Notes to the annual financial statements

19.

FINANCIAL ASSETS

The Kumba Environmental Rehabilitation Trust Fund (KERF) was created and complies with the requirements of both the Minerals and Petroleum Resources Development Act and the Income Tax Act, to provide for the rehabilitation or management of negative environmental impacts associated with mining and exploration activities. The KERF receives, holds and invests funds contributed by the Exxaro mining operations, which contributions are aimed at providing for sufficient funds at date of estimated closure of mining activities to address the rehabilitation and environmental impacts.

The trustees of the fund are appointed by Exxaro and consist of sufficiently qualified Exxaro employees capable of fulfilling their fiduciary duties. The funds are invested by Exxaro’s in-house Treasury department with reputable financial institutions in accordance with a strict mandate to ensure capital preservation and real growth.

Funds accumulated for a specific mine or exploration project can only be utilised for the rehabilitation and environmental impacts of that specific mine or project. If a mine of exploration project withdraws from the fund for whatever valid reason, the funds accumulated for such mine or exploration project are transferred to a similar fund approved by the Commissioner of Inland Revenue.

The fund cannot be closed down without the permission of the Commissioner of Inland Revenue.

Included in investments is a listed investment that was designated upon initial recognition as a financial asset fair valued through profit and loss.