Trans Hex Group Limited Valuation of Mineral Assets Trans Hex Group Limited Valuation of Mineral Assets Project Number JB009790 September 2016 Final 12 September 2016 Page 1 of 181 Trans Hex Group Limited Valuation of Mineral Assets OFFICE LOCATIONS This report has been prepared by Snowden Mining Industry Consultants Pty Limited (Snowden) for exclusive use by Trans Hex Group Limited pursuant to the Scope of Services contemplated and Perth agreed between Snowden and Trans Hex Group Limited. Snowden Level 6, 130 Stirling Street makes no representation or warranty as to the suitability of the Perth WA 6000 contents of this report for any third party use or reliance and AUSTRALIA Snowden denies any liability for any such third party reliance Tel: +61 8 9213 9213 (whether in whole or in part) on the contents of this report. ABN: 99 085 319 562 [email protected] 2016 Brisbane All rights are reserved. No part of this document may be reproduced, stored in a retrieval system, or transmitted in any form 104 Melbourne Street South Brisbane QLD 4101 or by any means, electronic, mechanical, photocopying, recording AUSTRALIA or otherwise, without the prior written permission of Snowden. Tel: +61 7 3026 6666 Fax: +61 7 3026 6060 ABN: 99 085 319 562 [email protected] Prepared by: VN Agnello BSc Geo (Hons), M Eng (Min Econ), Pr.Sc.Nat, MGSSA, MSAIMM Johannesburg Senior Consultant – Corporate Technology House, Greenacres Services Office Park, Cnr. Victory and Rustenburg Roads, Victory Park Reviewed by: WF McKechnie Johannesburg 2195 BSc Geo (Hons), Pr.Sci.Nat., SOUTH AFRICA FGSSA, MSAIMM PO Box 2613, Parklands 2121 General Manager - EMEA SOUTH AFRICA Tel: +27 11 782 2379 Fax: +27 11 782 2396 Reg. No. 1998/023556/07 Issued by: Johannesburg Office [email protected] Doc ref: 160912_Trans_Hex_Final_Valuation Number of copies: Website Snowden: 2 www.snowdengroup.com Trans Hex Group Limited: 2 Final 12 September 2016 Page 2 of 181 Trans Hex Group Limited Valuation of Mineral Assets Greg van Heerden General Manager – Corporate Affairs Trans Hex Group Limited Sidvale Street, Parow, 7500 Cape Town, South Africa Dear Greg Valuation of Trans Hex Mineral Assets in South Africa and Angola T1.0, T1.1, T1.3, T1.4, T1.12, T1.13, T1.15 Trans Hex Group Limited (Trans Hex, the Company or the Group) requires Snowden Mining Industry Consultants (Pty) Limited (Snowden) to undertake a fair and reasonable valuation of its Mineral Assets, following a mandatory offer to shareholders as per regulations 106 and 90 of the Companies Act. The Mineral Assets (or Trans Hex operations) comprise three alluvial diamond mining concessions, Trans Hex head office (Cape Town) and the diamond polishing factory (Johannesburg). Two of the mining concessions are situated in the Northern Cape Province (South Africa), namely: West Coast Resources (Pty) Limited (WCR or West Coast Resources) operations, with 40% Trans Hex ownership; and the Lower Orange River (LOR) operations (100% Trans Hex ownership). Trans Hex also holds a 33% interest in the Somiluana Joint Venture or JV (Angola). The Somiluana JV owns the Somiluana Mine, which is located approximately 1,000 kilometres (km) from Luanda in Lunda Norte Province in northeast Angola; the LOR operations (including Baken, Bloeddrif and Shallow Water operation) are situated in an area near Alexander Bay, on the border between South Africa and Namibia. WCR operations are located in the vicinity of the town of Kleinsee, approximately 615 km north of Cape Town. The Mineral Asset Valuation (Valuation) has been prepared by Snowden in accordance with the South African Code for the Reporting of Mineral Asset Valuation, 2016 Edition, as amended July 2015 (SAMVAL Code) and Johannesburg Stock Exchange (JSE) Listing Requirements. The Competent Valuator (CV) is Mr VN Agnello. The Valuation has been undertaken on unaudited financials as at the Valuation date; Snowden has undertaken a high level review of key inputs and considers these to be in alignment with audited financials. Snowden has prepared this Valuation and fulfilled the role of collator of the Diamond Resources and Reserves sections of this report. Relevant documentation and information was reviewed and verified for accuracy by Trans Hex and Z Star Diamond Resource Consultants (Pty) Limited (Z Star). The compilation of this Valuation is based on technical and financial data gathering undertaken between 1 December 2015 and 31 August 2016. The Report Date is 12 September 2016; and the Valuation Date is 31 July 2016. The Diamond Resource estimation for this Valuation has been prepared in accordance with the South African Code for the Reporting of Exploration Results, Diamond Resources and Diamond Reserves, 2016 Edition (SAMREC Code). Mr LM Cilliers of Trans Hex is the Competent Person (CP) for the Diamond Resources at Somiluana JV and LOR operations. Dr JA Grills (Z Star) is the CP: Diamond Resources for WCR. The Diamond Reserve estimation for this Valuation has been prepared in accordance with the SAMREC Code and the JSE Listings Requirements. The Trans Hex Ore Reserve committee, Final 12 September 2016 Page 3 of 181 Trans Hex Group Limited Valuation of Mineral Assets under the auspices of Mr LM Cilliers has signed off on Diamond Reserves for the South African operations and Angolan operations. Mr LM Cilliers is overall CP for this Valuation. The CV has endeavoured to ensure that all material information in the possession of Trans Hex has been fully disclosed to Snowden. Snowden has not carried out a comprehensive audit of the records of Trans Hex operations to verify that all material documentation has been provided for the Valuation. Trans Hex has agreed to indemnify Snowden from any liability arising from Snowden’s reliance upon information provided or not provided to it by Trans Hex. A draft version of this Valuation Report was provided to the executive directors of Trans Hex, along with a request to confirm that there are no material errors or any omissions in the Valuation and that the information in the Valuation is factually accurate. Confirmation in those terms has been provided in writing to Snowden and is relied upon as such by Snowden. This report is provided subject to the following qualifications and assumptions: a) Trans Hex has made available to Snowden all material information in its possession or known to Trans Hex in relation but not limited to the legal, geological, mining, process, environmental, financial and marketing aspects of Trans Hex operations and that Trans Hex has not withheld any material information and that information is accurate and up to date in all material respects. b) All geological reports, Diamond Resource estimations and other technical documents provided by Trans Hex correctly and accurately record the results of all geological and other technical activities conducted to date in relation to the relevant mining titles and accurately record any advice from relevant technical experts. c) Trans Hex has good and valid title to all mining titles or other land tenure required to explore, develop, mine and operate in the manner proposed, including tenure required for access, transport and infrastructure needs for current and planned Trans Hex operations advancement. d) All necessary governmental and other consents and approvals (including environmental aspects) required to operate and the associated activities under the relative legislation have been obtained or will be forthcoming without any material delay and on terms which will not cause any material change to any exploration, mining, processing or other activities proposed and which will not cause any material change to the costs of such activities. e) Trans Hex will have access to sufficient working capital or other sources of finance to conduct the proposed activities of Trans Hex operations. f) Macro or other economic conditions will not cause any material change to the prices expected to be obtained for the alluvial diamonds expected to be produced and marketed from the Trans Hex operations. g) All factual information provided by Trans Hex as to its history or future intentions, financial forecasting or the effect of relevant agreements is correct and accurate in all material respects. In relation to the above qualifications and assumptions, Snowden has not undertaken comprehensive enquiries or audits to verify that the assumptions are correct and gives no representation that the assumptions are correct. Snowden has prepared this Valuation on the assurance that all mineral rights relating to the revised acquisition are currently in good standing. Snowden has reviewed the Trans Hex mineral rights but has not attempted to establish the legal status of the mineral rights and relies on opinions provided by Trans Hex’s legal counsel (internal) in this respect. Final 12 September 2016 Page 4 of 181 Trans Hex Group Limited Valuation of Mineral Assets Snowden has reviewed, where applicable, exploration expenditure and supporting documentation provided by Trans Hex as at 31 December 2015, as well as information on diamond transactions in the public domain over the last six years. The lead CP for this Valuation is Mr LM Cilliers. Mr VN Agnello is the collator and CV, with the assistance of several other employees from Snowden, Trans Hex and Z Star that have contributed to the compilation of this Valuation. Prior to distribution, the Valuation was reviewed by Mr WF McKechnie. Snowden is independent of and does not have any material interest in Trans Hex, or the Mineral Assets. Snowden is remunerated for its work by way of a professional fee determined according to a standard schedule of rates which is not contingent on the outcome of the Valuation. The undersigned states that this Letter, Executive Summary and detailed Valuation are a true reflection of Mineral Assets held by Trans Hex. Yours faithfully, Original signed WF McKechnie BSc Geo (Hons), Pr.Sci.Nat, FGSSA, MSAIMM General Manager – Europe, Middle East and Africa Snowden Mining Industry Consultants (Pty) Limited Duties: Oversight of Valuation collation Original signed VN Agnello BSc Geo (Hons), M.Eng (Min Econo), MGSSA, MSAIMM, Pr.Sci.Nat.