ALEXKOR’S BOARD RESPONDS TO CONSTITUTIONAL COURT JUDGEMENT

The Alexkor Board of Directors fully respects the judgement made by the Constitutional Court in the historic land claim instituted by the Richtersveld Community.

 The practical implications of the judgement are the following:

 ¨   The judgement does not affect Alexkor’s current mining operations.  Business will continue as normal until this case is finally resolved;

 ¨  The judgement does not affect employees and contractors who are currently employed or operational at Alexkor;

 ¨ The judgement does not give the Richtersveld Community the right to the land which is currently registered in Alexkor’s name, but merely a claim to it.  In order to understand this statement, one must understand the agreement that was previously entered into between the litigants, as well as the provisions of the Restitution of Land Rights Act.  At the commencement of this dispute a few years ago, the parties (namely the Richtersveld Community, Alexkor and the Government) agreed to separate the trial into two phases, namely a rights phase and a remedy phase.  The parties agreed that the court should first determine whether the claimants had any right in the subject land and, if so, the second phase would involve a determination of an appropriate remedy.  The Constitutional Court has merely determined the first issue and confirmed that the claimants have a legitimate claim to the subject land and the minerals.  This means that (in terms of the agreement reached with the judge in the Land Claims Court (LCC)) the parties must go back to the LCC for the second phase so that the LCC can decide on an appropriate remedy.  In terms of the Restitution of Land Rights Act, the remedy (restitution) can take one of three forms, namely restoration (returning the land to the community), compensation or alternative state land.

It is our Board’s understanding that compensation is normally provided in lieu of restoration and the courts do not normally provide compensation as well as restoration, but normally one of the two;

¨      The judgement does not compel Alexkor to pay R10 billion to the claimants.  It has been asserted in the media that Alexkor must pay R10 billion in compensation.  This figure was mentioned in the Constitutional Court , although no one could explain to the judges how this amount had been calculated.  In any case, the Constitutional Court was not called upon to make any determination on the form of restitution, as this is an issue that was reserved for the Land Claims Court in the second phase;

¨      The summons in this case was issued in 1998 and the first phase had only been concluded in 2003 (nearly 5 years later).  The second phase can also result in a protracted legal battle if the parties adopt a confrontational approach and a further legal battle of two years is not unlikely.  Alexkor’s Board of Directors feels strongly that an adversarial approach should be avoided by the parties at all costs and it will use its best endeavors to ensure that a protracted legal battle is avoided as far as is reasonably possible;

¨      Negotiations between the parties have taken place in the past and will resume in all earnestness.  Alexkor’s Board of Directors is hopeful that a negotiated settlement will be reached, so that the parties do not have to engage in a costly and time-consuming trial.  If an agreement is reached, the parties will request the Land Claims Court to make it an order of court.  In the past, Alexkor has made a substantial offer to the claimants.  The claimants made a counter-offer and both the offer and counter-offer were refused by the respective parties; and

¨      Alexkor knows of no precedent anywhere in this country where a party was ordered to pay loss of income or past losses in a restitution case.  It was stated in the press that the LCC will be requested to calculate past losses since 1928 in order to derive at a compensation amount.  In our view, this approach is not in line with the restitution process that has unfolded in our country thus far and the Restitution of Land Rights Act stipulates the factors that a court must take into account when making an award.

As a company, Alexkor is on the road to recovery and it had recorded an impressive operating profit, notwithstanding the strong rand (its revenue is dollar-based).

The present management and Board has embarked on a strategy which will ensure that the company remains profitable.  Exploration has begun in all earnestness and the company is in the process of selling ailing equipment and replacing it with new ones.  After making losses for several years, the company has finally been turned around to profitability and with competent management this turn-around would be sustainable.

Alexkor’s Board will resume discussions with the representatives of the Richtersveld Community and we are positive that an amicable resolution will be reached.