant gain or loss being recognised directly in equity. When these investments are sold or impaired, the cumulative gain or loss previously recognised directly in equity is recognised in profit or loss.

For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date. For investments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment.

Loans to and from Group companies

These include loans to holding companies, fellow subsidiaries and associates and are recognised initially at fair value plus direct transfer costs.

On loans receivables an impairment loss is recognised in profit or loss when there is evidence that it is impaired. The impairment is measured as the difference between the investment's carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

Impairment losses are reversed in subsequent periods when an increase in the investment's recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the investment at the date the impairment is reversed shall not exceed what the amortised cost would have been had the impairment not been recognised.

Trade and other receivables

Trade and other receivables originated by the Group are stated at their nominal value less allowance for doubtful debts. An estimate of doubtful debts is made based on a review of all outstanding amounts at the balance sheet date. Bad debts are written off during the period in which they are identified.

Cash and cash equivalents

Cash and cash equivalents are measured at their fair value. For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held on call, and investments in money market instruments, net of bank overdrafts, all of which are available for use unless otherwise stated.

Financial liabilities and equity instruments

Financial liabilities and equity

Financial liabilities and equity instruments issued are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

The Group’s principal financial liabilities are interest-bearing debt, non-interest-bearing debt, trade and other payables and bank overdrafts and other short-term borrowings:

Interest-bearing debt

Interest-bearing debt is recognised using the effective interest method.

Non-interest-bearing debt

Non-interest-bearing debt is recognised at original debt less principal payments.

Trade and other payables

Trade and other payables are stated at cost which approximates fair value.

24 NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

Equity

The Group’s principal equity instrument is ordinary share capital. Ordinary share capital is recorded at original cost.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.

When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly attributable costs, is deducted from equity until the shares are cancelled, reissued or disposed of. Repurchased shares are classified as treasury shares and where such shares are subsequently sold or reissued, any consideration received, net of any directly attributable costs, net of tax, is included in equity.

Derecognition

Financial assets (or a portion thereof) are derecognised when the Group realises the rights to the benefits specified in the contract, the rights expire or the Group surrenders or otherwise loses control of the contractual rights that comprise the financial asset. On derecognition, the difference between the carrying amount of the financial asset and proceeds receivable and any prior adjustment to reflect fair value that had been reported in equity are included in the income statement.

Financial liabilities (or a portion thereof) are derecognised when the obligation specified in the contract is discharged, cancelled or expires. On derecognition, the difference between the carrying amount of the financial liability, including related unamortised costs, and the amount paid for it are included in the income statement.

Fair value methods and assumptions

The fair value of financial instruments traded in an organised financial market are measured at the applicable quoted prices, adjusted for any transaction cost necessary to realise the assets or settle the liabilities.

The fair value of financial instruments not traded in an organised financial market is determined using a variety of methods and assumptions that are based on market conditions and risk existing at balance sheet date, including independent appraisals and discounted cash flow methods. The fair value determined is adjusted for any transaction costs necessary to realise the assets or settle the liabilities.

The carrying amounts of financial assets and liabilities with a maturity of less than one year are assumed to approximate their nominal amounts.

Set-off

Where a legally enforceable right to set-off exists for recognised financial assets and financial liabilities, and there is an intention to settle the liability and realise the asset simultaneously, or to settle on a net basis, all related financial effects are set-off.

INVENTORIES

Inventories, which include rough diamonds, are stated at the lower of cost of production or estimated net realisable value. Consumable stores are stated at the lower of cost on the weighted average or estimated replacement value.

Net realisable value is the estimated selling price in the ordinary course of business less marketing costs. The cost of production is based on the weighted average cost basis, and includes direct labour, other direct costs and related production overheads.

PROVISIONS

Provisions represent liabilities of uncertain timing or amount.

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation.

TAXATION

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity.

Current tax comprises tax payable calculated on the basis of the expected income for the year, using the tax rates enacted at the balance sheet date, and any adjustment of tax payable for previous years.

Deferred taxation is provided on all taxable temporary differences. Temporary differences are differences between the carrying amounts for financial reporting purposes and the amounts used for taxation purposes, except for differences relating to goodwill which are not deductible for taxation purposes and the initial recognition of assets or liabilities which affect neither accounting nor taxable profit or loss.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

26

TAXATION (continued)

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Secondary Tax on Companies is provided in respect of dividend payments net of dividends received or receivable and is recognised as a taxation charge for the year.

A withholding tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the associated unused tax losses and deductible temporary differences can be utilised. Withholding tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

REVENUE

Revenue comprises of the invoiced value for the sale of diamonds and royalties received.

Revenue from the sale of diamonds is recognised when significant risks and rewards of ownership are transferred to the buyer.

Revenue from royalties are recognised when the sale which gives rise to this revenue takes place.

Other revenues earned by the Group are recognised on the following bases:

• Finance income: as it accrues unless collectability is in doubt

• Dividend income: when the shareholder’s right to receive payment is established

LEASES

Leases where the lessor retains the risks and rewards of ownership of the underlying asset are classified as operating leases. Payments made under operating leases are recognised in profit or loss on a straight-line basis over the period of the lease.

Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability. Contingent lease payments are accounted for by revising the minimum lease payments over the remaining term of the lease when the lease adjustment is confirmed.

FOREIGN CuRRENCy TRANSACTIONS

Transactions in foreign currencies are recorded at the rate of exchange ruling at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Gains and losses arising on translation are credited to or charged against income.

EMPLOyEE BENEFITS

Short term employee benefits

The cost of all short-term employee benefits is recognised during the period in which the employee renders the related service.

EARNINGS PER SHARE

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

SEGMENT REPORTING

A segment is a distinguishable component of the Group that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Group’s primary format for segment reporting is based on business segments.

NEW STANDARDS AND INTERPRETATIONS NOT yET ADOPTED

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 March 2008, and have not been applied in preparing these annual financial statements:

• The following standards are not yet effective and are not expected to be applicable to the Group: IFRS 2* & 8; IAS 1*, 23* & 32* and IFRIC 7, 12, 13 & 14

• The effect of the adjustment to IAS 27, and the improvement project have not yet been assessed in view of the recent issue thereof.

* Amended Statements

NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007

R000’s R000’s R000’s R000’s

� REVENUE

Major classes of revenue comprise:

– – – Diamond sales – 135 760

– – – 135 760

2 OPERATING (LOSS)/PROFIT

In arriving at operating (loss)/profit the following items have been taken into account:

Income:

– 417 Profit on sale of unlisted investment 417 –

– � Profit on sale of subsidiary � 684 442

Expenses:

2 253 667 Auditors remuneration 667 2 533

1 680 667 – Fees for audit services 667 1 960

573 – – Fees for other services – 573

6 295 �88 Consulting and management fees �88 6 295

62 �0 Depreciation of property, plant and equipment �0 62

49 �9 – Motor vehicles �9 49

13 11 – Computer equipment 11 13

4 486 3 284 Directors emoluments 3 284 6 086

59 – Finance leases – 59

2 000 161 Fair value adjustment of investment property 161 2 000

Impairment/write off of:

– – – Loan to minority shareholder – 4 800

74 530 31 788 – Investment in subsidiaries

1 535 637 – Loans to subsidiaries

– – Foreign exchange loss realised – 1 501

4 ��� Secretarial costs ��� 8

733 3 738 Staff costs 3 738 5 106

– 167 Operating lease expenses - buildings 167 185

– – Write off of intangible mineral rights – 65 536

4 4 Number of employees at year-end 4 4

3 FINANCE INCOME

377 008 1 234 – Dividends received from unlisted subsidiaries

1 709 ��� – Interest received from external parties 1 326 28 591

24 923 32 444 – Interest received from group companies (1)

403 640 34 033 1 326 28 591

(1) All interest received from Group companies relate to loans which are impaired.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s R000’s R000’s

4 FINANCE COSTS

Interest bearing borrowings

(1) (20) – Interest paid to external parties (345) (15 696)

(4 797) – – Interest paid to group companies

(4 798) (20) (345) (15 696)

5 INCOME TAX EXPENSE

– – Current taxation (453) (113 656)

– – – Normal taxation (179) (21 398)

– – – Withholding taxation in respect of prior year – 1 994

– – – Secondary Taxation on Companies (274) (94 252)

– – (453) (113 656)

% % Reconciliation of rate of tax % %

29.0 �9.0 Statutory tax rate �9.0 29.0

Adjusted for (reduction)/increase in effective tax rate as a result of:

(41.3) �0�.� – Non-taxable income 340.8 (49.8)

7.3 (189.7) – Non-deductible expenses (334.2) 21.1

0.0 0.0 – Secondary Tax on Companies (5.0) 12.9

5.0 (40.5) – Change in unrecognised temporary differences (38.9) 2.4

0.0 0.0 Effective tax rate (8.3) 15.6

Provision has not been made for taxation as the Company has no taxable income. Certain entities in the Group have incurred

losses. Any benefit derived from income tax losses carried forward is dependent on the companies earning taxable income in

the future. This is uncertain and therefore no deferred taxation has been raised.

6 LOSS/EARNINGS PER SHARE

The attributable earnings per share has been calculated on the attributable loss for the year of R6 035 000 (2007 profit:

R261 822 000) and a weighted average number of 370 547 286 (2007: 370 547 286) ordinary shares in issue during the year.

The diluted earnings per share have been calculated on the attributable loss for the year of R6 035 000 (2007 profit: R261 822

000) and a weighted average number of 370 547 286 (2007: 370 547 286) ordinary shares in issue during the year. The

headline loss per share has been calculated on a headline loss of R6 614 000 (2007: R44 906 000) and a weighted number of

370 547 286 (2007: 370 547 286) ordinary shares in issue during the year.

Reconciliation between attributable (loss)/profit and headline loss

Attributable (loss)/profit (6 035) 261 822

Fair value adjustment of investment property (161) (2 000)

Profit on sale of unlisted investment (417) –

Profit on sale of subsidiary (1) (309 528)

Impairment of loan to minority shareholder – 4 800

Headline loss (6 614) (44 906)

Headline loss per share (1.8) (12.1)

Diluted headline loss per share (1.8) (12.1)

There is no tax effect on any of the reconciling items.

�8 NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007

R000’s R000’s R000’s R000’s

� PROPERTy, PLANT AND EQuIPMENT

– – Prospecting rights � 1

– – – At cost 2 735 2 735

– – – Accumulated depreciation and impairment (2 734) (2 734)

19 – Motor vehicles (leased) – 19

242 242 – At cost 242 242

(223) (242) – Accumulated depreciation and impairment (242) (223)

14 6 Computer equipment 6 14

39 42 – At cost 42 39

(25) (36) – Accumulated depreciation and impairment (36) (25)

33 6 Total carrying value � 34

Details of the movements in property, plant and equipment are set out on page 37 in Annexure 1 to these financial statements.

8 INvESTMENT PROPERTy

1 310 3 310 Balance at beginning of the year 3 310 1 310

2 000 161Increase on remeasurement of investment property at fair value 161 2 000

3 310 3 471 Balance at end of the year 3 471 3 310

The investment property represents various properties situated in Jameson Park, Klippoortjie and Rensburg Township. These properties are freehold and are held for capital appreciation.

External valuations have been obtained, at the end of the financial year, for the properties, and the valuations were determined by reference to existing market conditions.

The effective date of the revaluation was April 2008. The revaluation was performed by a competent valuer, Ms C Watson, of Lyons Corporate Real Estate (Pty) Ltd ("Lyons"). In terms of location and category of the investment property being valued, Lyons have the necessary experience.

99.�

INVESTMENTSInvestment in subsidiaries

225 442 138 928 Shares at cost

24 671 25 309 Loans receivable

(43 886) (5)Loan payable (reclassified from loans and borrowings note 13)

206 227 164 232

(193 003) (150 899) Impairment allowances

13 224 13 333

Details of the subsidiary companies are set out on page 38 in Annexure 2 to these financial statements.

�9 NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007

R000’s R000’s R000’s R000’s

9 INvESTMENTS (continued)Available for sale:

9.2 Listed investments

JCI - Ordinary shares

Group: 210 168 073 (2007: 210 168 073)

Company: 126 834 740 (2007:126 834 740)

63 417 63 417 At cost 263 417 263 417

(43 109) (43 109) Accumulated impairment (229 776) (229 776)

20 308 20 308 At fair value 33 641 33 641

These shares have been valued at the suspended price of 16 cents per share.

The Group's exposure to credit risk at the reporting date in terms of investments is disclosed in note 22.

Available for sale assets are denominated in the following currency:

20 308 20 308 – Rands 33 641 33 641

The future carrying value of the JCI shares is subject to JCI producing financial statements, and the lifting of the suspension over the JCI shares. The future possible merger with Randgold and Exploration Company Limited could also have an effect on the future value of these shares, and could result in a material adjustment to the investment held in JCI. Several unresolved forensic issues relating to the fraud committed in the JCI group could also have a significant impact on the future value of this investment.

Available for sale:

9.3 unlisted investments

Skygistics (Pty) Ltd

10% shareholding at cost

1 000 – Shares at cost – 1 000

(1 000) – Impairment allowances – (1 000)

– – At fair value – –

This investment was sold during the current financial year. At 31 March 2007 the directors' valuation was R Nil.

9.4 Investment in associates

Shares at cost

* * – White Water Gold (Pty) Ltd * *

* * – White Water Exploration (Pty) Ltd * *

* * Impairment allowances * *

– – At fair value – –

Details of the associate companies are set out on page 38 in Annexure 2 to these financial statements. The amounts of the investments are less than R1 000.

33 532 33 641 33 641 33 641

�0 NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s R000’s R000’s

�0 OTHER RECEIvABLES

Other receivables

– 1 535 – Other receivables from related parties 1 535 –

The Group's exposure to credit risk and impairment related to other receivables is disclosed in note 22.

– 1 535 Fair value of other receivables 1 535 –

�� CASH AND CASH EQuIvALENTS

8 037 1 222 Cash and cash equivalents 1 222 18 361

The Company had restricted a cash amount of R436 000 (2007: R256 000) at the year end and a further R Nil (2007: R170 000) subsequent to the end of the financial year.

The restricted cash referred to above relates to certain performance and financial guarantees the Group is required to provide to the Department of Minerals and Energy for the rehabilitation of lands disturbed by any mining activities undertaken by the Group.

In 2007, R10 684 000 of the Group's cash related to Letšeng Holdings. The Company only had access to 50% of this amount.

All cash at bank and short term deposits are held at a single financial institution, being First National Bank, and the credit quality is rated as very good. The Group's exposure to credit risk related to cash and cash equivalents is disclosed in note 22.

12 ORDINARy SHARE CAPITAL AND SHARE PREMIuM

Authorised:

187 500 187 500750 000 000 (2007: 750 000 000) ordinary shares of 25 cents each 187 500 187 500

Issued:

92 637 92 637 370 547 286 (2007: 370 547 286) ordinary shares of 25 cents each 92 637 92 637

SHARE PREMIuM

201 552 201 552 At beginning of the year 201 552 201 552

201 552 201 552 At end of the year 201 552 201 552

NuMBER OF SHARES MOvEMENTS IN ISSuED SHARE CAPITAL NuMBER OF SHARES

370 547 286 370 547 286Total number of shares in issue at beginning of the year 370 547 286 370 547 286

370 547 286 370 547 286Total number of shares in issue at end of the year 370 547 286 370 547 286

DIVIDENDS

A dividend of R0,76 per ordinary share was declared and paid by the Company during the previous year.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s R000’s R000’s

13 LOANS AND BORROWINGS

Long-term borrowings

434 1 247– Consolidated Mining Management Services

Limited (1) 1 247 2 678

23 – – Finance lease (2) – 23

457 1 247 1 247 2 701

(23) (1 247)Less: Current portion included in current liabilities (1 247) (23)

– (1 247) – Consolidated Mining Management Services Limited (1)

(1 247) –

(23) – – Finance lease (2) – (23)

434 – – 2 678(1) The loan is unsecured and has no fixed terms of

repayment. The Group portion bore interest at market interest rates as determined from time to time, while the Company portion of the loan was interest free. The lender has indicated that payment of this loan will be sought within the next 12 months.

(2) Liabilities under instalment sale agreements payable in monthly instalments of R Nil (2007: R7 936) bearing interest at the prime overdraft rate and secured by motor vehicles with a book value of R Nil (2007: R19 000).

Reconciliation of finance lease

23 – Total minimum lease payments – 23

23 – – Not later than a year – 23

– – – Between 1 and 5 years – –

– – Less: Finance charges – –

23 – Present value at balance sheet date – 23

23 – – Not later than a year – 23

– – – Between 1 and 5 years – –

Neither the Company nor the Group defaulted on any payments that were due, and no terms or conditions of any of the loans were breached at any stage either in the year under review, or the previous year.

14 DEFERRED TAXATION

The Company has not raised a deferred taxation asset as the recoverability thereof is uncertain.

�� TRADE AND OTHER PAyABLES

Included in trade and other payables are the following:

2 173 1 425 – Trade and other payables 1 433 2 181

2 173 1 425 1 433 2 181

16 TAXATION

– – Current tax liability – 5 812

– – – 5 812

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s R000’s R000’s

��

17.1

CASH FLOWS (uTILISED IN)/GENERATED FROM OPERATING ACTIvITIESCASH (uTILISED IN)/GENERATED FROM OPERATING ACTIvITIES

(117 198) (38 809) (Loss)/profit before interest and taxation (6 466) 717 486

Adjusted for:

62 �0 – Depreciation �0 62

(2 000) (161) – Fair value adjustment of investment property (161) (2 000)

– (1) – Profit on sale of subsidiary (1) (684 442)

– (417) – Profit on sale of unlisted investment (417) –

25 479 32 425 – Impairment of loans to subsidiaries

– – – Write-off of loan to minority shareholder – 4 800

74 531 – – Impairment of investment in subsidiaries

(19 126) (6 933) (7 015) 35 906

Working capital changes

(13) (283) – Decrease in accruals (283) (13)

5 651 –– (Increase)/decrease in trade and other

receivables (1 535) 6 735

– Movement in disposal group held for sale – (3 067)

97 (748) – (Decrease)/increase in trade and other payables 486 (239)

5 735 (1 031) (1 332) 3 416

(13 391) (7 964) (8 347) 39 322

��.� FINANCE INCOME

403 640 34 033 Per income statement 1 326 28 591

(24 288) (32 444) Adjustment for non cash finance income from subsidiaries

(377 008) – Dividends received from unlisted subsidiaries

– (1 234) Dividends declared, not yet received in cash from unlisted subsidiaries

2 344 ��� 1 326 28 591

17.3 TAXATION PAID

– – Balance owing at beginning of the year (5 812) (887)

– – Charge to income statement (453) (113 656)

– – Current tax and Secondary Taxation on Companies disposed of in sale of subsidiary

6 035 –

– – Balance owing at end of the year – 5 812

– – Taxation paid (230) (108 731)

The Company's 2007 figures have been restated as the Group now considers interest charges relating to intergroup loans not to be of a cash nature. The 2007 values have been restated by an amount of R24 288 000.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s R000’s R000’s

�8 DISPOSAL OF SuBSIDIARy

The Group entered into a legal binding agreement with JCI Investment Finance (Pty) Ltd for the disposal of the Company's entire 50% equity interest in Letšeng Investment Holdings (South Africa) (Proprietary) Limited's ("Letšeng Holdings") The effective date of the disposal was 31 March 2008. The assets and liabilities attributable to Letšeng Holdings disposed of consisted of the following:

Loan payable (2 570) –

Taxation (6 035) –

Shareholders for dividend (2 468) –

Minority shareholders' interest (1) –

Cash and cash equivalents disposed of 11 073 –

Proceeds from sale of subsidiary � –

Profit on disposal of subsidiary – –

�9 DISPOSAL OF SuBSIDIARy

The Group entered into a binding legal agreement with Gem Diamond Mining Company of Africa Limited for the disposal of Letšeng Holdings entire 76% equity interest in Letšeng Diamonds (Proprietary) Limited (incorporated in Lesotho and a subsidiary of the Group) ("Letšeng Diamonds"). The effective date of the disposal was 1 July 2006.

Letšeng Diamonds' results are consolidated in the financial statements of Letšeng Holdings. The operating profit as reflected in the reviewed income statement relates to the results of Letšeng Diamonds to the date of disposal. Included in general and administrative expenses is RNil (2007: R29 609 000) relating to Letšeng Diamonds.

The assets and liabilities attributable to Letšeng Diamonds disposed of consisted of the following:

Property, plant and equipment – 208 431

Intangible assets – 68 474

Inventory – 33 588

Trade and other receivables – 61 985

Total assets excluding cash – 372 478

Deferred tax liabilities – (62 963)

Trade and other payables – (47 972)

Taxation – (16 443)

Provision – leave and severance pay – (5 057)

Minority shareholders' interest – (42 793)

Total liabilities – (175 228)

Cash and cash equivalents disposed of – 6 308

Net assets disposed of – 203 558

Proceeds from sale of subsidiary – 888 000

Profit on disposal of subsidiary – 684 442

34 NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s R000’s R000’s

�0 CONTINGENT LIABILITIES

– –Decommissioning and rehabilitation of mine dumps and plant – 150

The Group, in the ordinary course of business enters into transactions which expose the Group to tax, legal and business risks. Provisions are made for known liabilities which are expected to materialise. Possible obligations and known liabilities where non-reliable estimates can be made or it is considered improbable that an outflow would result, are noted as contingent liabilities.

21 BORROWING POWERS

The borrowing power in terms of the Company’s Articles of Association are unlimited. At the accounting date the actual borrowings amounted to R1 247 000 (2007: R2 701 000).

22 FINANCIAL INSTRuMENTS Risk management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk.

Liquidity risk

In the ordinary course of business the Group receives cash from its operations or future operations and is required to fund working capital and capital expenditure requirements. The cash is managed to ensure surplus funds are invested to achieve maximum return while minimising risks.

Market risk

Foreign currency risk

The Group is not exposed to any foreign currency risk on any sales, purchases or borrowings.

Interest rate risk

Fluctuations in interest rates impact on the value of short-term cash investments, and financing activities, giving rise to interest rate risk.

The Group's exposure to interest rate risk at the balance sheet is:

Assets Interest rate

Cash balance Varying rates

Other receivables Non-interest bearing

Liabilities Interest rate

Trade creditors Non-interest bearing

Interest bearing borrowings Varying rates

The Group’s investments in variable-rate debt securities and its variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Short-term receivables and payables are not exposed to interest rate risk.

Credit riskFinancial assets which potentially subject the Group to concentrations of credit risk consist principally of cash and other receivables.

The Group only deposits cash surpluses with a major bank of high quality credit standing.

Credit risk with respect to other receivables is limited due to a small number of debtors comprising the debtor base and the receipt of the outstanding amounts immediately after year end.

�� NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

PROPERTy, PLANT AND EQuIPMENT

COMPANY GROuP

2007 �008 �008 2007R000’s R000’s R000’s R000’s

22 FINANCIAL INSTRuMENTS (continued)Credit risk (continued)

The carrying amount of financial assets represents the maximum exposure to credit risk. The maximum exposure to credit risk at the year end was as follows:

Financial instrument

8 037 1 222 – Cash and cash equivalents 1 222 18 361

24 671 25 309 – Loans to Group companies

– 1 535 – Other receivables 1 535 –

20 308 20 308 – Available for sale 33 641 33 641

The Group had no changes in their exposure to risk, how they arise and their objectives, policies and processes for managing these risks and the methods used to measure the risks from the previous year.

Fair valueThe investment properties, listed investments, trade and other payables and accruals equate fair value.

23 CAPITAL MANAGEMENT

The Board's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of directors monitors the return on capital, which the Group defines as net operating income divided by total shareholders' equity, excluding non-redeemable preference shares and minority interests. The Board of directors also monitors the level of dividends to ordinary shareholders.

There were no changes in the Group's approach to capital management during the year.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

24 RELATED PARTIES

Identity of related parties Matodzi is the ultimate holding company in the Group. The subsidiaries of the Group are identified on page 38 in Annexure 2 to these financial statements. The directors and key management are set out in the directors’ report. The ultimate holding company is JCI.

Transactions with directorsRemuneration paid to directors is in the form of fees to non-executive directors and remuneration to executive directors. Other than as disclosed on page 14, the directors did not have any material interest in any contract of significance with the Company or any of its subsidiaries, which may have given rise to a conflict of interest during the year. Details relating to directors emoluments are set out in the directors’ report on page 14.

Transactions with entities within the GroupDuring the year under review, the Company and its subsidiaries entered into various loan transactions with one another in the ordinary course of business. These transactions occurred at arm’s length and have been eliminated on consolidation. Details of these loans are disclosed on page 38 in Annexure 2.Transactions with other related stakeholdersConsolidated Mining Management Services Limited, a wholly owned subsidiary of JCI, was repaid an amount of R1 431 000 (2007: R44 095 000) by the Group including interest capitalised at prime overdraft rate on the interest bearing portion during the 2008 financial year. During 2008, portion of this loan was interest bearing and portion of this loan was interest-free. Details of this loan are disclosed on page 32 in note 13.Lyons, a subsidiary of the Lyons Group, which is ultimately a subsidiary of JCI in its professional capacity as valuators were paid consulting fees to the value of R7 000 (2007: RNil) for the valuation of the investment property referred to in note 8 on page 29, which amount was settled in full at the year end. Mr PH Gray is a non-executive director of Tlotlisa Holdings Limited, the parent company of T-SEC, to whom Matodzi paid an amount of R399 000 (2007: RNil) as consulting fees for the restructure of the Group. There were no other amounts paid to the Tlotlisa Group during the financial year, and no amounts remained outstanding at year end.

Key management contractsAll key management contracts are disclosed in the directors report on page 14.

25 CRITICAL ACCOuNTING ESTIMATES AND JuDGEMENTS

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will by definition, seldom equal the related actual results. Estimates are used in assessing provision for assets, goodwill, inventories, doubtful debts, certain general accruals and provisions. The estimates used are consistent with the prior year and are appropriate for the industry in which the Group operates. There were no significant judgements made that would have a material impact on the annual financial statements.

36 NOTES TO THE ANNuAL FINANCIAL STATEMENTS FOR THE yEAR ENDED 31 MARCH 2008 (cont.)

PROPERTy, PLANT AND EQuIPMENT

Prospecting rights

Motor vehicles

Computer equipment TOTAL

R000’s R000’s R000’s R000’s

GROuP 2008

Cost 2 735 242 39 3 016

Accumulated depreciation and impairment (2 734) (223) (25) (2 982)

Carrying amount at beginning of the year 1 19 14 34

Additions – – 3 �

Depreciation – (19) (11) (30)

Carrying amount at end of the year � – 6 �

GROUP 2007

Cost 2 735 242 39 3 016

Accumulated depreciation and impairment (2 734) (174) (12) (2 920)

Carrying amount at beginning of the year 1 68 27 96

Additions – – – –

Depreciation – (49) (13) (62)

Carrying amount at end of the year 1 19 14 34

COMPANy 2008

Cost – 242 39 �8�

Accumulated depreciation and impairment – (223) (25) (248)

Carrying amount at beginning of the year – 19 14 ��

Additions – – 3 �

Depreciation – (19) (11) (30)

Carrying amount at end of the year – – 6 6

COMPANY 2007

Cost – 242 39 281

Accumulated depreciation and impairment – (174) (12) (186)

Carrying amount at beginning of the year – 68 27 95

Additions – – – –

Depreciation – (49) (13) (62)

Carrying amount at end of the year – 19 14 33

�� ANNEXuRE 1

INvESTMENT IN SuBSIDIARIES

Book value of Company’s interest

2008 and 2007 �008 2007

Issued

share

capital

Company

and Group

effective

holding

Date

acquired

Shares

R000's

Loans

R000's

Shares

R000's

Loans

R000's

Brakfontein Diamante (Edms) Bpk (2) R100 100% 01.07.1999 – 2 706 – 2 363

Consolidated Resources and

Exploration Ltd (3) R90 100% 01.07.1999 * 10 147 * 10 070

Ekuseni Resources Ltd

(incorporated in Jersey) (1) US$2 100% 01.07.1999 – – – –

Guild Hall No 22 Investment Holding

Company (Pty) Ltd (3) R1 000 100% 27.03.2002 12 837 (5) 56 718 (43 886)

IEN Investments (Pty) Ltd (3) R100 100% 01.07.1999 55 424 3 554 55 424 3 554

Newlands Minerals (Pty) Ltd (2) R200 100% 01.07.1999 1 553 8 403 1 553 8 185

Witnigel Investments (Pty) Ltd (3) R1 000 100% 05.09.1997 69 114 499 37 217 499

Letšeng Investment Holdings South

Africa (Pty) Ltd R Nil 0% 01.04.2004 – – 74 530 –

(2007: R100) (2007: 50%) (Sold 31.03.2008)

138 928 25 304 225 442 (19 215)

Impairment allowances (126 089) (24 810) (146 702) (46 301)

12 839 494 78 740 (65 516)

* Less than R1 000

All subsidiaries were incorporated in South Africa except where noted. (1) The company has been struck off the BVI Companies register.

All loans between the Company and its subsidiaries are unsecured and have no fixed terms of repayment. These loans bear interest

as follows:

(2) Portion of, or all of the loan is interest bearing, at varying rates linked to the prime overdraft rate.

(3) The loan is interest free.

INvESTMENT IN ASSOCIATES

White Water Gold (Pty) Ltd R100 35% 29.03.2005 * * * *

White Water Exploration (Pty) Ltd R100 30% 11.05.2005 * * * *

Impairment allowances * * * *

– – – –

* Less than R1 000

All associates are incorporated in South Africa

�8 ANNEXuRE 2

SEGMENTAL ANALySIS FOR THE yEAR ENDED 31 MARCH 2008

Based on the fact that the risks and rates of return are affected predominantly by differences in products and services other than by the fact that it operated in different geographical areas, the directors consider that the primary reporting format is a business segment. The Group was organised into two different business units. These business units were the basis on which the Group reports its primary segment information. The secondary reporting format was by geographic segment being the Republic of South Africa and the Kingdom of Lesotho. The risks and returns for the geographic segment were considered to be the same.

The principal business units in the Group were as follows:

Business unit Scope of operations

Mining Involved the mining and processing of kimberlite rock and associated gravels and the recovery of diamonds therefrom, in the Letseng-la-Terae Mining lease area in the Kingdom of Lesotho for sale by tender in Antwerp.

Other operations Represents the leasing of prospecting rights held by the Group and other non-reportable segments.

Business segment information Mining Other operations Eliminations Group

�008 2007 �008 2007 �008 2007 �008 2007

R000's R000's R000's R000's R000's R000's R000's R000's

Revenue – 135 760 – – – – – 135 760

Segment result – 49 791 (6 467) 667 695 – – (6 467) 717 486

Operating profit/(loss) – 49 791 (6 467) 667 695 – – (6 467) 717 486

Investment income – 487 1 326 28 104 – – 1 326 28 591

Finance costs – (889) (345) (14 807) – – (345) (15 696)

Profit/(loss) before tax – 49 389 (5 486) 680 992 – – (5 486) 730 381

Income tax expense – (17 338) (453) (96 318) – – (453) (113 656)

Profit/(loss) for the year – 32 051 (5 939) 584 674 – – (5 939) 616 725

Attributable to:

– Equity holders (6 035) 261 822

– Minority interest 96 354 903

Other information

Segment assets – 304 005 39 876 55 346 – (304 005)* 39 876 55 346

Segment liabilities – 142 126 (2 942) 11 239 – (142 126)* (2 942) 11 239

Depreciation – (7 589) (30) (62) – 7 589 (30) (62)

Capital expenditure – 10 155 � – – (10 155) � –

Secondary product segmentation

Revenue to external customers – 135 760 – – – – – 135 760

* These assets and liabilities were sold as part of Letšeng Diamonds' disposal.

�9ANNEXuRE 3

40

PROSPECTING RIGHTS

INTRODUCTIONThe Group held various old order prospecting permits throughout South Africa. Applications for conversion of the old order rights to new order prospecting rights on 32 farms have been submitted to the DME. With regard to these applications for prospecting rights:

• some are currently under evaluation process with the DME; and

• some have been granted by the DME.

Table 1: Number of farms applied for prospecting rights

CompanyNo. of Farms Ownership

Consolidated Resources and Exploration Limited (“COREX”) 20 100%

Matodzi 12 100%

With outside parties 0 25%

Total ��

The prospecting rights are held either directly by the Company or through its wholly-owned subsidiary COREX. The prospecting rights held by COREX are subject to the joint venture agreement referred to on page 14.

MATODzI: PROSPECTING RIGHT By virtue of successive name changes from Witwatersrand Nigel Limited to New Mining Corporation Limited (20 January 1999), and from New Mining Corporation Limited to Matodzi Resources Limited (4 November 2002), the Group held title to a substantial portfolio of mineral rights in the form of title deeds, mynpachten and precious metal claims in the Heidelberg area (Lesedi Local Municipality). The bulk of these rights comprise the now defunct Witwatersrand Nigel Limited gold mine, where the historical mining operations focused on the exploitation of the Nigel Reef.

Matodzi has converted the old order right to a new prospecting right over 10 farms (old order right included) in the Heidelberg area (Gauteng). The name of the project is Wit Nigel. Application of prospecting right for Wit Nigel Project was granted, executed and registered with the DME. This prospecting right has been ceded to White Water Gold (Pty) Ltd and the registration of the cession is pending.

The Group has applied for Ministerial consent in terms of section 102 of the MPRDA, to extend the prospecting right over the Wit Nigel Project. The motivation for inclusion

in the Wit Nigel Prospecting Right has been accepted and it is in the process of adjudication. The application is for inclusion of two farms that will increase the number of farms to 12.

COREX: PROSPECTING RIGHT COREX has applied for prospecting rights over 23 farms covering the Limpopo, Mpumalanga, North West and Gauteng regions. Applications over 2 farms have been rejected by the DME. These are subject to appeal. The farms are considered to have varying degrees of potential mineral deposits for a variety of minerals, including diamonds, gold, platinum group metals, coal, base metals and industrial minerals.

COREX has historically divided its mineral rights portfolio into two categories based on mineral deposits potential for a specific commodity, or a combination of commodities, by virtue of the surrounding geology. This is summarised in table 2.

Category A: Farms that are considered to be highly prospective and located in favourable geological terrains;

Category B: Farms considered to have lower potential due to commodity prices and/or the early stage (“grass roots”) nature of the property, but located in favourable geological terrains.

Prospecting right for Heuvelfontein project, farm Heuvelfontein 215 IR, has been granted. Registration for this prospecting right is pending subject to a correction of documentation. Prospecting right for Boschpoort project, farm Boschpoort 284 JQ, has been granted. Execution for this project is pending subject to the DME claiming not to have received the Bank Guarantee for rehabilitation of land disturbed by prospecting activity submitted by the Group.

ANNEXuRE 4

41ANNEXuRE 4 (continued)

Table 2: Summary of the Group's prospecting rights

Farm Name Farm

No. &

Reg

District Geological

Region

Potential

Category

Commodities Status

Altefraai 425LR Lephalale Bushveld

Complex

A Ti, V, Phosphate Prospecting Rights granted, awaiting execution

Blinkpoort

(Wit Nigel

Article 102

Amendment

394IR Heidelberg Central Rand

GroupA

Au, Ag, U, Py

Article 102 motivation for inclusion in the Wit

Nigel Prospecting Right has been granted subject

to submission of revised PWP and EMP. Revisions

have been completed and submission is pending on

consultations with affected parties.396IR Heidelberg

Central Rand

GroupA Au, Ag, U, Py

Bokveld 012MT Musina Glenover

Complex

A Cu, Ni, Zn, Cm,

Ti, Vm, Dm.

Prospecting Rights granted, executed 17 October

2007

Boschfontein 386IRHeidelberg

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Boschpoort 284JQ Rustenberg Bushveld

Complex

A PGM, Cu, Ni Prospecting Rights granted, awaiting execution

Bossieslaagte 369IQ Delareyville Transvaal Basin B Da Prospecting Rights granted, awaiting execution

Bothaskraal 393IRHeidelberg

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Elandsfontein 471JT Nelspruit Bushveld

Complex

B Au, Ag, U Prospecting Rights granted, awaiting execution

Havre 060MT Musina Glenover

Complex

A Cu, Ni, Zn, Cm,

Ti, Vm, Dm.

Prospecting Rights granted, executed 17 October

2007

Hayoma 130MT Louis Trichardt Glenover

Complex

A Coal, Cu, Ni,

Cm, Dm

Application accepted. EMP submitted, awaiting

decision from DME

Heidelberg

Townsland

(Langlaagte)

186IR

Heidelberg Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Heuvelfontein

3 & 22/8

215IR Witbank Karoo Basin B Coal Prospecting Rights granted, executed 11 November

2006. Registration is being finalised

Houtpoort 392IRHeidelberg

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Kaffersfontein 135LQ Lephalale Limpopo Central

Zone

A Dm Application accepted. EMP submitted. Awaiting

decision from DME

Klippoortjie 187IRNigel

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Letitia 093MS Musina Limpopo Central

Zone

A Coal, Cu, Ni,

Cm, Dm

Prospecting Rights granted and executed.

Registration is being finalised

Lith 138LQ Lephalale Limpopo Central

Zone

A Dm Application accepted. EMP submitted. Awaiting

decision from DME

Mariasdrift 190IRNigel

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Melbourne 034LQ Lephalale Limpopo Central

Zone

B Dm Prospecting Rights granted and executed on 30

January 2008

Mooivlei 004LP Lephalale Karoo Basin B Dm Prospecting Rights granted and executed on 17

October 2007

Niemandsland 288MR Polokwane Limpopo Central

Zone

A Cu, Ni, Au, Dm Prospecting Rights granted and executed on 17

October 2007

Norfolk 101MR Polokwane Limpopo Central

Zone

A Cu, Ni, Au, Dm Prospecting Rights granted and executed on 17

October 2007

Noycedale 191IRNigel

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

42

Table 2: Summary of the Group's prospecting rights (continued)

Farm Name Farm

No. &

Reg

District Geological

Region

Potential

Category

Commodities Status

Oorsprong 062MT Musina Limpopo Central

Zone

A Cu, Ni, Zn, Cm,

Ti, Vm, Dm

Prospecting Rights granted and executed on 17

October 2007

Poortjie 389IRHeidelberg

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Reserve 284LR Polokwane Limpopo Central

Zone

A Coal, Dm Prospecting Rights granted and executed on 17

October 2007

Spaarwater 171IRNigel

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Tulipvale 188IRNigel

Central Rand

GroupA

Au, Ag, U, Py Prospecting Rights granted and registered. Cession to

White Water Minerals in process of registration

Vucht 137LQ Lephalale Limpopo Central

Zone

A Dm Application accepted. EMP submitted. Awaiting

decision from DME

Wellington 460KR Modimolle Bushveld

Complex

B Coal, U, Cu,

Ni, Dm

Prospecting Rights granted and executed on 17

October 2007, excluding Coal and Uranium. An

investigation into the reason for this has commenced

Werkplaas 129MT Louis Trichardt Glenover

Complex

A Coal, Cu, Ni,

Cm, Dm

Application accepted. EMP submitted. Awaiting

decision from DME

MINERALISATION POTENTIAL

PLATINuM GROuP METALS

COREX applied for prospecting rights over two farms, Boschpoort and Schoonoord for Platinum group metals, the Boschpoort prospecting right having been granted by the DME and awaiting execution. The farm Boschpoort is underlain by the Bushveld Complex, inclusive of the Merensky and UG2 Reef zones, the latter of which occurs 212 metres below the former. Whilst both reef zones are currently being mined by Anglo Platinum and Impala Platinum close to outcrop, the Merensky Reef is projected to occur at a minimum depth of 2 000 metres below surface on the property, with similar grades and widths to those at the Rustenburg Platinum and Impala Platinum mining operations.

Schoonoord 462 is located on the north eastern sector of the Bushveld Complex, immediately down-dip of the Lebowa Platinum Mine. The farm is underlain by the Merensky and the UG2 Reef zones, which are currently being exploited at Lebowa. The Merensky Reef occurs at an estimated depth of 1 800 metres below surface at the north eastern boundary of the farm, and is expected to have similar grades and widths to those currently being mined at Lebowa. This application has been rejected and is subject to appeal.

DIAMONDS

Alluvial diamonds

The farms Bossieslaagte and Mooivlei have the potential for alluvial diamonds. Mooivlei is situated on the Limpopo River and has substantial paleo-channel gravel deposits, while Bossieslaagte lies within the Harts River area which is known for alluvial diamonds.

Kimberlite diamonds

Numerous Kimberlite discoveries have been made over the past two decades in the Limpopo Mobile Belt of the Limpopo province, the most notable being the Venetia pipe complex. The area is regarded as having potential for further discoveries of Kimberlite. COREX has applied for prospecting rights over 14 farms in this area which satisfy the criteria for Kimberlite occurrences, and which should be explored specifically for Kimberlite deposits. The farms are Bokveld, Havre, Oorsprong, Hayoma, Werkplaas, Kaffersfontein, Lith, Vucht, Mooivlei, Melbourne, Niemandsland, Norfolk, Reserve and Letitia. Prospecting right applications for all these farms have been accepted and Environmental Management Programmes have been submitted.

ANNEXuRE 4 (continued)

43ANNEXuRE 4 (continued)

GOLDMatodzi has been granted prospecting rights over the Wit Nigel Project area which comprises the now defunct Witwatersrand Nigel Limited gold mine (where the historical mining operations focused on the exploitation of the Nigel Reef) and the surrounding areas. This project has potential for both the Nigel Reef and Kimberley (May) Reef, albeit that these reef horizons are considered to be of a distal nature with the associated gold grades being erratic, and occurring largely within well constrained areas of channelisation.

COREX has been granted a prospecting right over the farm Elandsfontein 471 JP. A gold reef of the Pilgrims Rest type is indicated on a published geological survey map on the farm Elandsfontein 471JP at Ngodwana, west of Nelspruit. The old Mamre and Slaaihoek mines some 15 km to the south west historically produced over 11 tons of gold from similar deposits, across the Elands River valley from the farm. A gold reef appears on the same geological map and is an apparent continuation of these deposits with a reported assay value of 6,5 g/t over 1,75 m.

COAL

COREX has been granted a prospecting right over the farm Heuvelfontein situated in the Witbank Coalfield and has made application for a prospecting right over the farm Wellington, situated in the Springbok Flats Coalfield and Werkplaas situated in the Eastern Soutpansberg Coalfield.

Heuvelfontein is a small farm located in Mpumalanga between the defunct New Largo and Alpha collieries in the Witbank Coalfield. Small tonnages of high grade coking coal are likely to exist on the No. 4 seam at a depth of approximately 50 metres.

Register date: 31 March 2008Issued share capital: 370 547 286At 31 March 2008 more than 10% of the Company’s issued share capital was held by the public.

SHAREHOLDER SPREAD

No. of share-

holders % No. of Shares %

1 – 1 000 shares 726 37.04 464 836 0.13

1 001 – 10 000 shares 644 32.86 2 705 694 0.73

10 001 – 100 000 shares 455 23.21 19 020 407 5.13

100 001 – 1 000 000 shares 119 6.07 36 296 025 9.79

1 000 001 shares and over 16 0.82 312 060 324 84.22

1 960 �00.00 370 547 286 �00.00

DISTRIBuTION OF SHAREHOLDERS

No. of share-

holders % No. of Shares %

Banks 26 1.33 3 818 924 1.03

Close Corporations 20 1.02 2 760 433 0.74

Endowment Funds 2 0.10 1 242 671 0.35

Individuals 1 729 88.21 67 457 113 18.20

Mutual Funds 3 0.15 967 530 0.26

Nominees and Trusts 84 4.29 23 788 374 6.42

Other Corporations 46 2.35 2 426 912 0.65

Private Companies 41 2.09 244 361 115 65.95

Public Companies 9 0.46 23 724 214 6.40

1 960 �00.00 370 547 286 �00.00

PuBLIC / NON-PuBLIC SHAREHOLDERS

No. of share-

holdings % No. of Shares %

Non-Public Shareholders 8 0.41 272 779 917 73.62

Directors and Associates of the Company 5 0.26 13 743 694 3.71

Holding Company 2 0.10 211 590 595 57.10

Strategic Holdings (more than 10%) 1 0.05 47 445 628 12.81

Public Shareholders 1 952 99.59 97 767 369 26.38

1 960 �00.00 370 547 286 �00.00

RESIDENT/NON-RESIDENT

No. of share-

holders % No. of Shares %

Resident 1 690 86.22 364 754 158 98.44

Non-Resident 270 13.78 5 793 128 1.56

1 960 �00.00 370 547 286 �00.00

Beneficial shareholders holding 5% or more No. of Shares %

JCI Investment Finance (Pty) Ltd 187 954 095 �0.��

Phomella Investments (Pty) Ltd 47 445 628 ��.80

JCI Limited 23 636 500 6.38

44 SHAREHOLDERS INFORMATION

INDEPENDENT NON-EXECuTIvE

Andrew Mlangeni (83) (Chairman)BA (Pol Sci) Unisa, BA (Hons)Date of appointment: 22 January 2003

Born on 6 June 1925. Education: St Peter’s Secondary School. Andrew is an African National Congress (“ANC”) Member of Parliament and a former member of the National Executive Committee of the ANC (1991 – 1997). He was a prisoner on Robben Island for 26 years. Andrew is also a trustee of the Mahatma Ghandi Memorial Fund.

EXECuTIvE DIRECTOR

Andile Reeves Nkuhlu (38) (Chief Operating Officer)B.Comm (Honours)Date of appointment: 31 October 2006

Born on 30 May 1970, Andile was educated at St. Lukes Senior College and University of the Western Cape. He is experienced in a number of fields covering restructuring and privatisation of State Owned Enterprises and has extensive practical experience in the mining, property development and management, financial services and the oil and gas sectors. Andile has served in the former Free State Premier, Winkie Direko’s Advisory Council in 2001 and currently serves on numerous private boards and is Executive Chairman of Itsuseng Investments.

NON-EXECuTIvE DIRECTORSPeter Henry Gray (60)

C.A.I.B (S.A.)Date of appointment: 24 August 2005

Born on 30 October 1947, Peter was educated at Carlton Jones High School, Carletonville. Having served as an audit clerk at Charles Hewitt & Company, Peter joined the Advanced Management Training Programme at Nedbank Limited before being appointed Senior Credit Investigation Officer at Hill Samuel Merchant Bank.

Peter served nine years with the French Bank of S A Limited (Indosuez) (Now Credit Agricole), and held numerous positions, including that of General Manager and Deputy Chief Executive. In 1982 Peter was appointed Deputy Chairman of the French Merchant Bank.

During a 14 year spell with Societe Generale starting in 1988, he graduated from General Manager of The International Bank of Johannesburg Limited to Managing Director of Societe General South Africa Limited, voted top foreign bank in South Africa in 1996 and 1997.

He retired in 2002 to follow his own interests and then decided to play a guiding role in the creation of a structured empowerment financial services group, Tlotlisa Holdings Limited. Peter serves on numerous other private boards and is chief executive officer of JCI and Randgold & Exploration Company Limited.

Sandile Swana (40)B.Comm, MBADate of appointment: 31 October 2006

Born on 20 July 1968, Sandile is the chairman of Kabusha Mining and Finance and former chairman of Sub-Nigel Gold Mine Limited. He holds a B.Comm degree from the University of the Witwatersrand and MBA from the University of Pretoria.

Thabo Sindisa Kwinana (37)B.Juris LLBDate of appointment: 5 February 2007

Born on 6 November 1970, Thabo was educated at the University of Transkei and Rhodes University. Thabo is a member of the Law Society of the Northern Provinces, and director of Kwinana Nyapotse Incorporated.

Leslie Arthur Maxwell (61)B. Comm, CA (S.A.)Date of appointment: 5 February 2007Born on 12 February 1947, Les was educated at Jeppe Boys High School and the University of the Witwatersrand. Having served as an Articled Clerk to the Audit Manager from 1972 to 1980, Les joined Joy Manufacturing Company in 1980 and was appointed Financial Director. Starting in 1985, Les served over 14 years with Fralex Limited/Fraser Alexander Limited as Group Financial Director. From January 2000 to November 2006, Les has concentrated on Consulting and Private Business Ventures. Les currently serves on numerous other boards and in December 2006 he joined the Board of JCI as financial director.

45 DIRECTORS' DETAILS

ORDINARy BuSINESS

1. To adopt the audited annual financial statements for the year ended 31 March 2008.

2. (a) To elect Mr A Mlangeni who retires in accordance with the Company’s Articles of Association and, being eligible, offers himself for re-election.

(b) To elect Mr PH Gray who retires in accordance with the Company’s Articles of Association and, being eligible, offers himself for re-election.

3. To re-appoint KPMG Inc. as auditors of the Group, until the conclusion of the next Annual General Meeting.

SPECIAL BuSINESS

In addition, members will be requested to consider, and if deemed fit, to pass the following ordinary and special resolutions:

Ordinary resolution No. 1

Placing the unissued ordinary shares under the control of the directors

“RESOLVED, that the unissued ordinary shares of 25 cents each, in the issued share capital of the Company be and they are hereby placed under the control of the directors who are hereby authorised, subject to the restrictions contained in sections 221 and 222 of the Companies Act, 1973 (Act 61 of 1973), as amended (“the Companies Act”), and the Listings Requirements of JSE Limited (“JSE”), to allot and issue such ordinary shares to such persons and upon such terms as they, in their discretion, may determine.”

Ordinary resolution No. 2

Authority to issue shares for cash

“RESOLVED, that subject to the passing of Ordinary resolution No 1, and in terms of the Listings Requirements of JSE including (without limitation) that this Ordinary resolution No. 2 shall be approved by not less than 75% of the votes cast by shareholders present and voting in person or by proxy at the Annual General Meeting at which this resolution will be considered, the directors be and they are hereby authorised to allot and to issue (or to grant options to subscribe for) ordinary shares in the authorised but unissued share capital of the Company or securities which are convertible into ordinary shares in the capital of the Company (collectively “ordinary shares”) for cash upon such terms as they, in their discretion, may determine, subject to the requirements that:

• the shares issued will be of a class already in use;

• this authority shall not endure beyond the next Annual General Meeting of the Company nor shall it endure beyond 15 months from the date of the passing of this resolution;

• there will be no restrictions in regard to the persons to whom the ordinary shares in the issued share capital of the Company may be issued, provided that such shares are to be issued to public shareholders (as defined by JSE in its Listings Requirements) and not to related parties;

• upon the issue for cash of any ordinary shares in the Company which, together with issues of ordinary shares during the same financial year, will constitute 5% or more of the ordinary shares of the Company then in issue, the Company shall, by way of a paid press announcement, give full details thereof, including the effect on the net asset value of the Company and

(Incorporated in the Republic of South Africa)(Registration number 1933/004523/06)Share code: MTZ ISIN: ZAE000042412

(“Matodzi” or “the Company”)

Notice is hereby given that the Annual General Meeting of Matodzi will be held in the Auditorium, Ground Floor, 28 Harrison Street, Johannesburg, on Thursday, 31 July 2008 at 10h00 for the following purposes:

46

MATODZI RESOURCES LIMITED

NOTICE OF ANNuAL GENERAL MEETING

earnings per share;

• the Company shall not allot and issue ordinary shares in its share capital during any financial year which shall, in the aggregate, exceed 15% of the ordinary shares of the Company in issue as determined in accordance with the Listings Requirements of JSE (including securities which are compulsorily convertible into ordinary shares); and

• the maximum discount at which ordinary shares of the Company may be issued shall be 10% of the weighted average traded price of the ordinary shares of the Company on JSE during the period of 30 business days immediately prior to the date that the issue price of such ordinary shares is determined or agreed by the directors.”

SPECIAL RESOLuTIONSSpecial resolution No. 1

Repurchase by the Company of its shares

“RESOLVED, that the Company hereby approves, as a general approval contemplated in section 85 and 89 of the Companies Act, and in terms of the Company’s Articles of Association, the acquisition by the Company and/or its subsidiaries from time to time of the issued ordinary shares of the Company, upon such terms and conditions and in such numbers as the directors of the Company may from time to time determine, but, subject to the Articles of Association of the Company, the provisions of the Act and the Listings Requirements of JSE, provided that:

• any such acquisition of ordinary shares shall be effected through the order book operated by JSE trading system and done without any prior understanding or arrangement between the Company and/or its subsidiaries and the counter party in respect of such repurchase;

• this general authority shall only be valid until the Company’s next Annual General Meeting, provided that it shall not extend beyond 15 (fifteen) months from the date of passing of this Special Resolution;

• a paid press announcement will be published as soon as the Company and/or its subsidiaries shall have acquired ordinary shares constituting, on a cumulative basis, 3% (three percent) of the initial number of ordinary shares of the Company in issue, and thereafter in respect of each acquisition by the Company and/or its subsidiaries of ordinary shares constituting, on a cumulative basis, 3% (three percent) of the initial number of ordinary shares in the Company in issue, which announcements shall contain full details of such acquisitions;

• acquisitions by the Company and/or its subsidiaries of ordinary shares in any one financial year may not

exceed 20% (twenty percent) of the Company’s issued ordinary share capital;

• in determining the price at which the Company’s ordinary shares shall be acquired by the Company and/or its subsidiaries in terms of this general authority, the maximum price at which such ordinary shares shall be acquired by the Company and/or the subsidiaries shall be not more than 10% above the weighted average of the market value of the ordinary shares of the Company on JSE, as determined over a period of 5 (five) business days immediately preceding the date of repurchase of such ordinary shares by the Company and/or its subsidiaries;

• the Company may at any time appoint only one agent to effect any repurchase of ordinary shares on its behalf;

• the Company and/or its subsidiaries may only undertake a repurchase of ordinary shares of the Company if, after such repurchase it shall still comply with JSE Listings Requirements in relation to shareholder spread; and

• the Company and/or its subsidiaries may not repurchase securities during a prohibited period, as defined in JSE Listings Requirements.

The purpose and effect of Special resolution No. 1 is to enable the Company and/or its subsidiaries, in terms of a general authority granted by the shareholders in terms of Section 85 and 89 of the Act and the Listings Requirements of JSE, to acquire ordinary shares in the issued share capital of the Company.

Information required in terms of JSE Listings Requirements with regard to this general authority resolution for the Company or any of its subsidiaries to repurchase the Company’s securities appears in the annual financial statements, to which this Notice of Annual General Meeting is annexed as indicated below:

• Directors of the Company: page 14 and on the inside back cover

• Major shareholders: page 44

• Directors’ interest in securities: page 15

• Share capital of the Company: page 31

The directors, whose names are given on the inside back cover of the annual report collectively and individually accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the annual report and the Notice of Annual General Meeting contains all information required by JSE Listings Requirements.

There has been no material change in the financial or

47NOTICE OF ANNuAL GENERAL MEETING (continued)

trading position of the Company or any of its subsidiaries that has occurred subsequent to the year ended 31 March 2008.

There are no legal or arbitrations proceedings, either pending or threatened against the Company or its subsidiaries, of which the directors are aware, which may have, or have had in the last 12 months, a material effect on the financial position of the Company or its subsidiaries.

Pursuant to and in terms of the Listings Requirements of JSE, the directors of the Company hereby state that:

a) the intention of the Company and/or any of its subsidiaries is to utilise the authority if at some future date the cash resources of the Company are in excess of its requirements. In this regard the directors will take account, inter alia, an appropriate capitalisation structure for the Company, the long-term cash needs of the Company, and will ensure that any such utilisation is in the interest of shareholders;

b) the method by which the Company and/or any of its subsidiaries intends to repurchase its securities and the date on which such repurchase will take place, has not yet been determined; and

c) after considering the effect of a maximum permitted to repurchase securities, the Company and the Group:

• Will be able in the ordinary course of business to pay its debts for a period of 12 months after the date of the notice of the Annual General Meeting;

• The assets of the Company and the Group will be in excess of the liabilities of the Company and the Group for a period of 12 months after the date of the notice of the Annual General Meeting. For this purpose, the assets and liabilities will be recognised and measured in accordance with the accounting policies used in these audited annual Group financial statements;

• The share capital and reserves of the Company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of the Notice of the Annual General Meeting;

• The working capital of the Company and the Group will be adequate for ordinary business purposes for a period of 12 months after the date of the Notice of the Annual General Meeting.”

The Company will provide its sponsor and JSE with all the documentation as required in Schedule 25 of the JSE Listing Requirements, and will not commence any repurchase programme until the sponsor has signed off on the adequacy of its working capital, advised JSE accordingly and JSE having approved this documentation.

voting and proxies

A member entitled to attend and vote at the Annual General Meeting may appoint one or more proxies to attend, speak and vote in his/her stead. A proxy need not be a member of the Company. Duly completed proxy forms must be deposited at the office of the Transfer Secretaries not less than 48 hours before the time appointed for the holding of the Annual General Meeting (excluding Saturdays, Sundays and public holidays).

Shareholders who hold their shares in certificated form or are “own-name” dematerialised shareholders and who are unable to attend the Annual General Meeting but wish to be represented thereat, must complete and return the form of proxy attached in accordance with the instructions contained therein to be received by the Transfer Secretaries by no later than 10h00 on 29 July 2007.

Other shareholders who hold their shares in dematerialised form through a Central Securities Depository Participant (“CSDP”) or broker who wish to vote by way of proxy at the Annual General Meeting, must provide their CSDP or broker with their voting instructions, in terms of the custody agreement entered into between such shareholder and their CSDP or broker by the cut-off time and date advised by the CSDP or broker for instructions of this nature. If, however, such shareholders wish to attend the Annual General Meeting in person, then they will need to request their CSDP or broker to provide them with the necessary authority in terms of the custody agreement entered into between the dematerialised shareholder and their CSDP or broker.

By order of the board

Matodzi Resources Limited

DO JonesCompany Secretary

Johannesburg 19 June 2008

Transfer Secretaries Computershare Investor Services (Pty) Limited70 Marshall StreetJohannesburg, 2001(PO Box 61051, Marshalltown, 2107)Tel: +27 (0) 8611 00950Fax: +27 (0) 11 688 5238

48 NOTICE OF ANNuAL GENERAL MEETING (continued)

Only for use by shareholders of Matodzi in certificated or dematerialised “own-name” form.

Other dematerialised shareholders must inform their CSDP or broker of their intention to attend the Annual General Meeting to be held in the Auditorium, Ground Floor, 28 Harrison Street, Johannesburg, on Thursday, 31 July 2008 at 10h00, in order that their CSDP or broker may issue them with the necessary authorisation to attend, or provide their CSDP or broker of their voting instruction should they not wish to attend the Annual General Meeting in person.

I/We of

(Name in block letters please)

Telephone (work) Telephone (home)(area code and number) (area code number)

being a member of Matodzi and the holder of ordinary shares

hereby appoint of

or failing him/her of

or failing him/her the Chairman of the Annual General Meeting as my/our proxy to attend and speak for me/us and on my/our behalf at the annual general meeting of the Company to be held on Thursday, 31 July 2008 at 10h00 and at any adjournment thereof and to vote or abstain from voting as indicated on the resolutions to be considered at the said meeting:

(Please indicate with an “X” or tick in the appropriate space below how you wish votes to be cast)

ORDINARy BuSINESSvote for

vote against Abstain

1. To adopt the audited annual financial statements for the year ended 31 March 2008

2. (a) To elect Mr A Mlangeni as a director of the Company

(b) To elect Mr PH Gray as a director of the Company

3. To re-appoint KPMG Inc. as auditors of the Group until the conclusion of the next Annual General Meeting

SPECIAL BuSINESS

Ordinary resolution No 1

Placing the unissued ordinary shares under the control of the directors

Ordinary resolution No 2

Authority to issue shares for cash

Special resolution No 1Repurchase by the Company of its shares

Any member of the Company entitled to attend and vote at the Annual General Meeting may appoint a proxy or proxies to attend, speak and vote in his/her stead. A proxy need not be a member of the Company.Every person present and entitled to vote at the Annual General Meeting shall, on a show of hands, have one vote only, but in the event of a poll, every share shall have one vote.Please read the notes and instructions appearing on the reverse hereof.

Signed at on 2008

Name Signature(s)

(in block letters please)

Assisted by

(Where applicable) full names of signatory if signing in a representative capacity.

49FORM OF PROXy

MATODZI RESOURCES LIMITED(Incorporated in the Republic of South Africa)

(Registration number 1933/004523/06)Share code: MTZ ISIN: ZAE000042412

(“Matodzi” or “the Company”)

1. A Matodzi shareholder may insert the name of a proxy or the names of two alternative proxies of the Matodzi shareholder’s choice in the space/s provided, with or without deleting “the chairman of the Annual General Meeting”, but any such deletion must be initialled by the Matodzi shareholder concerned. The person whose name appears first on the form of proxy and who is present at the Annual General Meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. Please insert an “X” in the relevant spaces according to how you wish your votes to be cast. However, if you wish to cast your votes in respect of a lesser number of shares than you own in Matodzi, insert the number of ordinary shares held in respect of which you desire to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or to abstain from voting at the Annual General Meeting as he/she deems fit in respect of all the shareholder’s votes exercisable thereat. A Matodzi shareholder or his/her proxy is not obliged to use all the votes exercisable by the Matodzi shareholder or by his/her proxy, but the total of the votes cast and in respect whereof abstentions are recorded may not exceed the total of the votes exercisable by the shareholder or by his/her proxy.

3. The date must be filled in on this proxy form when it is signed.

4. The completion and lodging of this form of proxy will not preclude the relevant Matodzi shareholder from attending the Annual General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof. Where there are joint holders of shares, the vote of the senior joint holder who tenders a vote, as determined by the order in which the names appear in the register of members, will be accepted.

5. Documentary evidence establishing the authority of a

person signing this form of proxy in a representative

capacity must be attached to this form of proxy

unless previously recorded by the transfer secretaries

or waived by the chairman of the Annual General

Meeting of Matodzi shareholders.

6. Any alterations or corrections made to this form of

proxy must be initialled by the signatory/ies.

7. A minor must be assisted by his/her parent or guardian

unless the relevant documents establishing his/her

legal capacity are produced or have been registered

by the transfer secretaries.

8. Forms of proxy must be received by the transfer

secretaries, Computershare Investor Services (Pty)

Limited at 70 Marshall Street, Johannesburg, 2001

(PO Box 61051, Marshalltown, 2107) by not later than

48 hours before the time appointed for the holding of

the meeting, excluding Saturdays, Sundays and public

holidays.

9. The chairman of the Annual General Meeting may

accept or reject any form of proxy, in his absolute

discretion, which is completed other than in

accordance with these notes.

10. If required, additional forms of proxy are available

from the transfer secretaries.

11. Dematerialised shareholders, other than by “own-

name” registration, must NOT complete this form of

proxy and must provide their CSDP or broker of their

voting instructions in terms of the custody agreement

entered into between such shareholders and their

CSDP or broker.

�0 INSTRuCTIONS FOR SIGNING AND LODGING THIS FORM OF PROXy

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