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# INTEGRATED

# ANNUAL REPORT

2022

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THUNGELA’S 2022 REPORTING SUITE

This report forms part of our overall suite of reporting

documents for the year ended 31December 2022, all of

which should be read together. Our 2022 reporting suite

includes the following documents:

INTEGRATED ANNUAL REPORT

● Balanced assessment of our approach to creating and

sustaining value.

● Detailed assessment of our Coal Resources and Coal

Reserves in line with the South African Code for the

Reporting of Exploration Results, Mineral Resources

and Mineral Reserves, 2016 (the SAMREC Code).

● Developed in line with the <IR> Framework, the

Companies Act of South Africa, King IV, the JSE

Listings Requirements, the UK Listing Rules and the UK

Disclosure Guidance and Transparency Rules.

ANNUAL FINANCIAL STATEMENTS\*

● Detailed understanding of the Group’s financial and

operational performance.

● Prepared in accordance with IFRS, the Companies Act

of South Africa, King IV, the JSE Listings Requirements,

the UK Listing Rules and the UK Disclosure Guidance

and Transparency Rules.

ENVIRONMENTAL, SOCIAL AND

GOVERNANCE REPORT

● Detailed disclosure of the key environmental, social

and governance (ESG) elements that could have a

material impact on our performance and business if not

effectively managed.

● Prepared in accordance with the core requirements

of the Global Reporting Initiative (GRI) Reporting

Standards, specifically the GRI 12: Coal Sector 2022

Standard, as well as internal safety and sustainable

development indicators.

CLIMATE CHANGE REPORT

● Disclosure of Thungela's approach to climate change,

including risks and related management, compiled in

accordance with the recommendations of the TCFD.

Various acronyms, abbreviations and measures used

throughout the reporting suite have been defined on

pages 174 to 179.

For more information, visit https://www.thungela.com.

\*Available from 27 March 2023.

FORWARD-LOOKING STATEMENTS AND

THIRD-PARTY INFORMATION

This document includes forward-looking statements.

All statements included in this document (other than

statements of historical facts) are, or may be deemed

to be, forward-looking statements, including, without

limitation, those regarding Thungela’s financial position,

business, acquisition and divestment strategy, dividend

policy, plans and objectives of management for

future operations (including development plans and

objectives relating to Thungela’s products, production

forecasts and resource and reserve positions). By their

nature, such forward-looking statements involve known

and unknown risks, uncertainties and other factors

which may cause the actual results, performance or

achievements of Thungela, or industry results, to be

materially different from any future results, performance

or achievements expressed or implied by such forward-

looking statements. Thungela therefore cautions that

forward-looking statements are not guarantees of future

performance.

Any forward-looking statement made in this document

or elsewhere is applicable only at the date on which

such forward-looking statement is made. New factors

that could cause Thungela’s business not to develop

as expected may emerge from time to time and it is

not possible to predict all of them. Further, the extent to

which any factor or combination of factors may cause

actual results to differ materially from those contained

in any forward-looking statement are not known.

Thungela has no duty to, and does not intend to, update

or revise the forward-looking statements contained in

this document after the date of this document, except

as may be required by law. Any forward-looking

statements included in this document have not been

reviewed or reported on by the Group’s independent

external auditor.

The information contained within this report is

deemed by the Group to constitute inside information

as stipulated under the market abuse regulation

(EU) 596/2014 as amended by the market abuse

(amendment) (UK MAR) regulations 2019. Upon the

publication of this report via the regulatory information

service, this inside information is now considered to be

in the public domain.

ALTERNATIVE PERFORMANCE MEASURES

The directors consider additional financial and

operational measures to assess the results of the

operations of the Group, referred to as APMs. These

APMs can be identified throughout this document using

the ∆ symbol, and are fully described in the Annual

Financial Statements.

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1Integrated annual report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

Thungela IAR 2022 – Proof 7 – 25 April 2023

04

OUR PERFORMANCE

Review of financial performance 60

Summarised consolidated financial

statements 70

Review of operational performance 76

01

INTRODUCTION

About this report 2

Group performance in 2022 4

Chairman’s letter 5

03

STRATEGY AND VALUE

CREATION

Chief executive officer’s review 34

Market in context 38

Our strategy 40

Business model 42

Material matters 44

Approach to ESG 48

Stakeholder engagement 49

Business risks and opportunities

management 52

05

OUR IMPACT

ESG performance 80

Our contribution to society 84

#### TABLE OF CONTENTS

#### Responsibly creating value

#### together for a shared future

1Integrated Annual Report for the year ended 31 December 2022

02

THUNGELA AT A GLANCE

Who we are 10

Our purpose 11

Our culture 12

Our operations 14

Ownership structure 27

Board of directors 28

Executive management 30

07

RESOURCES AND RESERVES

Coal Resources and Coal Reserves 130

06

GOVERNANCE

Ethical leadership 88

Corporate governance 90

Remuneration report 98

Social and ethics committee report 124

Risk and sustainability committee

report 126

08

GROUP INFORMATION

Shareholder information 172

Glossary 174

Appendices

Appendix 1: Measuring

performance 180

Appendix 2: UK Listing Rules

disclosure table 181

Shareholder diary IBC

Corporate information IBC

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2 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

## ABOUT THIS REPORT

Thungela Resources Limited (Thungela or the Group) is one of

the largest pure play producers and exporters of thermal coal in

South Africa and listed on the JSE and LSE in June 2021.

SCOPE AND BOUNDARY

This is Thungela‘s second Integrated Annual Report, which

provides a holistic view of Thungela, its subsidiaries, joint

operations and associates for the year ended 31December

2022, and sets out our approach to value preservation and

creation in the short, medium and long term. It includes information

on our performance, business model, strategy, material matters,

principal risks, governance, remuneration practices, and

prospects, among other matters.

The content of this report is built on the interconnection of various

internal and external factors and its impact on our ability to create

sustainable value. Unless indicated, information in this report refers

to that of the Group.

We strive to cater for a wide stakeholder audience in the interest

of transparency and openness, and to enhance our stakeholders’

understanding of our business. The risks, opportunities and

outcomes associated with stakeholders are dealt with insofar

asthese relationships could materially affect our ability to

createvalue.

MATERIAL MATTERS

The principle of materiality informed our preparation of this

report. A matter is considered material if it can substantively affect

our ability to create and sustain value over the short, medium

or long term. The board and management are of the view that

the material matters published on pages44to 47 of this report

offer a balanced mix of information, allowing readers to assess

our performance and prospects. These material matters were

identified through our materiality determination workshops, risk

management process, strategy deliberations and stakeholder

engagements.

INTEGRATED REPORTING AND THE SIX CAPITALS

In pursuit of sustainable value creation, we consider how the six

capitals are integrated across our business model, strategy and

our overall business. It is our intention to positively contribute to

these capitals and to mitigate any negative impacts on them as

far as possible. Our Integrated Annual Report demonstrates our

progress in creating sustainable value for all of our stakeholders.

The six capitals we use and on which our business has an impact

are set out throughout this report and specifically in our business

model on pages42 and 43.

REPORTING FRAMEWORKS

This report is aligned with relevant reporting standards,

frameworks and best practice. We have applied the guiding

principles and content elements of the Integrated Reporting

Council's Integrated Reporting Framework and considered other

relevant guidelines and regulations in preparing this report,

including:

●

The Companies Act 71 of 2008 as amended (the Companies

Act of South Africa)

●

The King IV Report on Corporate Governance (KingIV)

●

The JSE Listings Requirements

●

The UK Listing Rules

●

The UK Disclosure Guidance and Transparency Rules

The financial information in this report has been extracted

from the Annual Financial Statements for the year ended

31December2022, prepared in accordance with the

International Financial Reporting Standards as issued by

the International Accounting Standards Board and the IFRS

Interpretations Committee (collectively, IFRS).

The Coal Resources and Coal Reserves information in this report

has been developed in line with the South African Code for the

Reporting of Exploration Results, Mineral Resources and Mineral

Reserves, 2016 (the SAMREC Code).

ASSURANCE

Financial and non-financial aspects of this report and of our

reporting suite for the year ended 31December 2022 are

independently assured. The report of the independent external

auditor, PricewaterhouseCoopers Inc. (PwC), on the consolidated

and separate financial statements appears on pages26to31

of the annual financial statements for the year ended

31December2022. The report of the independent external

assurer, IBIS Environment, Social, Governance Consulting Africa

Proprietary Limited (IBIS), on specific non-financial indicators

appears on pages 117 to 119 of the Environmental, Social and

Governance Report for the year ended 31 December 2022.

The assurance reports do not necessarily cover all of the

information contained in this report, and copies of these

reports should be obtained from the Thungela website

at www.thungela.com to understand the nature of the assurance

provided.

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3Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

#### The six capitals

Social and relationship

Manufactured

Natural

Human

Financial

Intellectual

BOARD RESPONSIBILITY STATEMENT

The Thungela board of directors, supported by the audit

committee and other board subcommittees, acknowledges its

responsibility to ensure the integrity of the Integrated Annual

Report for the year ended 31December 2022. Inthe directors’

opinion, this Integrated Annual Report addresses all material

matters and offers a balanced view ofThungela’s strategy and

how this relates to our ability to create and preserve value in the

short, medium and long term.

The report adequately addresses the use of, effects on, and

availability of the capitals as well as how these impact the

Group’s strategy and business model, and has been prepared in

accordance with the <IR> Framework, along with other relevant

guidelines.

This Integrated Annual Report, which remains the ultimate

responsibility of the board, is prepared under the supervision

of senior management, and is subject to rigorous internal and

external assurance reviews.

Sango Ntsaluba  July Ndlovu

Chairman  Chief executive officer

26 April 2023

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4 Integrated Annual Report for the year ended 31 December 20224

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

#### GROUP PERFORMANCE IN 2022

#### Delivering on our purpose of responsibly creating value together for a shared future

#### Export saleable production

13.1Mt

(2021: 14.5Mt)

#### Fatalities

#### None

#### (2021: One)

#### SAFETY

#### FINANCIALCREATING SHARED VALUE

#### PATHWAY TO NET ZERO

#### OPERATIONAL

#### TRCFR\*

1.41

(2021: 1.35)

#### Nkulo Community Partnership Trust

#### R448 million

#### contribution

#### (2021: R137 million)

#### Sisonke Employee

#### Empowerment Scheme

#### R448 million

#### contribution

#### (2021: R137 million)

#### Thungela will reduce its scope

#### 1 and 2 emissions from

#### existing operations by

30% in 2030\*\*, and reach

#### net zero by 2050

#### Export equity sales

12.2Mt

(2021: 13.9Mt)

#### Adjusted EBITDA

#### R29.5 billion

#### (2021: R10.0 billion)

#### FOB cost

R1,079

#### per export tonne

#### (2021: R830 per tonne)

#### Earnings per share

R127.08

(2021: R61.08)

#### Headline earnings per share

R130.82

(2021: R66.57)

#### Returns to shareholders

#### R13.8 billion

#### (2021: R2.5 billion)

#### \* Total recordable case frequency rate

#### \*\* Relative to 2021 baseline

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5Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

RESPONSIBLY CREATING VALUE TOGETHER FOR

A SHARED FUTURE

Our purpose of responsibly creating value together for a

shared future is the consistent thread that binds us together as

a Group. Once again, Thungela achieved outstanding results

in a challenging environment characterised by the continued

deterioration of Transnet Freight Rail’s (TFR) performance.

The challenging operating environment experienced in 2022

makes our results and strategy execution all the more impressive.

We believe that achievement of our objectives requires that all

parties play their roles.

STRIVING TO BE A FATALITY-FREE BUSINESS

Safety continues to be a key focus for the board, management

and every employee across our operations. In 2022, the business

operated fatality free, and indeed many operations went

scratch-free for periods exceeding 100 days.

Sadly, our colleague Mr Breeze Mahlangu, an operator at

Zibulo, passed away in February 2023 following complications

after an accident in December 2022. We extend our

condolences to his family and friends. This tragic loss is a crushing

blow for all of us at Thungela. This is a reminder that we need to

remain focused every day on our core value of safety, to ensure

everyone can go home safely, every day.

The increase in TRCFR is disappointing and we will continue our

focus on our safety strategy. We cannot become complacent in

our drive to operate as a fatality-free business.

DEMONSTRATING RESILIENCE AND DELIVERING

ON OUR STRATEGY

The year 2022 not only tested our resilience, it demonstrated that

we are on the right track in embedding our strategic objectives.

Despite several obstacles, we rose to the occasion and proved

our agility, never losing sight of our long-term ambition and our

purpose to responsibly create value together for a shared future.

Last year upon listing, the board set clear goals as it crafted

Thungela’s value-focused strategy. The board's objectives set for

the year have been met and we have made significant progress

on executing our strategic priorities in 2022.

Driving our ESG aspirations

Our environmental, social and governance (ESG) approach is to

recognise the urgency in addressing environmental degradation

but is mindful of the social challenges we face today. We continue

to strike a balance that recognises all of these imperatives.

We have set clear intermediate emissions reduction targets on our

pathway to net zero, and have committed to reducing our scope

1 and 2 emissions by 30% by 2030.

Our pathway to net zero has been developed on a scenario

approach, aligned to the International Energy Agency’s (IEA)

climate change scenarios – this will enable us to respond in the

most effective way based on changes in both our business and

the world at large.

Driving our ESG aspirations is about more than just meeting

targets, it is about building trust between stakeholders.

Building trust requires continued effort and consistency, and

in 2022 we held several constructive engagements with

stakeholders about a range of topics, including ESG.

Maximising value from existing assets

The Elders production replacement project was approved by

the board in 2022. Elders will replace the volumes lost from the

Goedehoop operation as the latter nears the end of its life, and

will not only maintain the size and shape of our South African

export business, but will also sustain regional jobs and support

local suppliers. The Zibulo North Shaft life extension feasibility

studies are progressing well and the project is expected to be

tabled for board consideration in 2023.

Creating future diversification options

In February 2023, we announced the acquisition of a controlling

interest in the Ensham Coal Mine and related assets, a thermal

coal mine in Queensland, Australia. This marks our first investment

outside of South Africa. This cash and earnings-accretive

transaction contributes to our strategy to diversify our geographic

footprint, as well as to balance our operations to manage the

risks associated with single geography exposure. From an ESG

perspective, owning and operating a mining asset already in

production provides us with the ability to extend the life of our

business without adding new carbon units globally.

Optimising capital allocation

In November 2022 we acquired the remaining 27% interest in

Anglo American Inyosi Coal Proprietary Limited (AAIC), the entity

which owns the Zibulo operation and the Elders project, from

Inyosi Coal (RF) Proprietary Limited (Inyosi). This transaction allows

for Thungela to benefit from the full economics of the most cash-

generative assets in our portfolio, while at the same time creating

significant value for our long-time partner as they transition from

asset partners to shareholders in Thungela.

CONTINUING TO CREATE SHARED VALUE

At Thungela, we believe that our success needs to be connected

with social progress. As part of our purpose, we strive to create

shared value, and in 2022 we have delivered on this promise.

## CHAIRMAN’S LETTER

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6 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

#### Sango Ntsaluba

#### Chairman

Despite several obstacles, we rose to the occasion and

provedour agility, never losing sight of our long-term

ambition and our purpose to responsibly create value

together for a shared future.

DISCIPLINED CAPITAL ALLOCATION

The board was pleased to declare a final dividend of R40 per

share on 27 March 2023, once again fulfilling its promise to

deliver attractive shareholder returns.

Last year, the board expressed the view that creating value

responsibly meant maintaining disciplined capital allocation,

balance sheet flexibility, and sufficient funding to withstand

market and Benchmark coal price fluctuations. As a result, it

was deemed appropriate to maintain liquidity of between

R5 billion and R6billion following periods of stronger market

conditions. While we have reduced the cash portion of this

buffer to R5billion following the declaration of the final

dividend, the board has decided to increase the liquidity

buffer to R8.2 billion through the securing of facilities

amounting to R3.2 billion. Two primary factors informed this

decision – uncertainty regarding the expected timeframe

for TFR performance to normalise, and the acquisition of

the Ensham Business which materially changes the overall

structure of the Group, including our liquidity needs.

The enhanced liquidity buffer will provide the Group with

adequate funding to execute its strategy.

A MATTER OF NATIONAL URGENCY

TFR performance has reached a record low, with total

volume railed only marginally above 50Mt in 2022.

Thisisthe lowest volume railed for the industry in over

13years.

The Sisonke Employee Empowerment Scheme and Nkulo

Community Partnership Trust (previously referred to as the EPP

and CPP, respectively) were established upon listing to empower

employees and communities to share in the value we create.

Ourcontributions to each of these trusts total R448million related

to the performance for 2022, bringing our total contributions to

the trusts since listing to R1.2 billion.

In addition to our social and labour plan commitments, the

education programme and other corporate social investment,

we continue to make an important and lasting impact on the lives

of those who are most critical to enabling value creation – our

employees and host communities.

The rail and port operator has continued to operate below

capacity due to security incidents on the line, maintenance

challenges on rail infrastructure and rolling stock, and, in the fourth

quarter of 2022, a crippling 12-day strike by Transnet employees

and one of the worst derailments seen on the line in recent history.

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7Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

In late 2022, Transnet and the mining industry set up collaborative

structures at senior leadership levels focused on stabilising rail

performance in the short term, before ramping performance back

up to historical levels in the medium term.

The deterioration of TFR performance to these levels seems

to have been a wakeup call for government in general, and

TFR in particular. There is a realisation that continuation on this

trajectory could result in a national crisis in South Africa given

the importance of the mining industry in providing employment,

sustaining livelihoods and generating foreign currency inflows for

the fiscus.

We therefore call upon government to act swiftly and effectively

in providing Transnet with all the support necessary for the state-

owned entity’s performance to start turning around and to attend

to other risks such as unstable electricity supply, illegal mining

and increasingly disgruntled communities frustrated by a lack of

service delivery.

The state of affairs at the national power utility is well reported

on in the media and loadshedding continues to weigh heavily

on South African industry and the economy as a whole. While

the political focus on this issue appears to be a step in the right

direction, it is imperative that clear, actionable and measurable

steps are taken to resolve this crisis. The newly appointed

Ministerof Electricity must take the necessary steps to ensure

a reliable and consistent supply of electricity to all parts of

thecountry.

Illegal mining continues to be rampant across the South African

mining industry and especially in the regions in which we operate.

Thungela has not been spared from this criminal activity and

we have seen illegal mining across our operations. We will

continue to work with communities, law enforcement agencies

and the judiciary to find a lasting solution in this regard. Illegal

mining was a contributing factor to the environmental incident

that occurred at Khwezela‘s Kromdraai site in February 2022.

Furthermore, illegal miners are also mining areas that have

previously been rehabilitated, resulting in increased costs for

Thungela to rehabilitate these areas again. We have proactively

taken a strategic decision to accelerate the closure of parts of

the Khwezela complex in order to discourage illegal mining on

our sites and to mitigate the risk of future adverse environmental

events.

We call on government to work towards the resolution of

these issues affecting South African industry and society, to

tackle corruption, to hold management at state-owned entities

accountable, and to urgently arrest the rapid deterioration of

rail, electricity and other infrastructure. South Africa stands on a

precipice, and not resolving these issues may push us over the

edge.

IN PURSUIT OF BOARD EXCELLENCE

Amid compounding challenges in South Africa and across the

world, it is becoming abundantly clear that an actively engaged

board is paramount to Thungela’s success.

The priorities for the board have been set out in detail on page94

of this report and the board will continue to focus on these

throughout the year. These priorities include,

inter alia

:

●

Elimination of fatalities.

●

Continued focus on challenges such as TFR and power

availability.

●

Pathway to zero emissions and decarbonisation.

In keeping with our commitment to establishing a world-class

board, Yoza Jekwa has been appointed as an independent

non-executive director to the Thungela board of directors, and as

member of the Thungela social and ethics committee, with effect

from 12 August 2022. Yoza is the CEO and co-founder of Thrive

Capital Partners (an investment firm focussed on infrastructure

and impact investing in South Africa and Sub-Saharan Africa).

She brings extensive investment banking and board-relevant

experience. Furthermore, she is actively involved in various

outreach and social responsibility programmes aligned to

Thungela’s values.

CLOSING REFLECTIONS

Four months into 2023, we are concerned by the challenges that

abound, including TFR performance, the softening of coal prices

and the volatility of coal demand worldwide. It is clear that coal

prices cannot be expected to be as strong as in 2022, but the

fundamentals for coal remain strong. These strong fundamentals

and our disciplined capital allocation approach allow us to take a

long-term view with confidence while staying true to our purpose.

Finally, I wish to thank my fellow board members, management

and indeed everyone at Thungela for delivering a stellar

performance in 2022 and we look ahead to continuing to deliver

on our purpose to responsibly create value together for a shared

future in 2023.

Sango Ntsaluba

Chairman

26 April 2023

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OUR GOAL AS A FUTUREORIENTED THERMAL

COAL BUSINESS IS TO CREATE SUSTAINABLE

VALUE FOR ALL OUR STAKEHOLDERS.

88

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02

#### THUNGELA

#### AT A GLANCE

9

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10 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

## WHO WE ARE

#### ACCOUNTABILITY

#### We take responsibility

#### for our decisions, actions

and performance, to

grow in success and

#### learn in failure.

#### EXCELLENCE

#### We are passionate about

#### being the best at what we

do and always seek to

#### raise the bar.

#### AGILITY

#### We ensure we are

#### well-informed to be

responsive, in order to

keep things simple and

#### make quick decisions.

#### SAFETY

#### We are unconditional

#### about protecting the lives

#### of all our people – atwork and at home – in

#### health and wellbeing.

#### CARE AND RESPECT

#### We show humanity to all

#### through our commitment

#### to make a positive impact

#### where we can.

#### ENTREPRENEURSHIP

#### We have an owner’s

#### mindset in everything we

#### do, because we know

#### that every small change

#### adds to greater impact.

#### VALUES

#### Ambition

To create real and

#### demonstrable value for all

#### our stakeholders.

#### Our culture

#### Our high-performance

culture values excellence,

#### agility and accountability

#### and understands that our

people are the heartbeat of

#### our organisation.

#### Who we are

#### We are a future-oriented

#### leading thermal coalbusiness.

![]()

## OUR PURPOSE

#### TO RESPONSIBLY

#### CREATE VALUE

#### TOGETHER

#### FOR A SHARED

#### FUTURE

We are uncompromising in our commitment to safety. This means

working to the highest health and safety standards to make sure

that no person comes to harm while earning a living for their

family.

We hold ourselves to the highest governance principles across

our operations and work with people who care about positive

outcomes.

We carefully manage our impacts – now and once our operations

reach the end of their lives. The land we mine today must be put to

sustainable and productive use tomorrow.

Being a responsible miner means being a responsible neighbour.

We want our communities to thrive and for the impacts we leave

on them to be positive ones.

We want everyone close to our business to share in the real and

unique opportunities for economic and social development that

mining brings. This is in our very DNA as our employees and

communities share a stake in our business.

We create this value for our investors and all our stakeholders by

focusing on our strategic ambition and related priorities.

We believe that everyone has a role to play in creating value. That

is why we are committed to collaborating, engaging and building

meaningful relationships with our stakeholders.

Our shareholders, employees, business and social partners all help

us to generate value and in turn, they share in this value.

The value we create contributes to a brighter future for all of us.

By achieving our mutual objectives, we – together with all our

stakeholders – can look forward to a future worth sharing.

11Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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### OUR CULTURE

12 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

#### We Embrace

Being a good employer means creating a sense of

belonging where people can bring their whole selves to

work. We believe in embracing the differences that make

our people, and our business, unique.

#### We Empower

We empower our employees with the trust and autonomy

they need to achieve results. Where possible, we have

flexible productive working arrangements. We also

support a healthy work-life balance.

#### We Engage

We support agile decision-making and honest open

communication. Our leaders strive to always be engaged

and open to ideas, including dissenting views. This is how

we grow together.

#### We Enrich

We offer an enriching world of work in which

employees are encouraged to fulfil their potential.

Individual development plans, exciting career paths and

opportunities to stretch and develop themselves are the

tools we give our employees to do this.

#### We Energise

We are bold, ambitious, and driven by an owner mindset.

This means having an engaged workforce with a high-

performance culture.

#### We Care

Core to our culture is the Thungela value of Care and

Respect. Apart from caring for our people’s safety and

overall wellbeing, we care for our environment and the

communities in which we operate.

Our business is built by our people, for our people. That is why we are passionate about

giving them a working environment that supports their personal aspirations and professional

goals.

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13

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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14 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

#### Our seven mining operations are among the highest quality thermal coal mines in

#### South Africa by calorific value.

#### GREENSIDE COLLIERY

Market:export and domestic

Coal Resources

●

Measured: 8.8Mt

●

Indicated: 4.5Mt

Coal Reserves

●

Proved: 15.9Mt

●

Probable: 0.9Mt

Mining method: underground –

bord and pillar

LOM:5 years

#### ZIBULO COLLIERY

Market: export and domestic

Coal Resources

●

Measured: 221.6Mt

●

Indicated: 107.4Mt

Coal Reserves

●

Proved: 41.0Mt

●

Probable: 21.2Mt

Mining method: underground –

bord and pillar, and opencast

LOM:10 years

Middelburg

eMalahleni

## OUR OPERATIONS

#### KHWEZELA COLLIERY

Market: export and domestic Coal Reserves

Coal Resources

●

Proved: 29.2Mt

●

Measured: 39.8Mt

●

Probable: 2.1Mt

●

Indicated: 9.5Mt

Mining method: opencast

LOM:7 years

#### ISIBONELO COLLIERY

Market: domestic Coal Reserves

Coal Resources

●

Proved: 12.6Mt

●

Measured: 16.0Mt

●

Probable:

–

●

Indicated:

– Mining method: opencast

LOM:3 years

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15Integrated Annual Report for the year ended 31 December 2022

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

MPUMALANGA

Johannesburg

#### MAFUBE COLLIERY

1

Market: export

Coal Resources

●

Measured: 15.9Mt

●

Indicated:

–

Coal Reserves

●

Proved: 80.6Mt

●

Probable: 40.8Mt

Mining method: opencast

LOM:21 years

1

Resources and Reserves are shown at 100%.

#### GOEDEHOOP COLLIERY

Market: export and domestic

Coal Resources

●

Measured: 225.5Mt

●

Indicated: 6.0Mt

Coal Reserves

●

P r o ve d :  11. 7M t

●

Probable: 0.4Mt

Mining method: underground –

bordand pillar

LOM:3 years

#### RIETVLEI COLLIERY

Market: domestic

Coal Resources

●

Measured: 19.7Mt

●

Indicated: 3.0Mt

Coal Reserves

●

Proved: 10.0Mt

●

Probable:

–

Mining method: opencast

LOM:4 years

#### MPUMALANGA

#### PROVINCE

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16 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

CHAMPIONING

#### ESG

OPERATIONS

#### ZIBULO

The Zibulo Colliery is an underground and

opencast mini-pit thermal coal mine. We operate

the Zibulo underground operation using a fully

mechanised bord and pillar mining method while

the opencast mini-pit is operated by contracting

partners using a truck and shovel fleet. Run of mine

(ROM) coal is conveyed on a 16km overland

conveyor belt to be beneficiated at the Phola Coal

Processing Plant.

The Phola Coal Processing Plant has a rail load-out

terminal connected with the Richards Bay Coal

Terminal (RBCT).

Based on the current life of mine (LOM) plan,

mining operations at the opencast are expected

to cease in 2026 with the remaining operations in

the underground workings expected to cease in

2032. We are progressing a life extension project

at the Zibulo North Shaft, for which the bankable

feasibility study and independent project review

were completed in 2022.

Reserves: 62.2Mt

Resources: 329.0Mt

LOM: 10 years

●

Zibulo upgraded the Phola fire

station, which now includes en-

suite lodging rooms and a pause

and dining area where fire

fighters can rest after a call-out.

●

Established a stakeholder

engagement forum to enhance

relationships with traditional

authorities from Phola, Ogies

and Lebohang. This allows us

to ensure that our engagement

platforms are inclusive and to

collaboratively identify impacful

initiatives that consider the

most vulnerable in our host

communities.

●

In 2023 Zibulo will complete

construction of a facility

for the Zamelani Abadala

Senior Citizen Organisation

in Lebohang. This facility will

create a safe environment

where senior citizens will have

access to meals, exercise, and

social and health services. Itwill

also host skills development

programmes and accommodate

offices for social workers and

other community services.

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17Integrated Annual Report for the year ended 31 December 2022

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CHAMPIONING

#### ESG

Reserves: 16.8Mt

Resources: 13.3Mt

LOM: 5 years

● Skills training was delivered to

42 young people including the

operation of heavy equipment,

hospitality, welding and

beekeeping – thus creating skills

that unlock opportunities for

employment.

● Greenside participated in the

Thungela education programme,

which aims to improve the

educational outcomes of

learners at selected early

childhood development centres,

primary and secondary schools.

● In 2023 Greenside will start

with the construction of Lynnville

Township Regeneration Project.

The project was identified to

create an economic hub where

small businesses can participate

in economic activity outside of

mining.

OPERATIONS

#### GREENSIDE

The Greenside Colliery is an underground thermal

coal mine in Mpumalanga. We supply the thermal

coal mined from the Greenside Colliery to the

export coal markets. Greenside extracts coal using

a fully mechanised bord and pillar mining method.

The Greenside LOM plan is scheduled to complete

mineable reserves by 2027.

A railway line traverses Greenside and is shared

with the Khwezela Colliery, connecting the rail

load-out terminal with the RBCT. The eMalahleni

Water Reclamation Plant (EWRP) is located

within the Greenside mining right. It services the

Greenside, Khwezela and Zibulo Collieries.

Potable quality water produced by the EWRP is

supplied to local communities via the eMalahleni

Local Municipality.

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18 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

CHAMPIONING

#### ESG

OPERATIONS

#### GOEDEHOOP

The Goedehoop Colliery is an underground thermal

coal mine. We operate Goedehoop using a fully

mechanised bord and pillar mining method and

supply the thermal coal mined from this colliery to

the export thermal coal market.

● Goedehoop‘s corporate

social investment spend in

2022 focused on enterprise

development, education, senior

citizens, skills development,

health and welfare and gender-

based violence prevention.

● Goedehoop, with select

partners, enabled the purchase

of a laser fibre cutting machine

for the Mpumalanga Stainless

Initiative (MSI). This machine

is the only one of its kind in

the province and enables the

MSI and its beneficiaries to

keep pace with developments

in the steel industry, access

opportunities, and grow

earnings.

● In 2023 Goedehoop will

establish two mobile clinics,

drill boreholes, and install JoJo

tanks to support local farming

communities with improved

access to water.

Reserves: 12.1Mt

Resources: 231.5Mt

LOM: 3 years

Based on the current LOM plan, mining operations

at Goedehoop are expected to cease in 2025.

A railway line traverses our property, connecting

our dedicated rail load-out terminal with the RBCT.

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19Integrated Annual Report for the year ended 31 December 2022

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

CHAMPIONING

#### ESG

● The Mafube Colliery successfully

established the Sikhululiwe

Cemetery and handed it over

to the Steve Tshwete Local

Municipality. The cemetery

can accommodate 5,209

grave sites and was undertaken

with consideration of cultural

traditions and ancestral beliefs.

● The Mafube Colliery will soon

donate 248ha of grazing land

to the Steve Tshwete Local

Municipality to support local

cattle owners with grazing land

capacity in the surrounding

farms.

● The Mafube Colliery has

committed to construct an access

route to Sikhululiwe Village

to improve road safety and

infrastructure in and around the

village.

OPERATIONS

#### MAFUBE

The Mafube Colliery is operated as a 50:50 joint

venture (JV) between Exxaro Coal Mpumalanga

Proprietary Limited (Exxaro) and South Africa

Coal Operations Proprietary Limited (SACO). Itis

an opencast thermal coal mine that utilises a strip

mining methodology for coal exposure. Mafube

produces primary and secondary products that are

sold to the JV partners in equal proportions for their

own specific markets.

Reserves

1

: 121.4Mt

Resources

1

: 15.9Mt

LOM: 21 years

1

Resources and Reserves are shown

at 100%.

Based on the current LOM plan, mining operations

are expected to cease by 2043.

A railway line traverses the property, connecting the

dedicated rail load-out terminal with the RBCT.

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20 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

CHAMPIONING

#### ESG

OPERATIONS

#### KHWEZELA

The Khwezela Colliery is an opencast thermal

coal mine that uses a strip mining method utilising

a combination of dragline and truck and shovel

equipment.

The thermal coal produced is both exported and

used in the domestic market.

● Khwezela constructed two waste

transfer stations in eMalahleni.

This initiative will address

some of the eMalahleni local

municipality’s long-standing

waste management challenges

and provide a centralised

location at which informal waste

collectors can gather and sort

items for recycling.

● The community of Clewer now

has access to a community

hall thanks to Khwezela. This

project offers a safe space for

the community to participate

in sports, arts, culture and

community initiatives.

● One of the ways that Khwezela

is driving ESG is by maximising

diesel and energy efficiency

through advanced technologies

as part of the Thungela strategy

towards a zero carbon footprint.

Based on the current LOM plan, mining operations

at the colliery are expected to cease by 2029.

Arailway line, shared with the Greenside Colliery,

traverses our property connecting the rail load-out

terminal with the RBCT.

Reserves: 31.3Mt

Resources: 49.3Mt

LOM: 7 years

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21Integrated Annual Report for the year ended 31 December 2022

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

CHAMPIONING

#### ESG

OPERATIONS

#### ISIBONELO

The Isibonelo Colliery is an opencast thermal coal

mine that consists of two opencast pits that produce

coal for the Sasol Synfuels Operations under the

coal supply agreement (CSA) with Sasol Mining

Proprietary Limited (Sasol).

Isibonelo uses the strip mining method utilising

a combination of dragline and truck and shovel

equipment.

● Construction of the Lebogang

4.7km sewerage pipeline is

facilitating management of

waste in light of the growing

population in Leandra. The

project was undertaken in

partnership with Sasol.

● Through the Star Schools

project Isibonelo provides

supplementary classes for 150

grade 10, 11 and 12 learners

annually. Subsequently, learners

deliver some of the region’s

best results, enabling them to

gain access to bursaries and a

university education.

● In 2023 Isibonelo plans to

construct a waste transfer

station in the Govan Mbeki

Municipality. This project

will address the health and

environmental concerns

associated with waste

management.

Reserves: 12.6Mt

Resources: 16.0Mt

LOM: 3 years

The thermal coal is crushed and screened and then

conveyed to Sasol Synfuels Operations in Secunda

via a 13km long overland conveyor.

In terms of the LOM plan, which is determined by

the Isibonelo CSA, mining operations at Isibonelo

are expected to cease by June 2025.

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22 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

CHAMPIONING

#### ESG

OPERATIONS

#### RIETVLEI

The Rietvlei Colliery is an opencast thermal

coal strip mine. The mine is operated by Rietvlei

Mining Company Proprietary Limited (RMC), in

which we own a 34% effective interest through

our shareholding in Butsanani Energy Investment

Holdings Proprietary Limited (Butsanani Energy).

Rietvlei is the only operation within the Group to

supply thermal coal directly to Eskom.

● Bankfontein Combined School

received nutritional support,

mathematics and science

tutoring as well as teacher

mentorship in 2022. Rietvlei

further supported the school

through the construction of

afence, staff rooms and the

upgrading of ablution facilities.

● Computer and security courses

were started in the local

community.

In 2022 the mine broadened its market offering

through the commissioning of a coal beneficiation

plant, which allowed Rietvlei to sell into a more

diversified customer base, as well as to optimise the

product feed into Eskom.

Reserves: 10.0Mt

Resources: 22.7Mt

LOM: 4 years

● The ongoing key economic

development initiative involves

the paving of roads and building

pedestrian walkways in the

community of Somaphepha.

The project is expected to be

completed in 2023.

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23

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

23

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24 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

PROJECTS

#### ELDERS

The Elders production replacement project will establish an

underground mine to maintain the production capability of the

South African export coal business as other operations approach

the end of their economic mine lives. The project is intended as

the replacement for the Goedehoop Colliery volumes as that

operation nears the end of its life. It is anticipated that the project

should sustain regional jobs and existing community suppliers.

The on-site infrastructure has been planned to produce up to

4.2Mtpa of ROM, initially from the higher quality No 2 Seam,

with further optionality to mine the No 4 Seam sequentially or

simultaneously depending on offtake demands. The No 2 Seam

is well suited to produce a washed 5,700kcal/kg export product

and the No 4 Seam is better suited for domestic customers as raw

sales or a lower grade 4,500kcal/kg domestic product.

The development capital is estimated in the order of

approximately R2.0 billion and should be completed 24months

after final notice to proceed.

The project has commenced construction with the main boxcut

and structural, mechanical, piping and platework contracts in

progress. The capital spent in 2022 is R205million, with 52%

of the total capital already committed. First underground coal

isexpected in the first quarter of 2024, followed by a steady

ramp-up.

KEY STATISTICS

Capex cost R2.0 billion (between 2022 and 2025)

LOM 12 years steady-state (No 2 Seam)

Production profile 4.2Mtpa ROM (No 2 Seam)

Potential quality 5,700kcal/kg export

4,500kcal/kg domestic

Project stage Execution phase

Scheduling

First coal Q1 2024

Construction complete Q2 2024

Conveyor complete Q1 2025

Nameplate production Q4 2025

Rietvlei

Khwezela

Mafube

Goedehoop

Greenside

Zibulo

Isibonelo

MPUMALANGA

ELDERS PROJECT

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25Integrated Annual Report for the year ended 31 December 2022

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08 GROUP

INFORMATION

Rietvlei

Khwezela

Mafube

Goedehoop

Greenside

Zibulo

Isibonelo

MPUMALANGA

ZIBULO NORTH

PROJECTS

#### ZIBULO NORTH SHAFT

The Zibulo North Shaft project aims to establish a new decline

shaft and associated infrastructure within the existing Zibulo

mining right area. This will enable access to the Zondagsfontein

West reserves thereby extending the LOM to beyond 2040, and

ensure continued utilisation of the full allocated wash capacity

of the Phola Coal Processing Plant. The new shaft will improve

operational efficiency and optimise the cost structure through

reduced travel distances to the coal face. This will further mitigate

the loss of ROM production as the opencast operation winds

down, and de-risk the Zibulo operation through access to

additional panels.

The new shaft is positioned approximately 8km northwest of the

existing shaft on the edge of Zondagsfontein West Resource

area, which was acquired and licensed at the same time as the

Zondagsfontein East (current Zibulo) mining area.

The on-site infrastructure is aimed at sustaining ROM production of

up to 8Mtpa after the initial underground development has been

completed. The export product quality is expected to reduce from

6,000kcal/kg to 5,700 kcal/kg from 2030 based on current

operational strategies, while production beyond 2035 will be

targeted for domestic supply.

The bankable feasibility study and independent project review

were completed in the fourth quarter of 2022. The associated

environmental and regulatory processes are progressing

according to plan and the project will be tabled for consideration

by the board in 2023.

KEY STATISTICS

Capex cost R2.4 billion (between 2023 and 2026)

LOM extension 10 to 12 years

Production profile 7.8 to 8.4Mtpa

Potential quality 6,000kcal/kg export

5,700kcal/kg export

Project stage Bankable feasibility complete

Scheduling

First coal H1 2025

Construction complete Q1 2025

Nameplate production H1 2026

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26 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

PROJECTS

#### METHANE

#### PROJECT

OVERVIEW

The Lephalale coal-bed methane project (LCBMP) is located

approximately 30km north-northeast of the town of Lephalale

within the largely undeveloped Waterberg Coalfield of the

Limpopo province of South Africa. Thungela holds an exploration

right which covers a total area of approximately 132,000ha

and owns approximately 12,500ha of surface rights within the

exploration right footprint.

Thungela has been involved in the LCBMP since 1992,

culminating in the establishment of a five-spot pre-feasibility test

site in 2004, which ran for 10 years. The quality of the LCBMP

has been confirmed by several studies supported by over 100

exploration holes.

POTENTIAL DEVELOPMENT

The LCBMP is a significant methane gas resource and Thungela

is currently evaluating its development options and potential

phasing. The options being explored as a lower carbon energy

source include:

●

Power generation

●

Diesel fuel substitution

●

Liquefied natural gas

An additional consideration is the associated water that is

produced, which could become an important resource to the

water-scarce Lephalale district.

Our development options are supported by a resource model that

was developed with Advanced Resources International Inc. that

supports the 3.5 trillion cubic feet (Tcf) gas in place estimate, of

which 1.5Tcf is extractable.

A feasibility study has commenced and an associated production

right application is planned for mid-2023.

LIMPOPO

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27Integrated Annual Report for the year ended 31 December 2022

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

## OWNERSHIP STRUCTURE

1

Exxaro Coal Mpumalanga Proprietary Limited holds the remaining 50% interest in Mafube Coal Mining.

2

Seriti Power Proprietary Limited holds the remaining 50% interest in Phola.

3

Vunani Mining Proprietary Limited holds the remaining 33% of Butsanani Energy.

4

Emalangeni Mining Resources Proprietary Limited and Mwelase Group of Companies Proprietary Limited hold 34% and 15% of RMC respectively.

5

Nasonti Technical Services Proprietary Limited holds the remaining 51% of Pamish.

Richards Bay Coal

Terminal

23%

Pamish

5

49%

Mainstreet

175 6

Rietvlei

Mining

Company

4

Thungela Resources

Limited

51%

Butsanani

Energy

3

33%

Thungela

International

Thungela

Resources

Holdings

Thungela

Treasury

Phola

2

50%

Thungela Operations

South Africa Coal Operations

33%

Anglo American

Inyosi Coal

73%

Mafube Coal

Mining

1

50%

Sisonke

Employee

Empowerment

Scheme

Nkulo

Community

Partnership

Trust

27%

5%

5%

90%

Wholly owned subsidiary

Subsidiary with non-controlling interests

Joint operations

Associate

#### Organisational structure of the Group

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28 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

## BOARD OF DIRECTORS

Sango Siviwe Ntsaluba

Independent non-executive

Chairman

July Ndlovu

Chief executive officer,

executive director

Gideon Frederick (Deon)

Smith

Chief financial officer,

executive director

Benjamin Monaheng (Ben)

Kodisang

Independent non-executive

director

BCOM, BCOMPT (HONS), CTA, HDIP

TAX LAW, MCOM IN DEVELOPMENT

FINANCE, CA(SA)

BSC (HONS) (ENG), MBL,

SENIOR EXECUTIVE PROGRAMME

(COLUMBIA BUSINESS SCHOOL)

BCOM (HONS), CTA, CA(SA)

BCOM (HONS), BCOMPT, CA(SA)

Age: 62

Nationality: South African

Appointed: 1 January 2021

Age: 57

Nationality: South African,

Zimbabwean

Appointed: 1 September 2016

Age: 45

Nationality: South African

Appointed: 1 July 2017

Age: 52

Nationality: South African

Appointed: 16 March 2021

Sango is the founder and chief executive

officer of Aurelian Capital and also

co-founded SNG-Grant Thornton, a

leading auditing and accounting firm.

He has a wealth of knowledge and

experience having spent over two

decades in leadership positions in

operations, investment, and finance. He

also has extensive board experience

in listed, public sector and unlisted

companies locally and abroad. Sango

brings invaluable experience to the

board on governance, analytical

analysis, sensitivities to emerging world

trends and an understanding of social

and environmental matters.

July is an experienced mining executive

and has worked in different commodities

over the last three decades. He was

previously chief executive officer of

Anglo America plc’s (Anglo American)

South African coal business and prior to

that occupied the position of executive

head of processing at Anglo American

Platinum Limited.

Deon was previously the chief financial

officer of Anglo American’s South African

coal business and subsequently assumed

responsibility for strategy, business

development and finance. Prior to joining

the team, he was responsible for several

finance functions across Anglo American

and its divisions over 14years including

corporate finance, capital management,

shared accounting services and risk and

audit. Deon spent six years with KPMG

where he completed his articles and

managed a software joint venture.

Ben is the founder and chief executive

officer of ALT Capital Partners and

has over 25 years of investment and

business experience across asset classes

throughout the African continent. He

serves on several boards including

Absa Bank Botswana Limited, Fortress

REIT Limited, Barloworld Khula Sizwe

Property Holdings (RF) Limited and

Sphere Holdings Proprietary Limited.

Prior to this, he was chairman of

the SouthAfrican Property Owners

Association (SAPOA) and Wesgro.

In addition, Ben was CEO of Sanlam

Alternatives, a managing director of

STANLIB Asset Management Limited and

Old Mutual Property Proprietary Limited.

Skills brought to Thungela

Leadership, investment, auditing,

operations, taxation, board experience,

governance, financial services, transport,

logistics, mining, sustainability, food

production.

Skills brought to Thungela

Operations, mining, risk management,

executive management, sustainability,

large scale industrial, board experience.

Skills brought to Thungela

Strategy, finance, auditing, risk

management, investment banking,

legal, IT/tech/digital, financial services,

corporate finance, mergers and

acquisitions.

Skills brought to Thungela

Operations, finance, business

development, risk management,

investment banking, fund management,

sustainability, asset and investment

property management, and governance.

Audit committee Remuneration and

nomination committee

Social and ethics

committee

Risk and sustainability

committee

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29Integrated Annual Report for the year ended 31 December 2022

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

Kholeka Winifred Mzondeki

Independent non-executive

director

Thero Micarios Lesego

Setiloane

Independent non-executive

director

Seamus Gerard French

Independent non-executive

director

Yoza Noluyolo Jekwa

Independent non-executive

director

BCOM, FCCA (UK) BSC, BENG BENG MBCHB, MBA

Age: 55

Nationality: South African

Appointed: 12 February 2021

Age: 63

Nationality: South African

Appointed: 7 March 2021

Age: 60

Nationality: Irish

Appointed: 4 June 2021

Age: 47

Nationality: South African

Appointed: 12 August 2022

Kholeka has over 20 years’ experience

in governance and senior financial

management. She has served as

financial director and chief financial

officer in several organisations, including

the Fortune 500 company, 3M. In

addition, she has served and is serving

on several boards and was chairman

of Trudon Proprietary Limited (Yellow

Pages), a subsidiary of Telkom SA SOC

Limited. Kholeka was part of the team

that pioneered Trudon’s digital journey.

She has been a finalist in the Nedbank/

BWA Businesswoman of the Year Award

and has also served as an audit member

at the United Nations World Food

Programme, ona pro-bono basis.

Thero currently serves as a non-executive

director on the board of Foskor and

is also a director and board member

of the Oppenheimer Memorial Trust.

He previously held the positions of

chief executive officer for Business

Leadership South Africa, and executive

vice president of business sustainability

at AngloGold Ashanti Limited. Thero

was also an executive director at

Real Africa Holdings Limited and the

deputy chief executive officer for the

commercial division of Transtel, and

has held various board positions which

included chairmanship of Rand Refinery

Proprietary Limited, Nuclear Fuels

Corporation of South Africa Proprietary

Limited, the Agricultural Research Council

and Swiss Re Life and Health Africa

Limited.

Seamus recently resigned as chief

executive officer-designate and

Europe Hub managing director of

the international engineering and

construction company, Laing O’Rourke

plc. Prior to joining Laing O’Rourke, he

was chief executive officer of Anglo

American’s plc’s bulk commodities and

other materials division, responsible for

the coal, iron ore and nickel businesses.

Yoza is the chief executive officer and

founder of Thrive Capital Partners, an

investment firm focused on infrastructure

and impact investing in South Africa

and Sub-Saharan Africa. Prior to this,

Yoza was the chief executive officer

of Mergence Investment Managers

Proprietary Limited, a mid-sized

diversified asset management company

with circa R35billion of assets under

management. She also has extensive

investment banking experience as an

originator and structurer of acquisition

financing/investments for mid to large

cap corporates as a dealmaker within

RMB and as a principal in acquisition

and leverage finance at Nedbank

Limited. She currently serves as an

independent non-executive director on

the boards of Brait plc and of Northam

Platinum Limited.

Skills brought to Thungela

Management, risk management, retail/

consumer, sustainability, IT/tech/digital,

governance, finance, accounting,

strategy, board experience, leadership.

Skills brought to Thungela

Governance, mining, leadership, retail,

fund management, sustainability, large

scale industrial, agriculture, education,

research, IT/tech/digital, board

experience.

Skills brought to Thungela

Governance, mining, executive

management, leadership, board

experience, sustainability and community

development.

Skills brought to Thungela

Corporate finance, risk management,

investment banking, fund management,

sustainability, health care, infrastructure,

impact investing, executive management,

leadership, board experience.

![]()

30 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

## EXECUTIVE MANAGEMENT

Bernard Dalton

Executive head: marketing

Leslie Martin

Executive head: technical

Lesego Mataboge

Executive head: human resources

Mpumi Sithole

Executive head: corporate affairs

BENG  BA, PGDIP BA (HONS)

Age: 61 Age: 51 Age: 50 Age: 44

Bernard is a seasoned marketing

professional with more than 35 years

of experience in the mining and metals

industries, having spent a number of

years with BHP Billiton Aluminium, BHP

Energy Coal South Africa Limited and

South 32 Limited (South 32). He has

worked in Singapore on commodity

trading and risk management, is known

for his extensive commercial knowledge

and is a director at RBCT. In his most

recent role prior to joining Thungela,

he was group manager marketing

and sales for South 32, he established

the marketing strategy and structure

for domestic and export sales across

Johannesburg and London.

Leslie is a mechanical engineer,

having commenced his career at

Anglo American in 1996 as a junior

engineer in the coal business. He has

held various roles, including general

manager and head of the safety and

sustainable development department,

and has experience in underground and

opencast mining, process plants, projects

and construction. Leslie successfully

integrated the operational risk

management process into the operating

model of Anglo American’s South African

coal business.

Lesego has extensive human resources

experience within the natural resources

sector, having worked at Kumba Iron Ore

Limited and ArcelorMittal SA Limited. He

was previously head of human resources

at Anglo American’s South African coal

business.

Mpumi previously held the position

of head of corporate affairs at Anglo

American’s South African coal business.

Prior to this, she was media and

external relations manager at Anglo

American Platinum Limited. Before

joining Anglo American, Mpumi was

head of communications at Sanofi.

Mpumi has held leadership positions at

various companies and has extensive

experience in communications and brand

management, reputation management,

media relations, stakeholder

engagement, socio-economic

development and ESG strategic

management.

Audit committee Remuneration and

nomination committee

Social and ethics

committee

Risk and sustainability

committee

![]()

31Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

Johan van Schalkwyk

Chief operating officer

Carina Venter

Executive head: safety, health and

environment

Francois Klem

Company secretary

BENG NATIONAL DIPLOMA IN SAFETY

MANAGEMENT, MBA

DIPLOMA IN BUSINESS

MANAGEMENT, DIPLOMA IN

COMPANY SECRETARYSHIP,

CHARTERED INSTITUTE OF

SECRETARIES

Age: 48 Age: 45 Age: 59

Johan has held a number of management

roles at various collieries of Anglo

American’s South African coal business

and was the general manager at Kumba

Iron Ore Limited's Sishen mine. Under

his leadership these mines achieved

prestigious safety, productivity and

efficiency awards within the Anglo

American Group. He was previously the

head of operations and business services

of Anglo American’s South African coal

business.

Carina has held several management

roles in Anglo American’s South African

coal business, having started her career

at SasCoal Engineering. She was

previously the head of safety and health

at Anglo American’s South African coal

business.

Francois previously worked as a

company secretary for Massmart

Holdings Group, Central News

Agencies, and Anglo American

Platinum Limited. He also worked as

the corporate governance manager

for Anglo American’s South African

coal business prior to the demerger.

![]()

#### THE VALUE WE CREATE CONTRIBUTES TO A

#### BRIGHTER FUTURE FOR ALL OF US.

3232

![]()

03

#### STRATEGY AND

#### VALUE CREATION

33

![]()

## CHIEF EXECUTIVE

## OFFICER’S REVIEW

PLACING SAFETY AT THE FOREFRONT

Running a business where each and every employee goes

home safely every day is central to everything we do, and we

are unwavering in our commitment to operating a fatality-free

business.

We operated fatality free in 2022, however our colleague

MrBreeze Mahlangu, an operator at Zibulo, tragically passed

away in February 2023 following complications after an accident

in December 2022. This has been devastating for all of us at

Thungela and a reminder that we must be unconditional about

safety to ensure that everyone goes home unharmed every day.

TRCFR increased to 1.41 in 2022, compared to 1.35 in

2021.The relentless application and management of critical

controls, focused leadership interactions, and the identification

and management of high-potential hazards continues to

be emphasised across our operations. The safety of all our

employees remains our absolute priority.

OUTSTANDING OPERATIONAL AND FINANCIAL

PERFORMANCE

The global energy crisis resulting from the ongoing conflict in

Ukraine, and the ensuing ban on Russian gas and coal entering

the European Union (the EU), resulted in significant changes in

seaborne thermal coal demand flows, with demand for South

African coal moving into Europe increasing substantially. These

dynamics led to a steep escalation in Benchmark coal prices,

which averaged USD270.87per tonne in 2022, up from

USD124.11 in 2021. Although prices remain firm, they continue to

be volatile.

Putting our purpose first, we continue to responsibly create value

together for a shared future. As a business, this is the core to

everything we do and is the compass that guides us.

PURPOSE IN ACTION

By focusing on what we can control, we achieved outstanding

results in 2022 and delivered on our strategic priorities:

● We operated fatality free in 2022, and several of our sites

reached over 100 days without an incident.

● Wedelivered robust results and produced 13.1Mt of export

saleable production at an FOB cost per tonne

∆

ofR929

(excluding royalties), meeting the updated production guidance

we provided in August 2022.

● Adjusted EBITDA

∆

and net profit both increased significantly to

R29.5billion and R18.2 billion respectively, while our year-end

net cash

∆

position reached R14.7billion.

● This robust cash position allowed the board to declare a final

dividend of R40 per share. Together with the interim dividend

of R60 per share declared in August 2022, the total dividend

returned to the shareholders of Thungela amounts toR100 per

share, or R13.8 billion for the year. This is a substantial increase

from our maiden dividend of R18 per share in 2021. The total

dividend distribution amounts to 76% of adjusted operating free

cash flow

∆

, once again well in excess of the Group’s dividend

policy to target a minimum payout of 30%.

● We have also contributed R896 million to the Sisonke

Employee Empowerment Scheme and the Nkulo Community

Partnership Trust relating to 2022 performance, ensuring that

our employees and host communities share in thevalue we

create.

● We have delivered on our strategy to drive our ESG aspirations

by publishing clear intermediate emissions reduction targets

– we will reduce our scope 1 and 2 emissions from existing

operations by 30% by 2030 (relative to the 2021 emissions

baseline) and achieve net zero by2050.

● The Elders production replacement project was approved

by the board in 2022, delivering on our strategic priority to

maximise value from our existing assets.

● We announced two highly cash-generative and earnings-

accretive transactions. In November 2022, we acquired the

remaining 27% shareholding held by Inyosi in AAIC, taking our

economic interest in the Zibulo operation and the Elders project

to 100%. More recently in February 2023, we initiated our first

move into a new geography with the acquisition of a controlling

shareholding in the Ensham Coal Mine and related assets in

Australia – we expect the transaction to complete in mid-2023.

In this unpredictable environment, we achieved a net profit of

R18.2 billion, a substantial increase from R6.9 billion in 2021.

This outcome is in large part due to strong coal prices. It is also

testament to our people's agility in operating in a significantly

constrained rail environment and continued efforts to combat cost

inflation, especially given the lower production base.

We recorded export saleable production of 13.1Mt – a decrease

of 13%compared to 15.0Mt (on a pro forma basis) in 2021, but

within the revised guidance range of 13.0Mt to 13.6Mt issued in

August 2022. The decrease is mainly attributable to the poor and

inconsistent TFR rail performance, which substantially worsened

following the issuing of this revised guidance.

FOB cost per tonne excluding royalties

∆

was R929 per

tonne, which is marginally higher than the upper end of the

revised guidance range of R885 to R915 per tonne issued

inAugust2022.

34

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

#### July Ndlovu

Chief executive officer

The results from this past year further bolster confidence in

bothour resilience and our potential. We will continue to put

safety first, focus on controlling the controllables and stay

true to our purpose to responsibly create value together

forasharedfuture.

Capital expenditure came in at R1.9 billion, in line with guidance.

Of this, R1.7 billion related to sustaining capital, and R235million

to expansionary capital for the Elders production replacement

project, and feasibility study costs for the ZibuloNorth Shaft

project.

Adjusted operating free cash flow

∆

increased significantly to

R18.1 billion in 2022, compared to R3.9 billion in 2021, as

cash generation continued to be robust and capital expenditure

efficiently managed.

DRIVING OUR ESG ASPIRATIONS

Being a responsible steward of both investors‘ capital and of the

environment in which we operate is deeply rooted in our purpose.

In February 2022 an uncharacteristic environmental incident

occurred at the Khwezela Colliery‘s Kromdraai site. The impact

of this incident was promptly mitigated and we have made good

progress in the rehabilitation of the Kromdraai area, as well as the

remediation of the affected water courses.

In line with our commitment to reducing emissions, we have

completed a full review of our emissions reduction opportunities

and we have published our intermediate targets. Thungela aims to

reduce its scope 1 and 2 emissions by 30% by 2030 (relative to

the 2021 emissions baseline) and achieve net zero by 2050.

This reduction in emissions will be achieved through a

combination of the introduction of new programmes such as

arenewable energy strategy, and continued focus on energy

efficiency at our operations to reduce our energy and carbon

intensity.

We have also published our first Climate Change Report,

aligned to the requirements of the Task Force on Climate-

Related Financial Disclosures (TCFD), alongside the

release of our Environmental, Social and Governance

Report. We will continue to develop and update our

climate change strategy, as our business evolves to

ensure that our commitment to net zero by 2050, subject

to the countries in which we operate and the markets

we serve, is considered and accounted for in the

decisions we make on projects or acquisitions.

35

Integrated Annual Report for the year ended 31 December 2022 35Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

The qualifier “subject to the requirements of the countries in which

we operate and the markets we serve” is an important distinction

as a responsible transition to renewable energy will, in each

jurisdiction, be underpinned by the continued provision of reliable,

secure and affordable base load energy.

EXECUTING OUR STRATEGY

In addition to driving our ESG aspirations, we have also made

significant progress on the execution of our strategy which we

shared with stakeholders in 2022.

Aligned to our strategic priority of maximising value from existing

assets, the board approved the development of the Elders

production replacement project which has been an integral

part of Thungela’s equity story from the outset. The project was

approved at a total capital cost of R2 billion (in2022 money

terms) and will replace volumes from the adjacent Goedehoop

operation as that mine comes to the end of its life. In keeping with

our commitment to make ESG considerations a key driver of our

capital allocation strategy, the social implications relating to the

project were carefully considered, and Elders will sustain regional

jobs and existing community suppliers.

In parallel, the feasibility study for the Zibulo North Shaft life

extension project is progressing well, and we expect to submit this

project to the board for consideration in 2023.

Thungela also has a significant gas resource in the Limpopo

province and is evaluating the development options and phasing

of this project in light of South Africa's energy crisis. This project is

currently in the feasibility study stage.

Turning to the optimisation of capital allocation, in November

we acquired the remaining 27% shareholding in AAIC, the

entity

that holds the Zibulo operation and the Elders project. This

earnings-accretive transaction will allow us to benefit from the

full economics of the most cash generative assets in our portfolio,

resulting in an increase in earnings attributable to the equity

shareholders of Thungela.

The announcement made in February 2023 related to the

acquisition of a controlling shareholding in the Ensham Coal

Mine and related assets in Australia marks an important milestone

in our journey, as it delivers on Thungela's strategic priority of

geographic diversification and offers several other benefits. The

Ensham Coal Mine is a highly cash generative thermal coal

asset, with long-life potential, and it puts Thungela in a position to

capitalise on the strong Newcastle coal price environment. From

a strategic point of view, this acquisition is an excellent fit for our

business and a significant step towards reducing exposure to a

single geography, while bolstering our resilience.

SPIKING ON SOCIAL

We have consistently said that for Thungela ESG is much more than

merely emissions, or even only the environment. We think about

ESG holistically, and given our unique context in South Africa, and

Mpumalanga in particular, we have committed to focusing on the

social component of ESG – creating value for our employees and

the communities in which we operate.

Employees and communities share in the value that we create

through their participation in the Sisonke Employee Empowerment

Scheme and the Nkulo Community Partnership Trust (previously

referred to as the EPP and CPP, respectively). We are proud to

have contributed an additional R198 million to each of these

trusts, in addition to the R250 million contributed to each trust in

relation to our performance in the first half of 2022. This brings the

total contributions to these trusts since our listing to R1.2billion.

Wealso continue to make a meaningful difference in the lives of

the people closest to our operations through our social and labour

plan commitments, the education programme and other corporate

social investments.

A further example of where we have ‘spiked on social‘ is the

Thuthukani supplier development programme. This initiative will

ensure that we incubate small to medium enterprises, develop their

skills and improve access to seed and working capital. Wewant

to ensure that these enterprises gain access to real and meaningful

opportunities in our supply chain.

TRANSNET: A NATIONAL CRISIS

Rail capacity throughout 2022 was predominantly impacted by

a shortage of locomotives and spare parts, the impact of cable

theft and the vandalism of critical infrastructure, as well as Transnet

industrial strike action and a significant derailment in the fourth

quarter.

TFR railed only 50.3Mt to RBCT for the industry in 2022 – nearly

10Mt lower than the minimum annual declared capacity of 60Mt,

and 20Mt lower than the 70Mt achieved as recently as 2020.

Thungela was directly impacted by TFR’s underperformance

which cost us close to 3Mt in lost rail volumes and ultimately lost

export sales.

We sought to mitigate this impact on our business by focusing on

what we can control. However, full stockpiles forced us to further

curtail production. Recognising the mining industry’s reliance on

properly performing logistics infrastructure, the Transnet board

and the Minerals Council of South Africa (the Minerals Council)

announced in December 2022 that they have agreed to establish

joint collaborative structures to work together to ensure that rail

infrastructure is stabilised and recovers to normal levels.

36

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

Thungela and other coal exporting parties are working with

Transnet to provide joint oversight on the interventions required to

stabilise and improve rail performance on the North Corridor that

carries coal to RBCT.

Coal production and export sustains jobs and livelihoods in our

host communities and drives the generation of foreign currency

into the South African economy. It also contributes significantly

to government in the form of taxes and royalties. Resolving

the concerns around TFR performance is a matter of critical

importance for the future of South Africa.

LOOKING AHEAD

Clearly, we remain focused on working with Transnet to resolve the

rail performance. I am encouraged by early engagements with the

Transnet board, and cautiously optimistic that we could start seeing

some progress in 2023. However, until we have further clarity on

the expected pace of improvements in rail performance, we are not

currently providing guidance for 2024.

The fundamentals supporting thermal coal remain firmly in place,

even if prices have softened somewhat in early 2023. Although

Europe currently has adequate stocks of both coal and gas,

we expect the EU to continue importing coal from South Africa

in 2023 as Russian coal remains subject to sanction. While we

are unlikely to see the historic price levels observed in 2022, we

expect prices to remain robust.

In the longer term, we anticipate continued strong coal demand

from emerging markets, especially those in Asia, where coal use

is likely to remain part of the energy mix for at least the next two

decades.

CONCLUSION

I would like to thank everyone at Thungela whose dedication and

agility made it possible to deliver this stellar performance under

challenging circumstances largely out of our control. It is with great

pride that I can say that we have risen to the challenges confronting

our business and made tremendous progress towards our strategic

goals. The results from this past year further bolster confidence

in both our resilience and our potential. We will continue to put

safety first, focus on

controlling the controllables

and stay true to our

purpose to responsibly create value together for a shared future.

July Ndlovu

Chief executive officer

26 April 2023

37Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

The global economy was marked by volatility and various

challenges in 2022, including conflict, inflationary pressures and

the lingering disruptions caused by the COVID-19 pandemic.

The escalation of the conflict between Russia and Ukraine resulted

in human tragedy and also severe turbulence in the global

economy, and energy markets in particular. A range of sanctions

were implemented against Russia, including against Russian

thermal coal entering the EU from August 2022.

Global economies, especially Europe, which is reliant on Russian

fuel sources, faced an energy security crisis which resulted in

substantially increased demand for alternative energy sources,

including thermal coal, in an already severely constrained supply

environment. Supply constraints have continued in several major

coal producing hubs – heavy rains in Australia, production

challenges in Colombia and continued and significant logistics

issues in South Africa. This resulted in significant volatility in the

market and an increase in the price of coal.

In an effort to reduce reliance on Russian energy sources, other

coal importing hubs also looked for alternative sources of high

grade coal to meet energy requirements. Thisimperative for

energy security increased seaborne thermal coal demand

and, combined with the constrained supply, resulted in volatile

increases in the Benchmark coal price which averaged

USD270.87 per tonne in 2022, compared to USD124.11 per

tonne in2021.

Global coal trade flows significantly changed with the EU

ban on Russian coal. The ban has seen heavily discounted

Russian coals flow into India and other South Asian countries,

negatively impacting South African coal market share in this

region. Increased seaborne coal prices resulted in developing

economies such as those in South Asia (including India, Pakistan,

Sri Lanka and Vietnam) being unable to afford these prices and

consequently demand from these hubs decreased. However, we

saw increased South African coal flows into Europe – specifically

of higher qualities which Thungela was well placed to supply.

Although prices were firm they remained volatile and began

softening towards the end of the year due to the milder than

expected winter in Europe, which resulted in high coal stocks at

European ports, as well as high gas inventories. China’s efforts to

tackle the COVID-19 pandemic as cases surged near the end of

the year also resulted in further demand destruction.

## MARKET IN CONTEXT

2022 PERFORMANCE

Thermal coal price and

exchangerate 2022 2021

Benchmark coal price (US$/tonne) 270.87 12 4 .11

Average realised export price (US$/

tonne) 229.21 103.82

Average realised export price (Rand/

tonne) 3,752 1,535

Realised price as a % of Benchmark

coal price 85 84

ZAR:US$ average exchange rate 16.37 14.79

The most significant challenge facing the coal mining industry in

South Africa and Thungela remains the continued deterioration in

TFR performance, with 2022 being another year of exceptionally

poor rail performance. In 2020, TFR railed a total of 70.1Mt to

the RBCT for the industry but this decreased to 58.1Mt in 2021.

TFRperformance continued to deteriorate during 2022 – from

an annualised industry rate of 53.3Mt in the first half of the year,

down to 47.4Mt in the second half – resulting in total volume

railed of 50.3Mt for the full year. This is the lowest volume railed

in over 13 years. The second half of the year was impacted by a

protracted strike by Transnet employees in October 2022, as well

as a severe derailment on the coal corridor in November 2022.

Thungela continues to manage consistently poor TFR rail

performance to the extent possible by railing higher-grade

products and creating additional stockpile capacity by trucking

coal between our operations. We have also trucked coal from our

operations to three additional third-party sidings to create further

rail loading optionality and de-risk train cancellations. In addition,

Thungela continues to review opportunities at alternative ports to

support production efforts and manage stockpile levels.

In 2022 Thungela and Transnet concluded an amendment to the

existing long-term agreement (LTA) according to which Transnet

declared a minimum contractual rail capacity of 60Mt for its

financial year ending March 2023. The LTA also resulted in an

agreement on the rail tariff escalation applicable on the balance

of the tenure of theLTA which is in place until 31 March 2024.

Thungela and the industry continue to offer support to Transnet.

A steering committee was established in December 2022 which

allows for executive collaboration with the Minerals Council, the

Transnet board, RBCT and the industry more broadly. The primary

goal of this collaboration is to ensure that TFR performance

stabilises, and once this is achieved, focus will shift to performance

improvement.

38

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

KEY FOCUS AREAS FOR 2023

While demand for seaborne coal should remain firm into 2023,

the market is expected to remain volatile and it is unlikely that the

record prices achieved in 2022 will be repeated in 2023.

Given the current challenges related to the conflict in Ukraine,

we expect sanctions against Russia to remain in place throughout

2023. As trade flows take shape, this is likely to result in continued

imports of South African coal into Europe, together with coal

from other origins. However, Russian coal is likely to continue to

take a portion of South Africa's market share in Asia, resulting

in increased competition in that region. Australia is expected to

continue recovering following the heavy rains in 2022 and the

easing of the Chinese ban on Australian coal will result in limited

volumes of this coal shifting back into China.

We will continue our concerted efforts to assist TFR in improving

their performance, and will monitor key factors affecting the

seaborne thermal coal markets, including:

● Geopolitical tensions and the resultant change in coal trade

flows, including,

inter alia

, the impact of the conflict in Ukraine,

as well as China easing the ban on Australian coal.

● Europe‘s drive to reduce its dependency on Russian fuel

sources, increase its renewable energy capacity and alternative

gas supplies and storage capacity.

● The continued impact of COVID-19, especially in China.

● India‘s continued push for increased domestic production and

the impact on seaborne thermal coal demand.

● Potential new coal requirements within the South African

domestic market, including Eskom, which could provide an

additional market for mid- to high-ash coals.

39

Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

## OUR STRATEGY

Our four strategic pillars will enable us to deliver on our purpose to responsibly create value together for

ashared future.

Drive Maximise Create Optimise

our ESG aspirations the full potential of

our existing assets

future diversification

options

capital allocation

ESG is at the heart of our strategy

that will inform our approach to

our existing business and any new

projects or initiatives as we consider

“buy vs build” options.

A broader ESG perspective is

required when considering the

socio-economic implications as

well as the timing and pace of the

transition to a low-carbon future.

Seeking to improve the competitive

positioning and cash generation of

the assets we own and operate today.

Developing a future pathway for our

business by pursuing geographic

diversification of coal assets where

we can leverage our core skills.

We would also consider the

divestment or winding down of

high-cost tonnes.

Implement “buy vs build” strategy

using investment evaluation criteria

to ensure that projects compete with

additional shareholder returns in the

form of additional dividends and

share buybacks.

OUR INVESTMENT EVALUATION CRITERIA

Our investment evaluation criteria have been designed to optimally balance responsible stewardship with the

need to upgrade our portfolio and create shareholder value. They are critical to all “buy vs build” decisions,

ensuring that all investments compete with additional shareholder returns. We continue to evaluate all merger

and acquisition opportunities against these criteria.

Environmental Social Governance

● Consider the impact on

global carbon output

● No net loss of biodiversity

● Support existing regional

communities and supplier

base

● Improved transparency and

accountability Responsible stewardship

Cost/margin curve Payback Capital intensity

● Target lower half of global

seaborne cost curve

● Target short payback period ● Competitive capex per

tonne when compared to

alternative options

Upgrade our asset

portfolio

Net present value

(NPV)/capex

Internal rate of return

(IRR)

Closure costs

● NPV

● Capital efficiency

● IRR higher than our nominal

weighted average cost of

capital (WACC)

● Cash flows to fund closure

cost provisions beyond

current LOM

Maximise shareholder

value

40 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

STRATEGIC FOCUS AREAS

We continue to make significant progress on the execution of our strategic focus areas.

Drive our ESG aspirations

Initiatives Outcomes

Focus on elimination of fatalities Zero fatalities in 2022

Reduce number of recordable injuries Number of injuries flat year-on-year

Implement optimised rehabilitation and closure plans Work to optimise these plans is ongoing

Develop pathway to net zero by 2050 and detailed climate

change strategy – incorporating greenhouse gas (GHG) emission

reduction initiatives

Scenario-based pathway to net zero developed

Develop carbon intensity reduction plan Plans developed to reduce carbon intensity across operations

Set scope 1 and 2 emissions reduction targets Targets set for existing operations: 30% reduction by 2030

Construct passive water treatment demonstration plant Demonstration plant commissioned in July 2022

Reduce freshwater abstraction Volume of freshwater abstracted reduced

Continue to create shared value

R896 million total contribution to the trusts based on 2022 performance

Maximise the full potential of our existing assets

Initiatives Outcomes

Deliver productivity improvements Progress curtailed by rail constraints

Enable an optimised cost structure Cost containment initiatives ongoing

Optimise use of rail and port infrastructure to enhance marketing

optionality

● Concluded rail agreement with a third-party to secure

additional trains

● Leased two additional third-party sidings

● Trucking between sidings to maximise ability to rail

● Completed alternate port sales

Accelerate farm-fence opportunities with a short pay-back period Multiple farm-fence opportunities with short pay-back periods

identified and reviewed

Develop and deliver production replacement and life extension

projects with near term goals

● Elders production replacement project approved by the board

in 2022 and construction had commenced

● Zibulo North shaft life extension project to be presented for

board consideration in 2023

Create future diversification options

Initiatives Outcomes

Consider divestment of stranded resources and/or high-cost tonnes Initiated divestment of remnant resource blocks at Umlalazi

Evaluate geographic diversification of thermal coal asset base

● Several opportunities evaluated

● Executed geographic diversification through announcement of

acquisition of Ensham Business in early 2023

Diversification where we have demonstrated our ”right to win” Ongoing evaluation of various options where we have

demonstrated our ”right to win”

Optimise capital allocation

Initiatives Outcomes

Maintain liquidity buffer throughout cycle Liquidity buffer enhanced in line with changing business context

Evaluate internal projects and acquisition options which could

deliver superior returns over time

● Several merger and acquisition opportunities evaluated during

2022

● Ensham Coal Mine integration plan, pending completion of the

acquisition in 2023

Seek shareholder approval for a potential share buyback

programme

Buyback programme was tabled at 2022 AGM, but failed to pass

41Integrated Annual Report for the year ended 31 December 2022

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

![]()

#### Marketing

●

High-quality, thermal coal destined for export

markets.

●

Focus on margin driven commercial

opportunities.

●

Guaranteed access to key export markets

through leading global coal export terminal.

#### Rehabilitation

●

Remediation and/or redevelopment of the

land to a sustainable state.

#### Safeguarding

●

Sustainable and responsible use of resources.

●

Collaborative partnerships to empower

and uplift surrounding communities and

employees.

●

Embracing strong governance through trusted

and skilled corporate leadership.

#### Sales andmarketingClosure

#### Champion

#### ESG

The below business model outlines how Thungela operates. It is underpinned by the

#### Group’s purpose: To responsibly create value together for a shared future.

#### CAPITAL INPUTS

#### Resources on which we rely What we do

#### BUSINESS ACTIVITIES

#### Finding and defining

●

Realistic evaluation of resources (legal tenure,

regulatory compliance and socio-political

factors).

●

Continuous resource evaluation aligned to

long-term business planning and strategy.

●

Successful track record of developing resources.

#### Processing

●

Production of high-quality export thermal

coal through wash plants.

●

Production of domestic thermal coal to

customer required specifications.

#### Mining

●

Low-cost open pit and underground coal

mining.

●

Adoption of innovative mining technologies to

enhance production delivery.

●

Continuous improvements in safety.

#### Resource

#### conversion

#### ExtractionBeneficiation

## BUSINESS MODEL

#### Social and relationship

●

Maintaining social licence to operate

●

Engagement with trade unions to ensure good

labour relations

●

Local procurement

●

Engagement with government and regulators

●

Engagement with local communities

#### Natural

●

Coal Resources and Coal Reserves

●

Land

●

Water

●

Energy

#### Financial

●

Debt and equity capital

●

Cash flow and working capital management

●

Self-insurance structure

●

Focused capital allocation

#### Human

●

Employees: 4,592

●

Contractors: 1,984

●

Skills development and training

●

Remuneration and incentives

●

Strong leadership team

●

Skilled and diverse board

#### Manufactured

●

Seven mining operations

●

TFR rail infrastructure

●

Port infrastructure (23% ownership)

#### Intellectual

●

Integrated business excellence

●

Intellectual property (processing plants)

●

Leadership and talent management

●

Strategy development

42 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

#### CAPITAL OUTPUTS

Coal for export market

Export saleable production: 13.1Mt

Coal for domestic market

Domestic saleable production: 6.9Mt

#### What we deliverWhat we produce

#### Human capital

●

Zero fatalities

●

Upskilled employees: 1,478,562 training hours

#### Social and relationship capital

●

5% direct equity stake in SACO for employees via the Sisonke Employee

Empowerment Scheme

●

5% direct equity stake in SACO for communities via the Nkulo Community

Partnership Trust

●

Contributions to the trusts of R896 million related to 2022 performance

●

Local procurement spend of R2.3 billion

#### Manufactured capital

●

Board approval of Elders production replacement project

●

Impact of rail infrastructure performance

●

Optimised sales mix

#### Intellectual capital

●

Development of independent information technology (IT) platform

●

Investment in self-insurance structure

#### Natural capital

●

In situ 677.7Mt Coal Resources and 266.4Mt Coal Reserves

●

Run of mine: 25.2Mt

●

Land managed: 49,076ha

●

Two reportable environmental incidents

●

Biodiversity: wetland restoration projects

#### Water

●

Freshwater abstraction: 767ML

#### Waste

●

Hazardous: 776 tonnes

●

Non-hazardous: 1,103 tonnes

#### Emissions

●

Energy consumed: 3.01 million GJ

●

GHG emissions (scope 1 and 2): 748kt CO

2

equivalent

●

Electricity: 415,732MWh

●

Diesel: 41,800kl

#### Financial capital

●

Revenue: R50.8 billion

●

Adjusted EBITDA

∆

: R29.5 billion

●

Adjusted operating free cash flow

∆

: R18.1 billion

●

Sustaining capital: R1.7 billion

●

Expansionary capital: R235 million

●

Earnings per share: R127.08 per share

●

Headline earnings per share: R130.82 per share

●

Dividend per share: R100 per share

#### OUTCOMES

43Integrated Annual Report for the year ended 31 December 2022

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

![]()

## MATERIAL MATTERS

Thungela’s material matters are those which have the potential

to substantively affect our performance and our ability to create

value over the short, medium and long term. Identifying these

matters assists us in managing our risks and opportunities and

ensuring that they are addressed by our strategy.

During the year we conducted and adjusted our annual

determination process and grouped our material matters into key

themes. In doing so we considered our external environment and

identified relevant megatrends, assessed our risks, and evaluated

and considered stakeholder feedback.

An in-depth materiality workshop was held by senior

management to identify relevant matters, assess their importance

and prioritise them. The views and comments expressed by various

stakeholders through our engagement with them in 2022 were

taken into account in the workshop, including shareholder activists,

communities and investors.

The Group executive committee reviewed and assessed the

outcomes of the workshop which were then discussed and

approved by the Thungela board.

Our material matters have been identified and grouped into the following key material themes:

These material themes, related material matters, their impact on value creation and our responses are discussed in more detail below.

SAFETY RAIL

INFRASTRUCTURE

OPERATING

RESPONSIBLY

CREATING

VALUE

SPIKING

ON SOCIAL

SAFETY

Material matter Impact on value creation Our response Link to strategy

Eliminating fatalities

● Everyone going home safely every

day is the cornerstone to sustainable

value creation.

● Safety strategy built around three pillars:

◦

Work management

◦

Back to basics

◦

Culture change

Drive our ESG

aspirations

44 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

RAIL INFRASTRUCTURE

Material matter Impact on value creation Our response Link to strategy

Reliability of rail

infrastructure

● The performance of the rail and

port networks, operated by TFR,

materially affect our ability to export

thermal coal to customers.

● Optimised export sales mix by railing higher

quality products.

● Creation of additional stockpile capacity.

● Utilisation of additional sidings.

● Trialling alternative transport options.

● Prioritisation of equity volumes over

third-party volumes.

● Continued engagement with Transnet at all

levels.

● Provision of support to TFR where required

(e.g. implementation of security initiative).

Maximise the full

potential of our

existingassets

Create future

diversification

options

OPERATING RESPONSIBLY

Material matter Impact on value creation Our response Link to strategy

Climate change

● Long-term demand destruction.

● Inability to access funding or

insurance.

● Development of a detailed climate strategy

and pathway to net zero by 2050.

● Reducing carbon intensity of existing

operations annually.

● Increased ESG and climate-related

disclosures, including TCFD requirements.

● Improving ESG performance.

Drive our ESG

aspirations

Responsible

mine closure and

environmental

provisions

● Environmental restoration and

rehabilitation costs.

● Negative impact on environment

or communities living close to

operations.

● Higher than anticipated closure

liabilities.

● Integrated approach to mine closure

planning.

● Execution of concurrent rehabilitation and

closure plans.

● Understanding the impact of NEMA

Financial Provisioning Regulations.

● Cash collateralisation of environmental

liability over time.

Environmental

incidents

● Impact on company reputation and

trust.

● Adequately providing for environmental

liabilities.

● Accelerated closure of high-risk sites and

illegal mining hotspots.

● Learning from incidents.

Regulatory

approvals

● Impact of delayed approvals. ● Proactive engagement with key

stakeholders.

● Adherence to relevant legislation and

standards.

Crime

● Increase in environmental liability.

● Losses suffered due to operational

disruptions from illegal mining.

● Collaboration with law enforcement.

45

Integrated Annual Report for the year ended 31 December 2022

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

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CREATING VALUE

Material matter Impact on value creation Our response Link to strategy

Capital allocation

● Long-term growth and profitability. ● Capital allocation policy and liquidity

buffer.

● Seeking shareholder approval for a

potential share buyback programme.

Maximise the full

potential of our

existingassets

Create future

diversification

options

Optimise capital

allocation

Resource

conversion

● Extending the life of the business. ● Development and delivery of production

replacement and life extension projects.

Geographic

diversification

● Mitigation of infrastructure risk in

South Africa.

● Execution of acquisition delivering

geographic diversification.

Market factors

● Impact on earnings and cash flow. ● Price risk management programme.

SPIKING ON SOCIAL

Material matter Impact on value creation Our response Link to strategy

Creating value for

employees

● Responsibly creating value for

employees improves attraction and

retention.

● Sisonke Employee Empowerment Scheme.

Drive our ESG

aspirations

Creating value for

communities

● Positively impacting the lives of

communities closest to operations

(through job creation, local

procurement and supplier

development) mitigates potential

community unrest.

● Nkulo Community Partnership Trust.

● Preferential local procurement.

● Thuthukani supplier development

programme.

● Education programme.

● Municipal capacity development

programme.

● Regular community engagements.

46

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

Key material theme Material matter

Reliability of rail infrastructure (TFR)

Eliminating fatalities

Operating responsibly

a. Climate change

b. Responsible mine closure and environmental provisions

c. Environmental incidents

d. Regulat ory approvals

e. Crime

a. Capital allocation

b. Resource conversion

c. Geographic diversification

d. Market factors

Spiking on social

a. Creating value for employees

b. Creating value for communities

#### Stakeholders

#### Thungela

214a3a3b3d3e4c4b4d5a5b3c

Safety

1

3

Creating value

4

5

Rail infrastructure

2

Key material theme Material matter

Reliability of rail infrastructure (TFR)

Eliminating fatalities

Operating responsibly

a. Climate change

b. Responsible mine closure and environmental provisions

c. Environmental incidents

d. Regulatory approvals

e. Crime

a. Capital allocation

b. Resource conversion

c. Geographic diversification

d. Market factors

Spiking on social

a. Creating value for employees

b. Creating value for communities

Stakeholders

Thungela

2

1

4a

3a

3b

3d

3e

4c

4b

4d

5a

5b

3c

Safety

1

3

Creating value

4

5

Rail infrastructure

2

#### MATERIALITY MATRIX

#### Material matters ranked by relevance for Thungela and its stakeholders

47Integrated Annual Report for the year ended 31 December 2022 47Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

## APPROACH TO ESG

THE ROLE OF COAL

Developments during 2022, particularly the Russian invasion

of Ukraine and the post-COVID-19 rise in the price of oil and

gas, have resulted in coal demand reaching all-time highs. In

advanced economies, where the use of coal had for several years

been on the decline, demand rose by 10% while developing

regions saw a 5% increase in consumption. This is considerable

given that these economies already accounted for 80% of the

world’s coal use

1

.

The IEA’s stated energy policy scenario sees coal demand

declining gradually by 12% by 2030, while the announced

pledges scenario anticipates a reduction of 22% in the same time

frame. The net zero scenario sees coal demand falling by 50%

by 2030 and 90% by 2050, due to countries like India, which

are heavily dependent on the resource, only having a net zero by

2070 pledge

1

.

Responsible coal producers like Thungela will play an ongoing

role in meeting future demand in regions such as these.

This, however, must be done in a way that balances crucial

environmental expectations and the vital role that coal plays – not

just in developing economies – but in coal mining communities.

We must also play our part by taking significant measures to

decarbonise our business, while advocating for technologies that

abate emissions from coal combustion.

In this Decade of Action, it is critical that we contribute to the

achievement of the United Nations’ Sustainable Development

Goals (SDGs). Our ESG focus areas are linked to our prioritised

SDGs.

COMMITMENT TO ESG STANDARDS

We are on a purpose-driven maturity journey that started with the

adoption of our ESG approach in 2021, and went on to drive and

embed our aspirations in this area during the course of the year.

Our ESG priorities were selected based on their material

relevance to our sector, shareholders, employees, communities,

and other key stakeholders. They are:

● Environmental stewardship

● Shared value for our stakeholders

● Responsible decision-making and leadership

These priorities are supported by robust management systems,

open and engaged leadership, and a commitment to effective

and transparent stakeholder engagement. They are also reflected

in our values and code of conduct.

While we aim to maintain the highest standards in all aspects of

ESG, our goal is to spike on the social element, where we already

make a significant positive impact – on the country and in coal

mining communities. We do this through our creation of substantial

employment, tax and royalty revenue, earnings of foreign

currency, and the provision of many essential community services.

We also contribute significantly through the Sisonke Employee

Empowerment Scheme and the Nkulo Community Partnership

Trust.

Full details related to our ESG approach and performance are included in the Environmental, Social and Governance Report available at www.thungela.com.

1

IEA (2022) | World Energy Outlook

Ethical behaviour

Minimise impact on

the environment and

operate to achieve

sustainable outcomes

Environmental

stewardship

Shared value

for our

stakeholders

Responsible decision-

making and leadership

Efficient use of resources

Climate risk management

Land stewardship and biodiversity

Safety, health and wellbeing

Inclusion and empowerment

Community partnerships

Integrated risk management

Governance and disclosure

SUPPORTED BY

•  Robust management

systems

•  Open and engaged

leadership

•  Values and code of

conduct

•  Effective and

transparent

stakeholder

engagement

We empower our

workforce and work

with our stakeholders

to deliver shared

value safely

We embrace strong

corporate governance

principles to manage risk

and build trust

48 Integrated Annual Report for the year ended 31 December 2022

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01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

Our success depends on sound relationships founded on mutual

trust and respect.

Engagement, consultation, and communication with a large

number of stakeholders takes place through both formal and

informal channels, and across a variety of platforms. These are

tailored according to the purpose of the engagement and each

stakeholder group’s particular interests in our business.

Our key stakeholders – together with the issues that are important

to them – were determined and defined during a stakeholder

mapping exercise.

This is reviewed and updated annually and incorporates

material matters and opportunities, the frequency and types of

engagement used, and the status of our relationship with each

stakeholder group. The table below details our key stakeholders,

their interests, and our mode of engagement with each category.

## STAKEHOLDER

## ENGAGEMENT

Stakeholder Objectives Engagement channel

Key interests, concerns or

expectations in 2022

Our people

●

Union engagement on

employment-related issues

●

Two-way communication with

employees

●

Employment equity targets

– Department of Labour,

Department of Mineral

Resources and Energy, and the

Department of Trade, Industry

and Competition

●

Employee and contractor

wellbeing

●

Change management

●

Central National Union of

Mineworkers (NUM), National

Union of Metalworkers of South Africa

(NUMSA) and management forums

●

Various site forum meetings

(forexample: employment equity, skills

development, and women in mining

forums)

●

Town hall and virtual engagements

●

ICAS employee assistance programme

●

Bokomoso financial wellness

programme

●

‘BeWell’ committees

●

Supervisory toolbox talks (supervisor

and employee engagements)

●

Employee engagement briefs

●

Skills development

●

Opportunities for women

●

Strategy for people with disabilities

●

Inclusion and diversity

●

Retrenchment and downscaling matters

●

Employee health and safety

●

Labour relations

●

Physical and mental health programmes

●

Wage negotiations

●

Transformation deliverables

●

Financial education

●

Thungela code of conduct

Labour unions

●

Adherence to relevant legislation

●

Consistent application of and

adherence to company and site

policies

●

NUM, NUMSA and management

forums

●

Various site forums

●

Thungela website

●

Employee health and safety

●

Labour relations

●

Relationship-building

●

Wage negotiations

●

Transformation deliverables

●

Conditions of employment

●

Sisonke Employee Empowerment Scheme

Communities

●

Proactive, transparent and

inclusive engagement

●

Ensure communities are kept

abreast of employment,

procurement, and socio-

economic development

opportunities; are updated about

changes in the organisation;

have knowledge of our

grievance mechanisms and

procedures; and are informed of

our legal compliance status

●

Future forums

●

Community engagement forums

●

Radio and social media platforms

●

Thungela website

●

Procurement and employment

opportunities

●

Socio-economic development

●

Social and Labour Plans (SLPs)

●

Management of grievances

●

Changes in the organisation

●

Nkulo Community Partnership Trust

●

Direct or indirect impacts affecting

communities (environmental, mine

planning, projects)

●

Key projects, for example, mine life

extension (lifex) projects that may impact

communities

●

Land claims and labour tenant issues

●

Mine closure plans

●

Access to business opportunities

49Integrated Annual Report for the year ended 31 December 2022

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

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Stakeholder Objectives Engagement channel

Key interests, concerns or

expectations in 2022

Shareholders,

investment

community

●

Inform investors of developments

that may materially affect their

investment decisions

●

Ensure the full, equal and timeous

disclosure of price-sensitive

information to shareholders

●

Johannesburg Stock Exchange News

Service (SENS) announcements

●

London Stock Exchange Regulatory

News Service (RNS) announcements

●

Results presentations

●

Annual reports

●

Investor meetings (buy-side)

●

Analyst engagements (sell-side)

●

Annual general meeting

●

Dividends

●

Share buyback approval

●

Capital allocation policy

●

Elders production replacement project

●

Progress on mergers and acquisitions

●

TFR performance

●

Price risk management

●

Thermal coal prices

●

Climate change and related disclosures

●

Pathway to net zero by 2050

Media

●

Inform stakeholders of new

developments, activities and

performance

●

Build brand awareness

●

Inform and educate the public on

topics and issues relating to our

business

●

Promote factual and accurate

news stories that enhance

Thungela’s reputation

●

Results presentations

●

Media releases

●

Holding statements

●

Interviews

●

Website – newsroom

●

Advertorials

●

Annual reports

●

Media events and site visits

●

Regular media engagement

●

Social media

●

Thungela performance

●

Thungela strategy

●

TFR performance

●

ESG

●

Mining rights and regulatory issues

●

Markets and products

●

Industry trends

●

Corporate citizenship and community

involvement

●

Transformation

●

Labour relations

●

Kromdraai incident

●

Illegal mining

Government and

regulators

●

Regulatory compliance

●

Obtain guidance to ensure

compliance

●

Ensure the relevant government

departments and regulators

are informed of organisational

changes

●

Contribute to the country’s

success

●

Various engagement forums

●

Site visits

●

Compliance with safety and health

regulations

●

Compliance with environmental

regulations

●

Compliance with labour-related

regulations

●

Compliance with the Mineral and

Petroleum Resources Development

Act (MPRDA) and Broad Based Black

Economic Empowerment (B-BBEE)

Regulations

●

Overlapping mining right applications

orconcerns

●

Delays in approval of mining right

applications, and competing applications

granted

Local government

●

Advance partnerships on socio-

economic development (SED)

programmes

●

Contribute to the capacitation of

host municipalities for improved

service delivery

●

Communication of organisational

changes

●

Report on relevant environmental

regulations

●

Municipal local economic

development and integrated

development planning forums (Steve

Tshwete, eMalahleni and Govan

Mbeki local municipalities)

●

Partnership on SED programmes (for

example, SLP projects and municipal

capacity-building)

●

Community issues associated with our

mines

●

Grievances raised through municipal

channels

●

The Nkulo Community Partnership Trust

●

Compliance with annual air quality

management reports (National

Atmospheric Emissions Inventory System)

●

Compliance with regulations on fire

prevention and flammable liquids and

substances

●

Compliance with municipal by-laws

related to waste, noise, blasting and

wastewater management

●

Public participation on key projects

related to our mines

●

Provision of water to the local municipality

50 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

Stakeholder Objectives Engagement channel

Key interests, concerns or

expectations in 2022

Non-

governmental

organisations

(NGOs) and civil

society

●

Partner with development and

social NGOs and civil society

in addressing social and

environmental matters

●

Meetings

●

Other forums

●

Resolving grievances related to mining

impacts

●

Responsible energy transition

●

Adequacy of closure provisions

●

Climate change and the role of coal

Industry

associations,

academia and

other bodies

●

Engage and contribute to

government policy and

regulatory development

●

Enable technical advancement

and collaboration

●

Policy advocacy

●

Collaboration with other mining

companies on common issues

●

Various subject-specific forums

●

Technical advancement and collaboration

●

NEMA Financial Provisioning Regulations

●

Climate Change Bill

●

Kromdraai incident

●

Skills and market development

●

Water management and collaboration

by mining houses to deal with catchment

water impacts

●

Development of carbon capture and

storage projects and skills in South Africa

●

Global energy security

●

Technology agnostic approach to the

transition to a low-carbon economy

Business partners

and customers

●

Customers – to ensure sustained

and predictable business

continuity and ultimately the

delivery of a saleable, desired

product

●

TFR – to ensure the delivery of

logistical services

●

RBCT – to ensure an open and

efficient export channel and the

effective loading of our products

●

Various engagements

●

Board meetings

●

Operational committee meetings

●

Technical forums

●

Market development and Thungela

response

●

Security of supply

●

Business continuity

●

Supplier relationship management

●

Logistics

Suppliers

●

Enhance supplier relationships

●

Cost-efficiency and operational

excellence

●

Build a green supply chain

●

Optimise procurement spend

with host community suppliers

●

Build capacity for small, medium

and micro enterprises (SMME)

●

Build relationships with local

business forums

●

Supplier roadshows

●

Individual supplier engagements

●

Digital platforms for supplier

engagements

●

Advertise opportunities through existing

market channels

●

Enterprise and supplier development

programmes

●

Collaboration and engagement with

original equipment manufacturers on

the provision of technical support for

SMMEs

●

Social performance meetings with

business forums and future forums

●

Building an agile, lean and effective

supply chain function through optimisation,

automation and digitalisation, for

example, digitalising supplier vendor

applications and opportunities

●

Reviewing the payment process to

enhance the supplier experience

●

Creating a circular supply chain and

ensuring responsible sourcing

●

Creating sustainable host community

businesses through ESD and job creation

targets

●

Communicating our approach to inclusive

procurement, initiatives, progress and

successes to host communities

51Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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## BUSINESS RISKS AND

## OPPORTUNITIES

## MANAGEMENT

They regularly evaluate the integrated risk management process

and lines of defence to make sure that risk is recognised,

managed, mitigated, and reported in a timely and appropriate

manner. Effective risk management provides sustainable value

creation and predictable operational performance as part of

excellent management practice.

During 2022 the Group‘s internal audit function facilitated

a fraud risk assessment which indicated a well-controlled

fraud risk prevention environment. Key controls include well-

defined segregation of duties, management oversight, and key

reconciliation procedures. A risk assessment of the Code of

Conduct was also conducted. Key controls include induction

training, and ongoing awareness campaigns with regards to

expected employee behaviour while utilising social media.

Through understanding, prioritising and managing risk, we

safeguard our people, assets, legal position, values, reputation

and the environment, and identify related opportunities to best

serve the long-term interests of all our stakeholders.

RISK MANAGEMENT

Thungela is exposed to a range of risks from both internal and

external sources. At Thungela, risk assessment entails a dynamic

and iterative process of identifying and evaluating risks. This

includes assessing the likelihood and consequence of an adverse

event on the Group's objectives, relative to the specified risk

tolerances.

A key duty of the board and the Group executive committee is

risk management. A comprehensive integrated risk management

process, which involves the systematic application of management

policies, procedures, and practices to the tasks of communicating,

consulting, establishing the context, and identifying, analysing,

evaluating, treating, monitoring, and reviewing risk as an integral

part ofbusiness processes, is also approved by theboard.

The risk and sustainability committee and the audit committee are

responsible for monitoring and assisting in this process.

RISK ASSESSMENT PROCESS

The risk assessment process is an iterative process and is undertaken on a consistent basis, as illustrated below:

COMMUNICATION AND CONSULTATION

Establish the context

MONITORING AND REVIEW

Group/operation/project objectives, internal and external environment and dependencies

Risk identification

Identify the risks to pre-defined Group/operation/project objectives

Risk analysis

Identify root causes Identify contributing factors

Identify potential

consequences

Risk evaluation

Determine existing controls

Determine likelihood

Determine

consequence

Calculate rating

Determine risk

appetite status

Risk treatment

Actions required to reduce the risk rating to an acceptable level

52 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

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RISK APPETITE AND TOLERANCE

Risk appetite and tolerance are core considerations in our

integrated risk management process. It considers the relationship

between potential consequences of a risk materialising and

the actual condition of the controls or management actions that

mitigate those consequences.

Risks exceeding appetite limits threaten the achievement of

objectives and may require a change to our strategy. Risks that

are approaching the limit of the risk appetite require specific

management actions to ensure the risk is managed within defined

appetite limits.

Our risk matrix combines the assessment of the consequences of

risks and the status of management actions and/or the internal

control environment that prevents or mitigates that risk. Risks that

have significant consequences will be within the risk appetite if

adequate controls or management actions are in place. Risks

exceed the risk appetite if a significant consequence is not

sufficiently controlled, or management actions have not yet been

implemented to an extent that the risks can be described as

effectively managed.

RISK FRAMEWORK

Thungela's integrated risk management includes the following key

principles:

● The board considers risk in a way that supports the

organisation in setting and achieving its strategic objectives.

● Risk is owned by the Group executive committee.

● Risk management is integrated across the organisation and

embedded in critical business processes to ensure it supports

day-to-day activities and executive decision-making at an

operational and corporate level.

RISK RATING

The purpose of a risk rating is to enable risks to be prioritised

and measured over time and is a combination of consequence

(considers what could happen if the risk event occurs) and

likelihood (considers the probability of the risk event occurring).

This is measured in terms of a 5 x 5 risk matrix.

TOP 10 KEY RESIDUAL RISKS

The 5 x 5 risk matrix below shows the residual rating for our top 10 key risks. A residual risk refers to the risk remaining after all identified

mitigation measures have been applied.

Residual risk rating Consequence type

Likelihood Insignificant Minor Moderate High Major

Almost certain

1

Likely 6 2,3,4,5,10

Possible

Unlikely

7,8 ,9

Rare

Risk level

High

A high risk exists that management’s objectives may not be achieved. Appropriate mitigation strategy to be

devised immediately.

Significant

A significant risk exists that management’s objectives may not be achieved. Appropriate mitigation strategy to be

devised as soon as possible.

Medium

A moderate risk exists that management’s objectives may not be achieved. Appropriate mitigation strategy to be

devised as part of the normal management process.

Low

A low risk exists that management’s objectives may not be achieved. Monitor risk, no further mitigation required.

Risk ranking table

1

Coal transport networks

6

Strata and geotechnical failure

2

Employee safety and health

7

Company sustainability

3

Commodity price and foreign exchange fluctuations

8

Critical business systems

4

Electricity supply

9

Legislative compliance

5

Community relations

10

Stakeholder activism

53

Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

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The following table lists the top 10 key residual risks that have been identified as having a potential impact on our ability to achieve our

strategic objectives:

Key risk Mitigation

Change

from 2021

Link to

strategic pillar

1 Coal transport networks

Frequent and unscheduled

disruptions by TFR could

have a material effect on our

export ability and ultimately

profitability.

● We continue to engage TFR at all levels to seek

sustainable solutions.

● We have implemented several actions to mitigate

the operational and financial impacts on our

business, including the prioritisation of export equity

volumes and optimisation of the export equity sales

mix.

● We have commenced with the evaluation of

alternative logistic arrangements to move additional

equity coal to the market.

Create future

diversification

options

2 Employee safety and

health

There are inherent safety and

health risks associated with

mining activities.

● We continuously review and upgrade our safety

systems, culture and programmes.

● We implement an ongoing roll-out and embedding

of a safety strategy founded on three core elements:

back to basics, work management and culture

change.

Drive our ESG

aspirations

3 Commodity price and

foreign exchange

fluctuations

Benchmark coal price

and currency exchange

rate volatility impacts our

profitability and cash

generation. A prolonged

weakness in Benchmark coal

prices could undermine the

sustainability of our business.

● We are positioning our portfolio on the lower half of

the global seaborne cost curve to improve margins

and reduce cash requirements during periods of

lower prices.

● A price risk management steering committee is

constituted specifically to monitor decisions and

expenditure on swaps, related financial instruments,

and fixed price transactions.

● A three-year marketing offtake agreement is still

in place with Anglo American Marketing Limited

(AAML), terminating in June 2024.

Optimise

capital

allocation

4 Electricity supply

Significant electricity supply

reductions by Eskom have

continued throughout 2022.

Prolonged electricity outages

could result in significant

business interruptions, and

impact on employee safety

and health.

● We have clearly defined roles and responsibilities

with regards to power management. We continue

to assess the security of electricity supply, as part of

the Energy Intensive Users Group of South Africa.

● From a safety perspective, an uninterruptible power

supply (UPS), and generators, are utilised in our

underground mines for environmental monitoring

purposes. In the event of a power outage, smoke

particles, carbon monoxide and methane will

continue to be monitored. Additionally, safety

evacuation drills are performed regularly.

#### New

Maximise the

full potential

of our existing

assets



Increased

Unchanged  Decreased

54 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

Key risk Mitigation

Change

from 2021

Link to

strategic pillar

5 Community relations

Demands and expectations

with regard to employment

and procurement from various

host communities.

● We have social commitments through the SLP

and the corporate social investment programmes.

We conduct regular engagements with host

communities. The Nkulo Community Partnership

Trust, implemented during 2021, ensures that our

host communities benefit from our financial success.

Host community procurement spend is aimed at

supporting economic activity and growth around

our operations.



Drive our ESG

aspirations

6 Strata and geotechnical

failure

Fall of ground in our

underground mines and slope

failure in our opencast mines

could result in significant

business interruptions,

property damage and the

occurrence of safety related

incidents.

● Underground operations – ground support is

designed by a competent person and installed using

fit-for-purpose equipment and according to mine

standards and/or procedures.

● Opencast operations – drilling, blasting and

excavation are completed according to the slope

design to mitigate the rock fall and slope stability

risks.



Drive our ESG

aspirations

7 Company sustainability

The impact of some of our

operations reaching their end

of life.

● We have several accretive production replacement

and life extension projects, including Elders and the

Zibulo North Shaft.



All

strategic

pillars

8 Critical business systems

The information management

(IM) transitional service

agreements with Anglo

American will end over the

course of the next 18months,

potentially bringing

challenges relating to the

continuity of critical systems.

The global increase in

cyberattacks continues and

represents a threat to our

business.

● We are currently working on an application

separation plan from the Anglo American IM

environment.

● Critical systems are continually assessed to protect

our information and safeguard infrastructure critical

to our sustainability.



Maximise the

full potential

of our existing

assets

55

Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

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Key risk Mitigation

Change

from 2021

Link to

strategic pillar

9 Legislative compliance

Our licence to operate and

our ability to sustain the

business could be influenced

by the Group’s level of

legislative compliance.

● MPRDA – we perform annual performance

assessments against environmental management

programmes.

● Water – we perform quarterly reviews, surface and

groundwater monitoring, and long-term hydro-

geological and geo-chemical modelling for all

mines to address volumes and quality.

● NEMA – we engage continuously with the

Department of Mineral Resources and Energy

(DMRE) and other regulators to ensure compliance

with the material aspects of this legislation.



Maximise the

full potential

of our existing

assets

10 Stakeholder activism

Future shareholder and

industry expectations in

relation to ESG issues could

impact the future profitability

of the Group.

● We have developed a fit-for-purpose ESG

framework. Our CEO continues to lead

engagements with stakeholders on significant ESG

matters.

Drive our ESG

aspirations

EMERGING RISKS

The below residual risks are considered to be emerging risks, and may move into the key risks as identified above in the next financial

year:

● Global political instability

● Inflationary pressures

EVENT RISKS

These are very high severity, low likelihood events, which are distinctive to a mining business and could result in multiple fatalities or

injuries, an unplanned fundamental change to our business or the way we operate and have significant financial consequences. Event

risks are not rated in the 5 x 5 risk matrix as they are always treated with the highest priority.

Event risk Mitigation

Underground fires, gas and explosion

An underground gas-related incident, an underground

explosion or exposure to irrespirable atmosphere could result

in potential fatalities, injuries, significant business interruption

and property damage.

● We ensure compliance with mandatory critical control

processes, including, but not limited to, monitoring and

management of ventilation systems and stone dusting controls.

● We have emergency preparedness and response procedures.

● We undertake event risk reviews by competent persons.

Shaft conveyance and shaft integrity failures

Mechanical failure of the shaft conveyance or the structural

integrity failure of the shaft could result in potential fatalities,

injuries, significant business interruption and property damage.

● We maintain compliance with shaft management standards,

regulations and guidelines.

● We undertake shaft management tests including live condition

monitoring of mechanical components and daily inspection by

competent persons.

● We undertake event risk reviews by competent persons.



Increased

Unchanged  Decreased

56 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

57

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

Thungela IAR 2022 – Proof 7 – 25 April 2023

58

THUNGELA ONCE AGAIN DELIVERED

EXCEPTIONAL RESULTS WHILE EXECUTING OUR

STRATEGIC PRIORITIES ACROSS SEVERAL FRONTS.

5858

![]()

Thungela IAR 2022 – Proof 7 – 25 April 2023

Thungela IAR 2022 – Proof 7 – 25 April 2023

04

#### OURPERFORMANCE

595959

![]()

## REVIEW OF FINANCIAL

## PERFORMANCE

#### For the year ended 31December 2022

The Group generated adjusted operating free cash flow

∆

of

R18.1billion for the year after paying income taxes and royalties

to SARS of R8.5billion.

At 31December 2022 the Group had a

net cash

∆

balance of R14.7 billion.

Our capital expenditure for the year was R1.9billion, which

comprises sustaining capital of R1.7billion and expansionary

capital of R235 million relating to the Elders production

replacement project and feasibility study costs for the Zibulo

North Shaft life extension project. We expect the Zibulo North

Shaft project to be presented to the board for consideration

in2023.

We have contributed R438 million into the green fund this year,

which includes a discretionary contribution of R200million to

further improve our environmental liability coverage

∆

in line with

our commitment to driving our ESG aspirations.

In light of the continued pressure faced by coal companies in

accessing appropriate insurance cover, we have implemented a

self-insurance structure which will see the Group gradually reduce

its reliance on the traditional insurance market. In 2022 we made

an initial contribution of R1.2 billion to this structure.

In November 2022 we announced the acquisition of the

remaining 27% shareholding in AAIC from Inyosi in exchange

for 4,180,777 shares issued by Thungela. This transaction is

expected to be earnings and cash flow accretive and will allow

us to benefit from the full economics of the most cash generative

assets in our portfolio.

In February 2023 we secured R3.2 billion in committed facilities

with two South African banks with which we have had a long-

standing relationship. These facilities were arranged to further

strengthen our balance sheet as we continue to migrate our

capital structure in a manner that would enhance returns to

shareholders over time. In addition this seeks to provide sufficient

liquidity to complete our capital projects and to navigate

uncertainty across a number of external factors.

Net profit

for the year

#### R18.2 BILLION

(2021: R6.9billion)

Headline earnings

per share

R130.82

(2021: R66.57)

Adjusted

EBITDA

∆



#### R29.5 BILLION

(2021: R10.0billion)

Net cash

∆

#### R14.7 BILLION

(2021: R8.7billion)

FOB cost

∆

#### R1,079/tonne

(2021: R830/tonne)

FOB cost

excluding royalties

∆

#### R929/tonne

(2021: R803/tonne)

Total

dividend of

#### R13.8 BILLION

to shareholders of Thungela

Total

dividend per share

R100

76% of adjusted operating

free cash flow

∆

We are pleased to announce an outstanding set of results for

the year ended 31December 2022. These results were driven

by supportive market conditions but tempered by continued rail

infrastructure constraints.

The further deterioration of the rail performance in 2022 severely

constrained export sales, and the resultant impact on already high

on-mine stockpiles led to further production curtailments across the

business. The poor rail performance seen throughout the year was

exacerbated by the impact of a strike by Transnet employees and

a significant derailment in the fourth quarter.

We implemented a number of actions to mitigate the impact of

the poor TFR performance on our business, including optimising

our allocated rail capacity to the extent that trains became

available by continuing to rail higher-grade products. We were

also able to create further rail loading optionality and de-risk

train cancellations by trucking coal between our operations and

to three additional third-party sidings. We successfully trialled

the road haulage of coal from our operations down to Richards

Bay, and we continue to evaluate trucking as an alternative to rail

transport.

The Group recorded export saleable production of 13.1Mt at an

FOB cost per export tonne

∆

of R1,079 (R929 per tonne excluding

royalties). The Group realised 12.2Mt of export equity sales and

generated adjusted EBITDA

∆

of R29.5 billion, mostly driven by

strong realised export prices.

Profit of R18.2 billion for the year includes the fair value loss of

R347 million on the derivative asset relating to the capital support

agreement, as well as fair value losses of R3.2billion on the

forward coal swap transactions undertaken by the Group. Profit

was further impacted by a non-cash charge of R1.1 billion related

to an increase in the environmental provisions through the annual

assessment performed.

The Group recognised impairment losses of R656 million at

Isibonelo as a result of increased costs due to ongoing production

and equipment related challenges, which were exacerbated

during the year by higher than historical average rainfall in the

region, impacting the recoverable amount of the operation.

60

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

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●

61

The total dividend declared for 2022 amounts to R100 per

share, or R13.8 billion in total. This represents 76% of the

adjusted operating free cash flow

∆

#### for the year.

We also announced the acquisition of a controlling interest in the

Ensham Coal Mine and related assets in Queensland Australia.

The transaction delivers on our strategy to pursue geographic

diversification in a commodity we understand well and in

which we can leverage our core skills. The transaction meets

our investment evaluation criteria of responsible stewardship,

upgrading our portfolio and maximising shareholder value.

Geographic diversification is a step towards de-risking our

underlying business and bolstering our resilience, recognising the

ongoing infrastructure challenges in South Africa.

The purchase price for the acquisition is AUD340 million, which

consists of AUD267 million to be funded by Thungela, and

AUD73 million to be funded by Audley Capital and Mayfair,

our co-investors. Thungela will provide loan financing of

AUD68million to our co-investors to fund their investment, which is

repayable through earnings generated by the Ensham Coal Mine.

The acquisition is subject to the fulfilment of a number of conditions

precedent which we expect to be met by mid-2023.

The acquisition, including the loan to our co-investors, will be

funded from the net cash

∆

on hand at 31December 2022.

Given our strong results we are pleased to declare a final

ordinary cash dividend of R40 per share. The final dividend

represents a payment to Thungela shareholders of

R5.6billion, or 61% of adjusted operating free cash flow

∆

generated in the second half of 2022. Combined with the

2022 interim dividend of R60 per share, this amounts to

a total dividend declared for 2022 of R100 per share.

This brings the total payment to Thungela shareholders

to R13.8 billion, representing 76% of adjusted operating

free cash flow

∆

for the year.

The Sisonke Employee Empowerment Scheme and

the Nkulo Community Partnership Trust will each

receive a further contribution of R198million, to add

to the R500 million contributed in August 2022. The

trust deed of the Sisonke Employee Empowerment

Scheme was amended to allow for eligible

employees to receive their allocations in the year

granted, and we accordingly paid R380 million to

eligible employees in December 2022.

#### Deon Smith

#### Chief financial officer

We remain resolute to deliver on our purpose to responsibly

create value together for a shared future and we believe

that the path we are taking will create value for our people,

our communities and our

shareholders.

61Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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FINANCIAL OVERVIEW

Financial and operational results of the Group

Rand million (unless otherwise stated) 2022 2021

Revenue 50,753 26,282

Operating costs (22,420) (17, 3 2 2 )

Profit for the reporting period 18,205 6,938

Attributable to non-controlling interests 1,217 509

Attributable to the equity shareholders of the Group 16,988 6,429

Earnings per share (cents/share) 12,708 6,108

Headline earnings per share (cents/share) 13,082 6,657

WANOS (number of shares) 133,684,828 105,260,339

Dividends (Rand/share) 100 18

APMs

∆

Adjusted EBITDA 29,530 9,978

Adjusted EBITDA margin (%) 58 38

FOB cost per export tonne (Rand/tonne) 1,079 830

FOB cost per export tonne excluding royalties (Rand/tonne) 929 803

Adjusted operating free cash flow 18,096 3,923

Net cash 14,720 8,663

Capital expenditure (1,923) (2,323)

Environmental liability coverage (%) 54 52

Thermal coal price and exchange rate

Benchmark coal price (US$/tonne) 270.87 12 4 .11

Average realised export price (US$/tonne) 229.21 103.82

Average realised export price (Rand/tonne) 3,752 1,535

Realised price as a % of Benchmark coal price 85 84

ZAR:US$ average exchange rate 16.37 14.79

kt

Run of mine 25,242 2 7, 4 5 8

Export saleable production 13,062 14,511

Domestic saleable production 6,915 10,064

Total saleable production 19,977 24,575

Export equity sales 12,172 13,893

Third-party export sales 21 967

Domestic sales 6,723 10,185

Total sales volumes 18,916 25,045

The table above reflects the financial results as disclosed in the consolidated financial statements for the year ended

31December2022, including the APMs as included in Annexure 1 of the Annual Financial Statements for the year

ended31December2022.

The internal restructure was completed on 31 March 2021 and accordingly only had an impact on the financial and operational

information of the Group in the comparative period. Refer to note 2A in the Annual Financial Statements for the year ended

31 December 2022 for detail related to the internal restructure.

62

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

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OPERATIONAL PERFORMANCE

ROM decreased by 8.1% to 25,242kt (2021: 27,458kt) mainly

due to the curtailment of export production in response to the

continued poor TFR performance. Export saleable production

volumes decreased by 10% to 13,062kt (2021: 14,511kt) largely

as a result of the decrease in ROM production.

Our operations continued to be impacted by the poor and

inconsistent rail performance which deteriorated materially in

the second half of 2022, placing even greater strain on on-mine

stockpiles which were already near capacity. We accordingly

continued to actively curtail production at some of our operations

during 2022.

Export equity sales declined by 12% to 12,172kt

(2021:13,893kt). The decrease in export sales is as a direct result

of the poor TFR performance. In 2022, only 21kt of third-party

coal was railed, compared to the 967kt in 2021 as export equity

volumes were prioritised.

Domestic saleable production decreased by 31% to 6,915kt

(2021: 10,064kt) mainly as demand from domestic customers

reduced. Isibonelo continued to experience operational

challenges in 2022 as a result of increased rainfall year-on-year

and equipment related challenges. Domestic sales decreased by

34% to 6,723kt (2021: 10,185kt).

REVENUE

Revenue increased by 93% to R50.8 billion (2021: R26.3billion)

mainly as a result of the significant increase in the Benchmark coal

price and the impact of a weaker US dollar exchange rate. The

Group achieved an average realised export price of R3,752 per

tonne in 2022 compared to R1,535 per tonne in the comparative

period.

The realised export price as a percentage of the Benchmark coal

price averaged 85% for 2022, an improvement from the 84% in

2021. The narrower discount of 15% is mainly due to premiums

achieved on certain products as well as continued optimisation of

the Group’s export equity sales mix. The increase in revenue was

further supported by the impact of the weaker average US dollar

exchange rate of R16.37 (2021: R14.79).

OPERATING COSTS

Operating costs increased by 29% to R22.4 billion from

R17.3billion in 2021

.

Royalties increased year on year by R1.6 billion on the back of the

higher realised export prices achieved.

Total operating costs increased by R1.6 billion due to inflation and

a significant rise in costs across the energy complex. The purchase

price on our third-party commodity purchases fluctuates in line

with Benchmark coal prices and accordingly increased.

As a result of the continued poor TFR performance and the

continued curtailment of production, selling expenses reduced

year on year, however, we continue to incur fixed costs as well as

incremental stockpile management costs at all our operations.

The Sisonke Employee Empowerment Scheme and the Nkulo

Community Partnership Trust benefited from the strong financial

performance of the Group and the expense recognised related to

contributions made to the trusts amounted to R766 million. These

contributions will continue to positively impact our employees and

communities.

Operating costs were also impacted by a non-cash charge of

R1.1 billion related to an increase in the environmental provisions

through the annual assessment performed, compared to

R306million in 2021

.

2021

17.3

1.6

1.6

0.6

0.6

0.3

0.6

0.8

0.8

22.4

Royalties Forex

gain

Inflation Selling

expenses

Inventory

build

TrustsThird-party

commodity

purchases

Environmental

provisions

and non-cash

2022

Rbn

63Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

FOB COST PER EXPORT TONNE

∆

The FOB cost per tonne

∆

has increased to R1,079 per tonne from

R830 per tonne in the comparative period (R812 per tonne on

a pro forma basis), mainly due to the impact of lower volumes,

higher royalties and inflation on our operating costs. The lower

saleable volumes resulted from the poor TFR rail performance.

ADJUSTED EBITDA

∆

The Group generated adjusted EBITDA

∆

of R29.5billion for

the year ended 31December 2022 (2021: R10.0 billion). The

material increase in earnings was driven by higher realised export

prices and the impact of the weaker US dollar exchange rate.

This was partially offset by,

inter alia

, the lower export sales

volumes, the impact of higher inflation on operating costs and the

non-cash charge relating to the environmental provisions.

The adjusted EBITDA margin

∆

improved to 58%, compared to

38% in 2021.

The positive impact on unit costs of the increased domestic

revenue is mainly as a result of domestic sales that are linked to

the Benchmark coal price. This impact is expected to moderate

asBenchmark coal prices soften.

The FOB cost per export tonne excluding royalties

∆

of R929 per

tonne, was 16% higher than the comparative period of R803 per

tonne.

Pro forma

2021

Internal

restructure

1

812

18

830

105

108

110

105

31

1,079

2021 Royalties InflationTFR

performance

Domestic

revenue

Other 2022

R/tonne

2021 Price and

foreign

exchange

10.0

25.2

1.6

1.6

0.6

0.4

0.8

0.7

29.5

Inflation Sales

volume

Inventory

build

Costs Trusts Environmental

provisions

2022

Rbn

1

Internal restructure of the Thungela Group before demerger, completed 31 March 2021

64 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

PROFIT FOR THE REPORTING PERIOD

Profit for the reporting period was R18.2 billion (2021: R6.9billion),

as the Benchmark coal price reached record highs in March 2022

and remained elevated for most of the year, although it started to

soften in the fourth quarter.

Profit attributable to the equity shareholders of the Group is

R17.0billion (2021: R6.4 billion), while R1.2 billion (2021:

R509million) is attributable to non-controlling interests in AAIC

and Butsanani Energy. Following the acquisition of the remaining

27% interest in AAIC in November 2022, the proportion of profit

attributable to the equity shareholders of the Group is expected

toincrease.

Ahead of the demerger, a capital support agreement was

put in place with Anglo American. This agreement ended on

31December 2022, and did not result in any cash inflow or

outflow for the Group for the year. A fair value loss of R347 million

(2021: R569 million) was recognised related to this agreement.

Inline with the principle of securing a firm Benchmark coal

price, the board resolved to take advantage of the favourable

Benchmark coal price environment. The board accordingly

approved a price risk management programme enabling the

Group to enter into structured forward coal swap transactions

from November 2021.

During 2022, the Group settled forward coal swap transactions

of 1,515kt, representing 12% of our export saleable production,

ata weighted average price of USD153 per tonne. The cash cost

to settle these transactions for the year ended 31December 2022

was R3.0 billion.

The fair value loss of R3.2 billion on these transactions was driven

by the rapid increase in the Benchmark coal price to record levels

from the onset of the conflict in Ukraine.

We have achieved a high net margin on these volumes and the

Group continues to benefit from higher realised export prices on

the remainder of our sales volumes.

The price risk management programme remains in place,

within the mandate of the board, which is reassessed as market

conditions change. At 31December 2022, we have open

positions of 181kt at a weighted average price of USD231 per

tonne related to committed sales in the first half of 2023. The

mark-to-market gain on these positions as at 31December 2022

of R124million is included in the total fair value losses recognised

for the year.

Given the sustained production and cost challenges faced at

Isibonelo, impairment losses of R656million were recognised

based on the reduction in the recoverable amount of this

operation.

Thungela is exposed to volatility in the US dollar exchange rate as

a result of our export sales to AAML. The Group entered into FECs

to manage our exposure to the volatility in the US dollar exchange

rate throughout the year. The loss recognised on the FECs of

R553million is offset by gains recognised on our closing cash

balance in US dollars of R377 million, as well as gains recognised

on our US dollar denominated trade receivables of R835 million,

included in operating costs.

The Group incurred an income tax expense of R5.9 billion for

2022 which results in an effective tax rate of 25%. Due to the

sustained increase in the Benchmark coal price and resultant

higher taxable income, we have utilised all available tax losses

and unredeemed capital deductions by 31December 2022. The

Group has recognised the full impact of previously unrecognised

deferred tax assets on this basis which has impacted the effective

tax rate for theyear.

EARNINGS PER SHARE AND HEADLINE

EARNINGS PER SHARE

Thungela generated earnings attributable to the equity

shareholders of the Group of R17.0 billion, equivalent to R127.08

per share, for the period ended 31December 2022. In the

comparative period we generated earnings attributable to the

equity shareholders of the Group of R6.4billion (R61.08 per

share).

Thungela generated headline earnings attributable to the

equity shareholders of the Group of R17.5billion, equivalent to

R130.82 per share, for the period ended 31December 2022.

For the comparative period, we generated headline earnings of

R7.0billion (R66.57 per share).

The per share figures above are based on a WANOS of

133,684,828 (2021: 105,260,339).

65Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

ADJUSTED OPERATING FREE CASH FLOW

∆

AND

CASH AND CASH EQUIVALENTS

The Group generated adjusted operating free cash flow

∆

of

R18.1billion for the year ended 31December 2022 (2021:

R3.9billion).

The difference between the adjusted EBITDA

∆

generated for

the year and the adjusted operating free cash flow

∆

is mainly

attributable to income tax payments to SARS of R6.6billion,

settlements of the derivatives related to the forward coal swap

transactions and FECs of R3.6 billion, and sustaining capex of

R1.7 billion.

CAPITAL EXPENDITURE

The Group incurred capital expenditure of R1.9 billion for the

period (2021: R2.3 billion) comprising both sustaining capex and

expansionary capex.

Stay-in-business capex of R1.2 billion was spent mainly on

machinery overhauls, infrastructure upgrades and mining fleet

upgrades or replacements.

The Group ended the period with cash and cash equivalents of

R15.3 billion, which is reduced by cash held in the Sisonke Trust

and the Nkulo Trust of R519 million and loans and borrowings of

R60 million, resulting in net cash

∆

of R14.7billion.

Adjusted

EBITDA

Δ

Income

taxes

29.5

6.6

3.6

1.7

0.6

1.1

18.1

Derivative

settlements

Sustaining

capex

Working

capital build

Environmental

and other

provisions

Adjusted

operating free

cash flow

Δ

Rbn

Stripping and development capex of R455 million was spent on

activities to access LOM reserves.

Expansionary capex of R235 million includes R205 million spent

on the Elders production replacement project and a further

R30millionon feasibility study costs for the Zibulo North Shaft

project.

66 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

NET WORKING CAPITAL

Net working capital at 31December 2022 was R4.1billion

(2021: R3.4 billion), reflecting an increase of R724million.

The working capital build up is mainly driven by a further inventory

build of R632 million due to the poor TFR rail performance. The

increase in trade receivables was driven by higher realised export

prices whereas payables increased marginally which reflects cost

increases as a result of inflationary movements.

2021 Inventory Receivables Payables Non-cash 2022

3.4

0.6

0.4

0.4

0.1

4.1

Rbn

ENVIRONMENTAL PROVISIONS

The environmental provisions are comprehensively assessed on

an annual basis and determined with assistance from specialist

independent environmental consultants. At 31December 2022

the environmental provisions recognised amount to R7.6 billion

(2021: R6.8 billion). The increase in the environmental provisions

is based on expected increases in costs to be incurred in future

based on global and local inflationary pressures, as well as the

impact of illegal mining on our sites which had previously been

rehabilitated.

The Group has investments ringfenced in the environmental

rehabilitation trusts and the green fund of R4.1 billion (2021:

R3.5billion). Environmental liability coverage

∆△

has increased from

52% at 2021, to 54% at 31December 2022, mainly as a result

of our R438million contribution to the green fund in 2022, well

inexcess of the required annual contribution.

The environmental provisions are determined using the MPRDA

Regulations as a base, adjusted for costs the Group is likely to

incur until closure is completed. The financial provisioning as

required by the current MPRDA Regulations is assessed annually

and amounted to R4.4 billion at 31December 2022 (2021:

R4.1billion). The difference between the financial provisioning

required and the environmental provisions recognised is due

to additional costs which the Group believes it is likely to incur

through a combination of our interpretation of the NEMA

Financial Provisioning Regulations as well as actual costs to be

incurred in the period up to and following mine closure. These

costs are most significantly in relation to costs for the treatment of

polluted or extraneous water.

We have provided for water treatment costs using a combination

of active and passive water treatment methods, based on the

activities currently being performed at our operations. The current

draft of the NEMA Financial Provisioning Regulations requires

the treatment of water to be provided for using the costs for

currently available technologies which the DMRE has approved,

based on evidence that the technology to be implemented is

able to consistently achieve the discharge requirements. We are

actively working to prove the efficacy of passive water treatment

technologies, and have commissioned a demonstration scale

plant to prove that this treatment can manage our water risks post

mine closure in line with the methods included in our environmental

provisions.

The transition date of the NEMA Financial Provisioning

Regulations, previously scheduled for February 2017, has been

postponed on a number of occasions and most recently was

deferred to 19September 2023, however there are several

regulatory steps that are required to take place before this

transition can be effective. An updated draft of these proposed

regulations was published for comment on 11 July 2022 however

no feedback has been provided by the DFFE on the industry

comments provided. Should the NEMA Financial Provisioning

Regulations become effective as currently drafted, the level of

financial provisioning required to be held is likely to increase,

which may be sourced on similar terms to our existing financial

provisioning held.

67Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

CAPITAL ALLOCATION AND LIQUIDITY

Thungela has a clear and prioritised capital allocation

framework which seeks to prioritise returns to shareholders while

collateralising our environmental liabilities over time and investing

in sustaining capital to maintain asset integrity. Our dividend

policy is to maintain a dividend payout of at least 30% of our

adjusted operating free cash flow

∆

as a base dividend, followed

by the allocation of capital to either projects which will enhance

shareholder returns in the long-term, or additional returns to

shareholders.

Another year of robust cash flow generation allowed the Group

toimprove the cash collateralisation of our environmental

liabilities, fund sustaining capex needs, and end the year with net

cash

∆

of R14.7 billion.

As a result, the board has declared a final dividend of

R40pershare (R5.6 billion), which represents 61% of the adjusted

operating free cash flow

∆

generated in the second half of the

year. The Sisonke Employee Empowerment Scheme and the

Nkulo Community Partnership Trust will also receive a further

R396millioncollectively.

Combined with the interim dividend of R60 per share declared

in August 2022, the final dividend brings the total dividend

declared for 2022 to R100 per share, and R13.8 billion in total.

This represents 76% of adjusted operating free cash flow

∆

, well

inexcess of the Group’s stated dividend policy.

The Thungela board has resolved to fund the acquisition of the

Ensham Coal Mine and related assets from cash on hand at

31December 2022. We have accordingly reserved R4.2 billion

of the netcash

∆

balance to fund the acquisition.

Given the lock-box mechanism included in the agreements, we

expect the Ensham Business to deliver approximately R500 million

in cash benefit by the time the transaction is completed in

mid-2023. Thus the net cash outflow relating to the investment in

the Ensham Business is expected be approximately R3.7billion.

The board has consistently stated that it is appropriate to maintain

liquidity of between R5 billion and R6 billion following periods of

stronger market conditions.

However, the board recognises the softening coal prices we’ve

seen in recent months, as well as the need to protect the Group's

South African operations from the dire infrastructure challenges

it faces. Furthermore, the acquisition of the Ensham Business

materially changes the overall structure of the Group, including

our liquidity needs. The board is therefore of the opinion that it is

prudent to maintain a higher level of liquidity.

For this reason Thungela has secured access to R3.2billion in

credit facilities from two leading South African banks. Together

with the cash of R5 billion, this results in an enhanced liquidity

buffer of R8.2 billion which will enable the appropriate level of

balance sheet flexibility.

In accordance with its balanced and disciplined approach

to capital allocation, the Group will be adequately funded to

execute its strategy, including the development of the Elders

production replacement project, the funding of our pathway to

net zero, as well as additional contributions to the self-insurance

programme. Most importantly the increased liquidity also reflects

the change in the Group structure and the uncertainty relating to

the eventual normalisation of TFR performance.

Net cash

Δ

31 Dec 2022

14.7

4.2

0.5

5.6

0.4

5.0

3.2

8.2

Ensham

acquisition

Ensham

economic

benefit

1

Final

dividend

declared

Trusts Cash

buffer

Facilities Liquidity

buffer

Rbn

1

Reflects the Ensham economics which would accrue to the Group for the period 1 January 2023 to the completion of the transaction, up to a maximum of AUD102 million.

This graph does not reflect historical financial information, other than the net cash

∆

balance at 31 December 2022. This is accordingly a conceptual representation of the intended utilisation of the net

cash

∆

on hand at the reporting date.

68 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

OPERATIONAL OUTLOOK

2023

Export saleable production (Mt) 10.5 – 12.5

FOB cost per export tonne

∆

(Rand/tonne) 1,131 – 1,264

FOB cost per export tonne excluding royalties

∆

(Rand/tonne) 1,047 – 1,180

Capital – sustaining (Rand billion) 1.3 – 1.5

Capital – expansionary (Rand billion) 1.6 – 1.8

Looking ahead our priority remains executing on our strategy.

Akey part of this is maximising the value of our existing assets,

while continuing to operate safely.

Thungela continues to be well positioned for the future as the

fundamentals supporting coal demand remain strong. Our ability

to create value for shareholders, employees, communities and

the South African fiscus is inextricably linked to our ability to move

coal from our mines to port, and ultimately to our customers.

However, given TFR’s deteriorating performance since 2021, and

the especially poor performance in 2022, we have had to reset

our production outlook for 2023.

Our export saleable production guidance for 2023 is between

10.5Mt and 12.5Mt, as we plan to drawdown on the high on-

mine stockpiles to the extent that the rail performance exceeds

actual production levels.

Our guidance for FOB cost per export tonne

∆

for 2023 is

between R1,047 and R1,180 excluding royalties. Including

royalties the guidance range is between R1,131 and R1,264 per

tonne using a forecast Benchmark coal price of USD130 per

tonne.

Our sustaining capital expenditure for 2023 is expected to be

between R1.3 billion and R1.5 billion. Expansionary capex is

expected to be between R1.6 billion and R1.8 billion, relating

primarily to R1.2 billionfor Elders and R0.5 billion for Zibulo North

Shaft, should the latter be approved by the board.

While we will ensure that the business remains capable of

continuing to deliver safe production and that we maintain

operational flexibility to ramp volumes up should rail performance

improve, we have instituted a programme to reduce costs across

our operations in an effort to manage the unit cost impact of

the reduced production guidance. The expected impact of this

programme has been taken into account in the 2023 FOB cost

per export tonne

∆

guidance.

Given the degree of uncertainty regarding TFR performance

currently, we are not providing guidance for 2024 and beyond

at this stage. We continue to evaluate the potential for near-

term improvements. Furthermore, we are actively involved in the

collaborative effort between the Transnet board and the Minerals

Council focused on stabilising and improving rail performance,

and we remain hopeful that this matter of national importance will

be resolved.

69

Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

## SUMMARISED CONSOLIDATED

## FINANCIAL STATEMENTS

SUMMARISED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER

COMPREHENSIVE INCOME

For the year ended 31December 2022

Rand million 2022 2021

Revenue 50,753 26,282

Operating costs (22,420) (17, 3 2 2 )

Impairment losses (656) (808)

Fair value (losses)/gains on derivative financial instruments (3,207) 348

Fair value loss on derivative asset – capital support (347) (569)

Restructuring costs and termination benefits (29) (422)

Profit before net finance costs and tax 24,094 7, 5 0 9

Net finance costs 49 –

Investment income 963 503

Interest expense (738) (680)

Other net financing (losses)/gains

(176) 177

Profit before tax 24,143 7, 5 0 9

Income tax expense (5,938) (571)

Profit for the reporting period 18,205 6,938

Attributable to:

Non-controlling interests

1,217 509

Equity shareholders of the Group 16,988 6,429

Other comprehensive income/(loss)

Items that will not be reclassified to the statement of profit or loss

Remeasurement of retirement benefit obligations 71 27

Fair value losses on financial asset investments – (63)

Related tax (15) (6)

Net items that will not be reclassified to the statement of profit or loss 56 (42)

Total comprehensive income for the reporting period 18,261 6,896

Attributable to:

Non-controlling interests

1,217 508

Equity shareholders of the Group 17,0 4 4 6,388

Earnings per share

1

Basic (cents/share) 12,708 6,108

Diluted (cents/share) 12,487 6,087

Reconciliation of headline earnings

Profit attributable to equity shareholders of the Group 16,988 6,429

Adjusted for:

Excluded remeasurements 673 800

Impairment of property, plant and equipment 648 786

Impairment of intangible assets 8 22

Loss/(profit) on sale of property, plant and equipment 17 (8)

Tax effects of excluded remeasurements (172) (222)

Impairment of property, plant and equipment (165) (218)

Impairment of intangible assets (2) (6)

(Loss)/profit on sale of property plant and equipment (5) 2

Headline earnings

2

17, 4 89 7, 0 0 7

Headline earnings used in the calculation of diluted headline earnings per share

3

17, 4 89 7, 0 0 7

Headline earnings per share

1

Basic (cents/share) 13,082 6,657

Diluted (cents/share) 12,855 6,634

1

The earnings per share and headline earnings per share has been calculated using a WANOS of 133,684,828 (2021: 105,260,339).

2

There were no adjustments to headline earnings that had an impact for the non-controlling interests.

3

There were no adjustments to headline earnings used in the calculation of diluted headline earnings per share relating to the potential ordinary shares.

70 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

#### SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

#### As at 31December 2022

Rand million 2022 2021

ASSETS

Non-current assets

Intangible assets 82 118

Property, plant and equipment 10,656 10,568

Environmental rehabilitation trusts 3,446 3,288

Investment in associate 43 63

Deferred tax assets 503 378

Financial asset investments 755 323

Investment in insurance structure 1,226 —

Trade and other receivables 1 64

Other non-current assets 65 109

Total non-current assets 16,777 14 ,911

Current assets

Inventories 3,181 2,546

Trade and other receivables 4,907 4,320

Current tax assets 231 46

Financial asset investments 31 31

Derivative financial asset – capital support — 347

Derivative financial instruments 149 348

Cash and cash equivalents 15,299 8,736

Total current assets 23,798 16,374

Total assets 40,575 31,285

EQUITY

Stated capital 11,323 10,041

Contributed capital 965 965

Merger reserve 2,606 2,606

Treasury shares (302) (183)

Share-based payments reserve 83 16

Other reserves 145 89

Retained earnings 11,4 5 3 3,039

Equity attributable to the shareholders of the Group 26,273 16,573

Non-controlling interests (114) 1,901

Total equity 26,159 18,474

LIABILITIES

Non-current liabilities

Lease liabilities 62 92

Retirement benefit obligations 405 449

Deferred tax liabilities 1,421 1,400

Environmental and other provisions 7,179 6,609

Total non-current liabilities 9,067 8,550

Current liabilities

Trade and other payables 3,997 3,499

Loans and borrowings 60 63

Lease liabilities 31 29

Environmental and other provisions 1,236 392

Current tax liabilities 25 278

Total current liabilities 5,349 4,261

Total liabilities 14,416 12 , 811

Total equity and liabilities 40,575 31,285

71Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

#### SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

#### For the year ended 31December 2022

Rand million Stated capital

Contributed

capital

Merger

reserve

Treasury

shares

Balance at 1January 2021 — — 7,17 9 —

Issue of shares for assumed fair value of SACO 4,575 — (4,575) —

Issue of shares for cash 5,466 — — —

Purchase of shares by Group companies — — — (183)

Acquired through internal restructure — — 2 —

Total comprehensive (loss)/income for the reporting period — — — —

Movements in share-based payments reserve

2

— — — —

Reclassifications — — — —

Transfer of financial asset revaluation reserve on sale of investments

3

— — — —

Contributed capital – capital support agreement — 916 — —

Contributed capital – Anglo American retention awards — 49 — —

Balance at 31December 2021 10,041 965 2,606 (183)

Purchase of shares by Group companies — — — (165)

Acquisition of additional interest in subsidiary 1,282 — — —

Total comprehensive income for the reporting period — — — —

Dividends paid — — — —

Movements in share-based payments reserve

4

— — — —

Treasury shares issued to employees on vesting of share awards — — — 46

Balance at 31December 2022 11,323 965 2,606 (302)

1

Includes the financial asset revaluation reserve of R3 million (2021: R3 million) and the retirement benefit obligation reserve of R142 million (2021: R86 million).

2

Includes movements as a result of share-based payment expenses, vesting of shares and granting of share awards. The individual movements are not considered material, other than the accelerated

vesting of the Anglo American share awards on demerger.

3

The transfer of financial asset revaluation reserve relates to the disposal of Anglo American shares in relation to the accelerated vesting thereof on completion of the demerger.

4

Includes movements as a result of share-based payment expenses of R113 million reduced by the impact of the vesting of shares of R46 million under the Thungela share plan.

72 Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

Share-based

payment

reserve Other reserves

1

Retained

earnings

Total equity

attributable to

shareholders

of the Group

Non-

controlling

interests Total equity

65 411 (4,894) 2,761 1,395 4,156

— — — — — —

— — — 5,466 — 5,466

— — — (183) — (183)

— — 1,299 1,301 — 1,301

— (41) 6,429 6,388 508 6,896

(49) — (76) (125) (2) (127)

— 9 (9) — — —

— (290) 290 — — —

— — — 916 — 916

— — — 49 — 49

16 89 3,039 16,573 1,901 18,474

— — — (165) — (165)

— — 1,909 3,191 (3,191) —

— 56 16,988 17,0 4 4 1,217 18,261

— — (10,483) (10,483) (42) (10,525)

67 — 46 113 1 114

— — (46) — — —

83 145 11,4 53 26,273 (114) 26,159

73

Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

#### SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS

#### For the year ended 31December 2022

Rand million 2022 2021

Cash flows from operating activities

Profit before tax 24,143 7, 5 0 9

Net finance costs (49) —

Profit before net finance costs and tax 24,094 7, 5 0 9

Impairment losses 656 808

Restructuring costs and termination benefits

1

— 174

Fair value loss on derivative asset – capital support 347 569

Fair value losses/(gains) on derivative financial instruments 3,207 (348)

Depreciation and amortisation 1,197 1,018

Share-based payment charges 113 87

Increase in provisions

2

1,730 127

Loss/(profit) on sale of property, plant and equipment 17 (8)

Other adjustments 15 33

Movements in working capital (618) (3,154)

Increase in inventories (632) (1,352)

Increase in trade and other receivables (381) (960)

Increase/(decrease) in trade and other payables 395 (842)

Cash flows from operations 30,758 6,815

Amounts applied to reduce environmental and other provisions

3

(846) (502)

Cash outflow on settlement of derivative financial instruments (3,561) —

Income tax paid (6,567) (197)

Net cash generated from operating activities 19,784 6 ,116

Cash flows from investing activities

Expenditure on property, plant and equipment (1,923) (2,312)

Proceeds on sale of property, plant and equipment — 9

Expenditure on intangible assets — (11)

Purchase of financial asset investments (443) (302)

Investment in insurance structure (1,224) —

Repayment of loans granted to investees 31 6

Loans granted to investees (8) (69)

Repayment of quasi-equity loans by associate 20 26

Investment income received 707 108

Acquired through internal restructure — 158

Acquisition of joint operation — 8

Net cash utilised in investing activities (2,840) (2,379)

Cash flows from financing activities

Shares issued for cash — 5,466

Interest expense paid (33) (58)

Capital repayment of lease liabilities (26) (32)

Repayment of loans and borrowings (9) (3,135)

Proceeds on loans from Anglo American — 2,570

Purchase of shares by Group companies (165) (183)

Dividends paid to equity shareholders of the Group (10,483) —

Dividends paid to non-controlling interests (42) —

Net cash (utilised in)/generated from financing activities (10,758) 4,628

Net increase in cash and cash equivalents 6,186 8,365

Cash and cash equivalents at the start of the reporting period 8,736 194

Net increase in cash and cash equivalents 6,186 8,365

Effects of changes in foreign exchange rates 377 177

Cash and cash equivalents at the end of the reporting period 15,299 8,736

1

Restructuring costs and termination benefits at 31December 2021 of R174 million included the accelerated vesting of the Anglo American share awards on demerger and represented the non-cash

portion of the expense.

2

Increase in provisions includes amounts recognised in the statement of profit or loss and other comprehensive income in respect of environmental and other provisions of R1,302 million

(2021: R88million) and contributions to the Nkulo Community Partnership Trust of R386 million (2021: R6 million).

3

Amounts applied to reduce environmental and other provisions represent cash paid to settle these obligations which is not recognised through the statement of profit or loss and other comprehensive

income.

The consolidated financial

statements from which this extract

was derived have been prepared

under the supervision of Deon Smith

CA (SA), CFO. The summarised

consolidated financial statements

are derived from the consolidated

and separate financial statements

on which PwC has expressed an

unqualified opinion. A copy of the

independent external auditor’s

report together with the Annual

Financial Statements is available for

inspection on

www.thungela.com/investors/

results.

74

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

75

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

## REVIEW OF OPERATIONAL

## PERFORMANCE

UNDERGROUND OPERATIONS

GOEDEHOOP COLLIERY

2022 2021

Fatalities — 1

TRCFR 1.55 2.38

Total saleable production (kt) 3,224 5,281

Export saleable production (kt) 2,356 2,191

Domestic production (kt) 869 3,090

FOB cost per tonne

∆

(Rand/tonne) 1,271 1,001

FOB cost per tonne excluding

royalties

∆

(Rand/tonne) 1,057 984

Capex (Rand million) 91 257

Safety

Greenside recorded a TRCFR of 2.21 compared to 0.79 for the

prior period as a result of an increase in recordable injuries.

Performance

Export saleable production of 2,586kt at 31December2022

was25% lower than the comparative period as more

underground sections were deployed into the more geologically

challenging East Block reserves, with moderate improvements

recorded in the second half of the year.

FOB cost per tonne excluding royalties

∆

of R957 is 22% higher

than the comparative period mainly as a result of the lower

production.

GREENSIDE COLLIERY

2022 2021

Fatalities — —

TRCFR 2.21 0.79

Total saleable production (kt) 2,586 3,456

Export saleable production (kt) 2,586 3,454

Domestic production (kt) — 2

FOB cost per tonne

∆

(Rand/tonne) 1,166 845

FOB cost per tonne excluding

royalties

∆

(Rand/tonne) 957 785

Capex (Rand million) 209 355

ZIBULO COLLIERY

2022 2021

Fatalities — —

TRCFR 0.21 0.98

Total saleable production (kt) 4,479 5,553

Export saleable production (kt) 4,318 5,553

Domestic production (kt) 161 —

FOB cost per tonne

∆

(Rand/tonne) 1,177 715

FOB cost per tonne excluding

royalties

∆

(Rand/tonne) 1,012 682

Capex (Rand million) 664 704

Safety

Goedehoop recorded a TRCFR of 1.55 compared to 2.38 for

the comparative period as a result of a lower number of incidents

following a safety campaign on the mine.

Performance

Export saleable production of 2,356kt at 31December 2022

was 7.5% higher than the comparative period in line with the

plan to mine in higher yielding areas and as a result of increased

productivity across all sections. The mine was able to increase

stockpile capacity and utilise third-party sidings to alleviate the

impact of the poor rail performance.

Domestic saleable production reduced by 72% to 869kt as a

result of lower domestic demand.

FOB cost per tonne excluding royalties

∆

of R1,057 was 7.4%

higher than the comparative period as a result of the impact of

inflationary pressure and additional rehabilitation requirements.

Safety

Zibulo recorded a TRCFR of 0.21 compared to 0.98 in the

prior period. The mine operated the first three quarters of 2022

injury free. Regrettably, in February 2023 Mr Breeze Mahlangu

tragically passed away following complications after an accident

in December 2022.

Performance

Zibulo’s production suffered from the poor rail performance as

stockpiling facilities at the Phola Plant are at capacity. Export

saleable production of 4,318kt in 2022 was 22% lower than the

prior period. The Zibulo opencast pit was materially curtailed as

a result of the TFR challenges. Further to being hampered by full

stockpiles, the underground production was also impacted by

challenging geological conditions in the year.

FOB cost per tonne excluding royalties

∆

of R1,012 is 48% higher

than the comparative period mainly as a result of the lower

production levels and inflationary pressures.

76

Integrated Annual Report for the year ended 31 December 2022

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

OPENCAST OPERATIONS

KHWEZELA COLLIERY

2022 2021

Fatalities — —

TRCFR 0.42 1.10

Total saleable production (kt) 2,150 3,207

Export saleable production (kt) 1,597 1,963

Domestic production (kt) 553 1,244

FOB cost per tonne

∆

(Rand/tonne) 2 ,174 1,240

FOB cost per tonne excluding

royalties

∆

(Rand/tonne) 2,146 1,204

Capex (Rand million) 268 302

#### MAFUBE COLLIERY (ATTRIBUTABLE)

2022

2021

Pro forma

Fatalities — —

TRCFR 2.53 1.09

Total saleable production (kt) 1,834 1,796

Export saleable production (kt) 1,834 1,796

Domestic production (kt) — —

FOB cost per tonne

∆

(Rand/tonne) 955 786

FOB cost per tonne excluding

royalties

∆

(Rand/tonne) 793 745

Capex (Rand million) 150 218

Safety

Khwezela recorded a TRCFR of 0.42 in compared to 1.10 in the

prior period.



Performance

Export saleable production decreased by 19% to 1,597kt as

the operation was curtailed due to the impact of the poor rail

performance. Equipment and resources were redeployed to

perform rehabilitation and other activities to alleviate the pressure

on on-mine costs while maintaining the optionality to ramp-up

production, which commenced in the second half of 2022.

Domestic saleable production at 553kt reduced by 56% due to

the depletion of reserves from the Umlalazi pit and lower demand

from domestic customers.

The FOB cost per tonne excluding royalties

∆

of R2,146 has

increased by 78% compared to the prior period. Unit costs were

mainly impacted by lower production and higher than inflation

price increases on petroleum products and explosives.

Safety

Mafube recorded a TRCFR of 2.53 in 2022 compared to 1.09

in the prior period mainly as a result of an increase in reportable

injuries recorded in the first half of 2022.

Performance

Export saleable production at 1,834kt was in line with the prior

year (on a pro forma basis). The stockpiles remain full and road

hauling to other sidings ensured that production was not severely

impacted by the poor rail performance.

FOB cost per tonne excluding royalties

∆

of R793 increased

by 6.4% mainly due to higher than inflation price increases on

petroleum products and explosives.

ISIBONELO COLLIERY

2022 2021

Fatalities — —

TRCFR 1.83 2.99

Total saleable production (kt) 3,674 4,153

Export saleable production (kt) — —

Domestic production (incl. coal

purchases) (kt) 3,674 4,153

FOR cost per tonne (Rand/tonne) 527 380

Capex (Rand million) 133 173

Safety

Isibonelo recorded a TRCFR of 1.83 in 2022compared

to2.99inthe prior year.

Performance

Saleable production was 12% lower at 3,674kt in 2022. This

year has seen higher rainfall than the prior year which has

impacted production. In addition, equipment availability has

further impacted performance. An improvement plan has been

concluded and we expect a gradual improvement in mine

performance.



The FOR cost per tonne of R527 increased by 39% mainly due to

higher than inflation price increases on explosives and petroleum

products as well transportation costs related to coal purchases

required to meet the contractual obligations.

77

Integrated Annual Report for the year ended 31 December 2022

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

![]()

WE THINK ABOUT ESG HOLISTICALLY AND

ARE COMMITTED TO ‘SPIKING ON SOCIAL’

ENSURING WE CREATE VALUE FOR OUR

EMPLOYEES AND HOST COMMUNITIES.

78

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05

#### OUR IMPACT

79

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80 Integrated Annual Report for the year ended 31 December 2022

## ESG PERFORMANCE

SAFETY

We operated fatality free for 2022. However, our colleague

Mr Breeze Mahlangu tragically passed away on

28February2023 following complications after an accident at

Zibulo in December 2022. This has been devastating for all of us

at Thungela and a reminder that we must be unconditional about

safety to ensure that everyone goes home unharmed every day.

There were 25 recordable injuries in 2022, the same number as

in 2021, despite a reduction in working hours. This resulted in an

increase in TRCFR to 1.41 for the year ended 31December 2022

compared to 1.35 in 2021. To ensure we remain vigilant and

keep safety top of mind at all times, we continue to emphasise

the relentless application and management of critical controls,

focused leadership interactions, and the identification and

management of high-potential hazards across our operations.

ENVIRONMENTAL STEWARDSHIP

Mining in South Africa is strictly regulated. We aim to achieve and

surpass legal compliance to ensure we not only avoid or minimise

the potential adverse environmental impacts of our operations,

but also deliver positive environmental outcomes. We regularly

engage with the Department of Water and Sanitation (DWS) and

the DMRE on issues related to compliance and permitting.

We remain steadfast in our commitment as a responsible

corporate citizen to mitigate the impacts of the incident that

occurred at the Khwezela Kromdraai site in February 2022, and

we are working with all stakeholders to achieve a sustainable

outcome. Given the complexity of the plan to rehabilitate

the Wilge river system, we appointed a specialist technical

consultant to assist with this task. Through collaboration with the

Mpumalanga Tourism and Parks Agency (MTPA), we have also

engaged a panel of independent experts to review the work that

is carried out and to guide the rehabilitation effort.

PERFORMANCE DASHBOARD

Key performance indicators 2022 2021

Safety and health

Fatalities 0 1

Total recordable case frequency rate 1.41 1.35

Environment

Total energy consumed (million GJ) 3.01 3.42

Energy intensity (MJ/total tonne moved) 16.81 19.04

Total GHG emissions (kt CO

2

– equivalent) 748 819

Carbon intensity (kg CO

2

/total tonne moved) 4.18 4.56

Freshwater abstraction (ML) 767 865

Water efficiency (reuse/recycle) (%)

1

96 95

Water treatment (%) 57 57

Number of level 3 – 5 environmental incidents 2 1

People

HDPs in management (%) 76 74

Women in management (%) 29 28

1

The water efficiency value for 2021 was updated based on the revised calculation methodology which uses a disaggregated approach to include water reuse in washing plants with thickeners and

filter presses. Further detail on the revised calculation methodology will be included in the Environmental, Social and Governance Report.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

81Integrated Annual Report for the year ended 31 December 2022

We have taken the recommendations of this panel of experts

onboard with a view to ensure that agreed actions are based

onsound scientific principles.

We continue to engage the DWS on progress made against the

action plan as well as results from the biomonitoring carried out in

August and October 2022. We have made significant progress in

achieving milestones which are critical to the overall rehabilitation

process. These include:

● An intervention by the Hawks to remove large-scale illegal

mining activities was completed.

● Accelerating the rehabilitation of the area which will reduce

the ingress of water by increasing run-off.

● Reinstating water management infrastructure that was

vandalised or stolen due to illegal mining activities.

Additionally, we are investigating longer-term, modular

treatment capacity to further treat water to discharge qualities.

● Establishing the Wilge river’s EcoStatus through the two

biological sampling exercises conducted in collaboration with

the MTPA. The outputs of the sampling exercises were used to

guide future interventions as well as monitoring and evaluation

of the impacts of the interventions.

Thungela has set aside the necessary financial and human

resources to implement the interventions contained in the

rehabilitation plan. We continue to approach the rehabilitation

with the necessary level of urgency and commitment, in

collaboration with all relevant stakeholders.

WATER MANAGEMENT

The Goedehoop, Isibonelo and Mafube Collieries rely on fresh

water from external sources and are working towards a reduction

target of 20% by 2023, using 2015’s 1,015ML as a baseline. The

overall trend for 2022 indicates that the current import of water

has decreased by 11% to 767ML from 865ML in 2021.

A target was also set to increase water reuse and recycling levels

to 75%. We have exceeded this target by driving efficiencies

across the water cycles. Water recycling and reuse rose from 95%

in 2021 to 96% in 2022. This increase is attributed to concerted

efforts at our Goedehoop Colliery to reduce freshwater intake

and improve recycling.

We have again achieved and exceeded our annual target of

40% water treatment in 2022.

REHABILITATION AND CLOSURE PROVISIONS

The transition date of the NEMA Financial Provisioning

Regulations, originally scheduled for February 2017, has been

postponed on a number of occasions and most recently was

deferred to 19 September 2023.

The fourth draft of the NEMA Financial Provisioning Regulations

was released for comment on 11July2022, but no feedback

has been received from the DFFE on comments submitted by the

industry. The NEMA Financial Provisioning Regulations require the

treatment of water to be provided for using the costs of currently

available technologies which the DMRE has approved, based

on evidence that the technology to be implemented is able to

consistently achieve the discharge requirements.

We have provided for water treatment costs using a combination

of active and passive water treatment methods, based on activities

currently being performed at our operations. The construction

of a demonstration scale plant to further prove the effectiveness

of passive water treatment was completed in June 2022. The

demonstration plant uses bacteria to remove sulphates, neutralise

water and remove metals to create a fit-for-purpose end-product

that can be used in agriculture. The study will continue to treat

different water qualities to optimise process parameters and inform

the design of a full-scale plant that will be constructed at our

closed Kromdraai site and later expanded to other operations.

We are also trialling the use of phytoremediation at our

Goedehoop Colliery in collaboration with a leading South

African university to address mine-impacted water.

Thungela is accelerating the rehabilitation and closure of the

North West and Kromdraai pits at the Khwezela Colliery. This

should also contribute to the prevention of illegal mining activities

on our sites.

REDUCING OUR CARBON INTENSITY AND

DEVELOPING INTERMEDIATE TARGETS

Following our commitment to net zero by 2050, subject to

the requirements of the countries in which we operate and the

markets we serve, we have done a full review of our intermediate

emissions reduction targets which we are pleased to publish.

Thungela aims to reduce our scope 1 and 2 emissions by 30% (off

the baseline of our 2021 emissions) by 2030 on our pathway to

net zero.

Total carbon dioxide equivalent (CO

2

e) emissions in 2022 were

748kt compared to 819kt in 2021. This 8.7% reduction was driven

by energy efficiency improvement projects and a reduction in

production volumes due to TFR underperformance. Our carbon

intensity decreased by 8.3% from 4.56kg CO

2

per total tonne

moved in 2021 to 4.18kg CO

2

per total tonne moved in 2022.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

82 Integrated Annual Report for the year ended 31 December 2022

Our energy intensity improved by 12% year-on-year from

19.04MJ per total tonne moved in 2021 to 16.81MJ per total

tonne moved in 2022. We undertook extensive opportunity

scoping during 2022 to identify energy saving projects at

each of our operations and projects as well as opportunities

for substitution of some of our fixed energy requirements with

renewable energy.

Further detail on our climate change response strategy will be

provided in our maiden Climate Change Report aligned with the

recommendations of the TCFD that will be published together with

the Environmental, Social and Governance Report in April 2023.

CREATING VALUE FOR A SHARED FUTURE

In keeping with our commitment to responsibly create value

together for a shared future, we have contributed R896million

to the Sisonke Employee Empowerment Scheme and the Nkulo

Community Partnership Trust related to our 2022 performance.

This will make a meaningful impact in the lives of our people and

empower the Nkulo Community Partnership Trust to create a

legacy beyond the life of our mines.

The Sisonke Employee Empowerment Scheme paid its first

allocation to eligible employees in December 2022. A decision

was made to amend the payment date, originally set for 2024,

to allow for employees to receive their benefit in the year that

contributions are made to the trust. Employees participated in

financial wellness training before receiving the award.

ESD is critical in South Africa as it supports economic growth

and transformation imperatives. We proudly launched our ESD

programme, Thuthukani, in June 2022. This joint initiative is

focused on providing small enterprises in our host communities in

Mpumalanga with hands-on entrepreneurial business support and

mentorship, access to loan funding and technical development. It

runs across the Thungela operational areas in the municipalities of

eMalahleni, Steve Tshwete and Govan Mbeki and will contribute

to the creation of a thriving small business sector in Mpumalanga.

We are intentional about our socio-economic development

programmes and their desired impact. We have adopted an

approach that guides the social initiatives we undertake as a

business, linking them to business objectives and designing them

to meet the impact goals we have set.

A highlight for Thungela in 2022 was the conclusion of a

three-year wage agreement with the NUM. The agreement,

which will run until May 2025, will see salary and salary-

related allowances of bargaining unit employees increase

byapproximately 6% annually over three years.

Full details related to our ESG approach and performance are included in the Environmental, Social and Governance Report available at www.thungela.com.

We depend on a diverse team of high-performing individuals

who have the right skills, expertise and mindset to achieve

the highest levels of productivity – safely, without harm to the

environment or the communities that host our mining sites. To this

end, we launched the Thungela Leadership Academy in 2022, in

partnership with a leading South African university.



We have seen an improvement in the levels of HDPs at

management level from 74% in 2021 to 76% in 2022. Women in

management also increased from 28% in 2021 to 29% in 2022,

which is testament to our commitment to transformation in our

business.

ILLEGAL MINING

Illegal mining operations in Mpumalanga continue to pose

a challenge to our business. These are highly sophisticated

operations and form part of organised crime networks.



These networks are increasingly turning to violence which puts the

lives of our security personnel and employees at risk, while at the

same time increasing criminal activity in the communities in which

we operate. An additional effect experienced is the environmental

degradation at the sites where the activities are taking place.

While Thungela continues to invest in security and specialised

interventions, we remain dependent on law enforcement

authorities, regulators such as the DMRE, and the judicial system

to halt illegal mining syndicates. Tackling the issue requires a

collaborative and well-resourced effort between industry, law

enforcement and regulators. Thungela is an active member of

the Mineral’s Council’s security cluster, where industry members

collaborate on dealing with criminality. Thungela will continue to

work with the relevant authorities to combat illegal mining at our

operations.

GOVERNANCE

The board remains committed to supporting management in

decision-making and driving its agenda on critical matters,

including ESG related matters. The board also recognises its

responsibility to safeguard and represent the interests of the

Group’s stakeholders in perpetuating a successful and sustainable

business that ensures the achievement of Thungela’s strategic

objectives.



The Thungela remuneration and nomination committee approved

the linking of 30% of the LTIP awards for senior management to

ESG metrics, which are aligned with our ambitions.



THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

83Integrated Annual Report for the year ended 31 December 2022 83

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

84 Integrated Annual Report for the year ended 31 December 2022

## OUR CONTRIBUTION

## TO SOCIETY

We are proud of the vital role we play in South Africa’s

growth and development. Working together, we aim to

responsiblycreate value together for a shared future.

#### SISONKE EMPLOYEE

#### EMPOWERMENT

#### SCHEME

#### R448 MILLION

In 2022 the trust received a total contribution of

R448 million, of which R250 million was paid

to eligible employees in December 2022. The

additional contribution announced in March 2023

of R198 million will be paid to eligible employee

beneficiaries within three months from the payment

date of the dividends in line with the trust deed.

#### NKULO COMMUNITY

#### PARTNERSHIP TRUST

#### R448 MILLION

In keeping with our commitment to create shared

value, the trust received a total contribution of

R448 million, related to the 2022 performance.

The trust was founded to deliver socio-economic

development programmes for the upliftment of local

communities. It will be administered by a board of

trustees and work has commenced updating the trust

deed to ensure the value that is created by Thungela

flows to the intended beneficiaries.

#### HOST COMMUNITY

#### PROCUREMENT

#### R2.3 BILLION

Procurement of goods and services from

suppliers in the immediate areas of our

operations.

#### CONTRIBUTION

#### TO LOCAL

#### COMMUNITIES

#### R108 MILLION

Our expenditure on social and labour

plans, socio-economic development

initiatives and corporate social

investment.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

85Integrated Annual Report for the year ended 31 December 2022

#### TOTAL PROCUREMENT

#### R8.2 BILLION

Discretionary expenditure includes all supply

chain-related expenditure from third-party

suppliers. This includes operational and

capital expenditure.

#### TOTAL TAXES BORNE

#### AND COLLECTED

#### R9.8 BILLION

Taxes paid by Thungela on behalf of other

parties through our business activities.

#### WAGES AND

#### RELATED PAYMENTS

#### R4.8 BILLION

Payroll costs for employees, excluding

contractors, including a proportionate share

of employees in joint operations.

#### CAPITAL INVESTMENT

#### R1.9 BILLION

Cash expenditure on property, plant and

equipment, including sustaining capex of

R1.7billion and expansionary capex of

R235million.

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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86

CONDUCTING BUSINESS ETHICALLY AND IN

LINE WITH GOOD CORPORATE GOVERNANCE

PRACTICES IS A PRIORITY FOR THUNGELA.

86

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87

06

#### GOVERNANCE

87

![]()

88 Integrated Annual Report for the year ended 31 December 2022

Conducting business ethically in line with good corporate

governance practices is a key priority for Thungela, as it is in the

best interest of our stakeholders and helps us remain responsible

and accountable. Due processes of disclosure and transparency

are followed to provide regulators and shareholders, as well as

the general public, with accurate information about financial,

operational and other aspects of the Group.

As a Group, we are committed to adhering to the corporate

governance principles set out in King IV, the International Finance

Corporation Performance Standards and other relevant adopted

industry standards.

Thungela adheres to board composition requirements set out in

our inclusion and diversity policy, incorporating consideration

of all aspects of diversity, including gender, race, culture, age,

field of knowledge, tenure, skills and experience which is evident

from the current board appointees. It also commits to transparent

and fair executive pay structures, linked to ESG performance as

applicable in South Africa and the United Kingdom, and as may

be relevant to the Group’s financial reporting policies.

PURPOSE AND APPROACH

The Thungela approach to corporate governance is essential to

value creation, and this is integrated into the Group’s strategies,

policies, standards, practices and procedures. High standards of

corporate governance support our pursuit of achieving business

sustainability, as well as enhancing accountability, transparency

and effective compliance.

In addition, the Group:

● Commits to proactively identify and assess the risks and

opportunities to the business, and to develop and implement

strategies to address these.

● Promotes diversity and inclusion on its board, and throughout

the organisation.

● Implemented strategies to promote equality and develop a

workforce that is diverse in terms of race, age, culture, skills,

sexual orientation and gender.

● Has zero tolerance for corruption and has implemented

policies, procedures and associated training to ensure that this

is achieved.

● Implemented policies and initiatives to, among other things,

encourage the reporting of inappropriate behaviour and

protect whistle-blowers, encourage tax transparency and

discourage anti-competitive practices.

COMMITMENT

The Group commits to principles of sound governance and the

application of the highest ethical standards in the conduct of its

business and affairs and to the principles of diligence, honesty,

integrity, transparency, accountability, responsibility and fairness.

The board accepts full responsibility for the application of

these principles to ensure that the principles of good corporate

governance are effectively practised throughout the Group.

The board also understands and accepts its responsibility to

safeguard and represent the interests of the Group’s stakeholders

in perpetuating a successful and sustainable business that ensures

the achievement of Thungela’s strategic objectives.

The board comprises directors with an age range from 45 to 63,

with an average age of 55 years. The board comprises four black

males, two black females and two white males.

The knowledge and experience of the board is diverse, with

board members having accounting, financial, technical,

engineering, sustainability, and management skills, as reflected in

their

curricula vitaes

as available on our website at

www.thungela.com/about-us/who-we-are.

ETHICS AND CODE OF CONDUCT

Thungela promotes ethical business conduct through the

implementation of the Group’s business integrity policy, code of

conduct and antitrust policy and has clear governance structures

that are charged with ethics management and monitoring.

Thungela is committed to conducting a business that is consistent

with its values, principles and leadership code through guidelines

and policies that set out its ethical culture. These policies guide

employees, contractors, suppliers and all other stakeholders on

how the Group conducts itself, the way it does business, and the

behaviour expected of them at all times.

Thungela has upheld its principle of zero tolerance to unethical

behaviour during the year under review. This was achieved

through exercising rigorous ethics management and monitoring.

The ethics function is shared between the office of the company

secretary and human resources disciplines. The board is ultimately

responsible for the ethics function at Thungela.

## ETHICAL LEADERSHIP

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89Integrated Annual Report for the year ended 31 December 2022

A corporate governance policy has been put in place, which

was approved by the board in February 2022. The policy speaks

to compliance with King IV, regulatory compliance, trading in

securities, the role of the board and board committees, the role of

the CEO, and the role of the Group executive committee, as well

as the governance structure and the approvals framework.

The Group rolled out online training with a focus on business

integrity and the code of conduct. Face-to-face training

commenced shortly thereafter at sites for employees with little to

no access to the internet.

Thungela achieved a fully compliant audit for an internal audit

done on both the Thungela business integrity and code of conduct

policies in 2022.

INTERNAL COMMUNICATION

The Group frequently communicates company policies, ethics and

reminders of sections of the code of conduct through a weekly

Thungela newsletter, which is a communication method created

by corporate affairs.

WHISTLEBLOWING

A whistle-blowing hotline has been put in place and is

managed by an external party, which supports anonymity

and confidentiality. The process is frequently communicated to

employees through weekly staff communication methods and

face-to-face refresher training. The hotline is available to all

employees, contractors, suppliers and broader stakeholders.

Whistle-blowers are able to raise reports and receive feedback

in all 11 official South African languages. The audit committee

regularly reviews a summary of the whistle-blowing reports to

identify possible trends and corrective action required.

During the year the hotline was contacted 109 times resulting

in 23 reports being registered, with 17 of these reports being

resolved by 31 December 2022. Of the 17 resolved cases, only

two were proven, and the necessary corrective measures and

disciplinary actions were taken.

Fairness and transparency are exercised during all investigations

and the outcome of each investigation is properly considered to

ensure that corrective action is taken to address control failures.

Feedback on incidents and outcomes of investigations are

presented to the social and ethics committee on a bi-annual basis.

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90 Integrated Annual Report for the year ended 31 December 2022

Required to

report annually to

shareholders and

oversees the Group’s

accounting and

financial reporting,

external audit,

integrated reporting

and combined

assurance.

Responsible for the

process of nominating,

electing and appointing

board members,

CEO, CFO and board

succession planning,

board performance

evaluation process,

and the remuneration

policy in terms of the

board and prescribed

officers.

Responsible for

overseeing and

reporting on ESG

matters to the

extent that it is not

covered in the risk

and sustainability

committee, ethics,

stakeholder relations

and responsible

corporate citizenship,

and overseeing

people diversity,

and regulatory

compliance, and

transformation.

Overall oversight of

Group risk, IT, and

sustainability with

focus on safety, health

and the environment,

and decides on the

Group’s risk appetite.

BOARD

AUDIT

COMMITTEE

REMUNERATION

AND

NOMINATION

COMMITTEE

SOCIAL

AND ETHICS

COMMITTEE

RISK AND

SUSTAINABILITY

COMMITTEE

## CORPORATE GOVERNANCE

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91Integrated Annual Report for the year ended 31 December 2022

#### THE BOARD

The board is the ultimate decision-making body of the Group,

except in respect of matters reserved for shareholders, and has

delegated responsibility to the CEO, the CFO and the Group

executive committee, who are provided with clear definitions of

their responsibilities and accountabilities. The Group executive

committee's performance is measured against agreed key

performance indicators and the Group’s performance, which are

also used to determine their compensation. Evaluating the board‘s

and committees’ performance in terms of King IV principles

provides the board with a mechanism and outcomes with which

to assess its governance performance and make improvements if

necessary.

MEMBERSHIP

The members of the board, as appointed at the most recent AGM,

are as follows:

● Sango Ntsaluba (Chairman)

● Kholeka Mzondeki

● Thero Setiloane

● Ben Kodisang

● Seamus French

● Yoza Jekwa

● July Ndlovu (CEO)

● Deon Smith (CFO)

ROLES AND RESPONSIBILITIES

The key roles and responsibilities of the board include,

inter alia

,

the following:

● Providing the Group with clear strategic direction.

● Ensuring that there is adequate succession planning at senior

levels.

● Reviewing operational performance and management.

● Reviewing policies and processes that seek to ensure the

integrity of the Group’s risk management and internal controls.

● Ensuring the implementation of, and compliance to, strict

governance processes and procedures with a zero tolerance

for fraud or corruption.

● Ensuring the business operates safely.

● Focusing on climate change driving the pathway to zero

emissions.

The Thungela board and the Group executive committee work

together to create value for all stakeholders, ensuring that the

Thungela strategy and business model are fit-for-purpose in the

short, medium and long term, and that we retain the flexibility to

adapt to changing market conditions and ensure the sustainability

of the business.

To maintain a balance between stakeholder reward and being

a responsible citizen, Thungela has developed risk matrices

monitored by the audit committee and risk and sustainability

committee via the risk and assurance team.

The Thungela governance framework places the board as the

custodian of corporate governance, giving it effective control

of the business, with its roles and responsibilities set out in the

board charter which is based on the Thungela memorandum of

incorporation (MOI). Both the board charter and the MOI are

available on the Thungela website. The Thungela approvals

framework ensures that business matters are managed and

approved at the right levels, and that the board retains overall

control and oversight of the business as a whole. The framework

is reviewed annually to ensure relevance to current market and

economic conditions.

COMMITMENTS

The board has made a number of commitments to operating in line

with relevant regulations, and the board acknowledges that:

● It is responsible for ensuring that the Group complies with all of

its statutory obligations as specified in its MOI, the Companies

Act of South Africa, the JSE Listings Requirements and all other

relevant regulatory requirements.

● It endorses the principles of King IV and recognises the

need to conduct the affairs of the Group with integrity and in

accordance with generally accepted corporate practices.

In discharging this responsibility, the principles of King IV are

being applied in both letter and spirit.

● It is ultimately responsible for the performance of the Group.

● It is responsible for ensuring that the Group complies with its

obligations in line with the UK Listing Rules, MAR and the UK

Disclosure Guidance and Transparency Rules.

● It accepts its responsibility around climate change with

particular focus on water management, rehabilitation, the

environment, carbon emissions, and climate change reporting

requirements.

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92 Integrated Annual Report for the year ended 31 December 2022

BOARD COMPOSITION

The board consists of eight members, with two executive directors,

and six independent non-executive directors. In accordance

with the board charter, the composition reflects a majority of

non-executive directors. The non-executive directors bring an

independent view to the board’s decision making.

None of the directors, other than the executive directors, have

a fixed term of appointment and one-third of the non-executive

directors are subject, by rotation, to retirement and re-election by

shareholders at every AGM, in accordance with the Thungela

MOI. Thero Setiloane will retire for re-election at the upcoming

AGM to start the process of rotation. Also, as stipulated in the

MOI, all newly appointed board members must retire at the first

AGM following their appointment, therefore Yoza Jekwa will be

retiring for re-election at the upcoming AGM.

Any non-executive director whose term of office exceeds

nine years will be subject to a rigorous annual review by

the remuneration and nomination committee, for onward

recommendation to the board, taking into account their

performance and independence. A statement as to such director’s

independence will be included in the integrated annual report.

The mandatory retirement age for non-executive directors will

be 70 years, at which time the director shall vacate office at the

end of the financial year in which that director turns 70, unless the

board, on recommendation by the remuneration and nomination

committee in its discretion, decides otherwise.

Each director has been, and in future shall be, identified and

selected for nomination to the board by the remuneration and

nomination committee, subject to final approval by the board.

Theremuneration and nomination committee follows a transparent

and formal process in recommending suitable candidates for

the board’s consideration. Directors shall be appointed and

removed in accordance with the applicable provisions of the

Thungela MOI, the Companies Act of South Africa and any other

applicable law or regulatory provision.

The board comprises an appropriate mix of knowledge, skills,

experience, diversity and independence to provide the necessary

breadth and depth of knowledge and experience to meet its

objectives and responsibilities objectively and efficiently. This is

assessed annually by the chairman of the board in consultation

with the remuneration and nomination committee.

BOARD

COMPOSITION

● Executive directors

● Independent

non-executive directors

%

25

75

GENDER

DIVERSITY

● Female

● Male

%

25

75

ETHNICITY

● Black

● White

%

75

25

AGE DIVERSITY

● 40 to 49

● 50 to 59

● 60 to 69

25

37

38

%

BOARD AND DIRECTORS’ PERFORMANCE

EVALUATION

The performance of the board, the board committees and

individual directors are evaluated annually against the relevant

principles of King IV and other measures. This evaluation provides

the board with a mechanism and outcomes that help assess

its governance performance and make improvements where

necessary. In2022, the services of an external service provider,

were contracted to conclude the evaluation process. Feedback

from the process to the remuneration and nomination committee,

and finally to the board was completed in November. The board

was rated as highly effective, committed, and decisive, with the

appropriate skills, experience and diversity. Management was

rated as competent, and the feedback noted that the board has a

good relationship with management.

The chairman of the board, board committees, company

secretary, CEO and CFO were all rated as highly effective and

competent, and scores achieved were rated as excellent.

INCLUSION AND DIVERSITY POLICY

In order to add additional valuable skills and further diversify the

board, Yoza Jekwa was appointed as an independent non-

executive director on 12August 2022 and has completed her

induction process. The process is run by the company secretary

and includes her meeting with the Thungela Group executive

committee and other management team members. Since her

appointment, Yoza Jekwa has been actively involved in a number

of projects and also attended the November board meeting held

at one of the sites in person.

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93Integrated Annual Report for the year ended 31 December 2022

The Group recognises and embraces the benefits of having

a diverse and inclusive board and workforce as an essential

element in maintaining a competitive advantage. In this regard, the

board has adopted the Thungela inclusion and diversity policy,

applicable to the board and the workforce, a summary of which

has been made available on the Group’s website at

https://www.thungela.com/about-us/who-we-are.

In terms of this policy, in considering the composition of the

board, cognisance is taken of the benefits of all aspects of

diversity specifically including, but not limited to, gender and race

diversity, with due regard to attaining the appropriate balance of

knowledge and experience, skills, race, gender, culture, age and

independence in order for the board to effectively discharge its

role and responsibilities.

All board appointments are made on merit, in the context of the

skills, experience, independence and knowledge which the

board as a whole requires to be effective. The remuneration and

nomination committee annually reviews and considers whether

the board size, diversity and demographics make it effective. The

assessment done in November provided positive feedback to the

board and expressed a high level of comfort in the independence

of individual board members.

KEY FOCUS AREAS FOR 2022

During the year the Thungela board addressed the following

areas, each of which may have a material bearing on the Group’s

ability to create long-term value for its shareholders and other

stakeholders:

● Reviewed and approved on recommendation by the audit

committee the Interim Financial Statements, Annual Financial

Statements, the Integrated Annual Report, the notice of the

AGM, and other required documents for publication.

● Constantly monitored and reviewed the Group’s performance

in terms of safety, health and the environment, and operating

afatality-free business.

● Reviewed and approved on recommendation by the social

and ethics committee the Environmental, Social

and Governance Report and Climate Change Report for

publication.

● Discussed the Group’s strategy at the board strategy

workshop, and continuously reviewed the Group strategy for

relevance.

● Reviewed and approved the 2023 budget on

recommendation by the audit committee.

● Reviewed important matters dealt with at the audit, risk

and sustainability, social and ethics, and remuneration and

nomination committees.

● Approved new and updated Thungela policies based on the

recommendations from the various board committees.

● Reviewed the CEO business performance update on a

quarterly basis against targets set.

● Reviewed and approved the B-BBEE Form and Compliance

Report for submission to the B-BBEE commission on

recommendation by the social and ethics committee.

● Reviewed and considered feedback on the board and

committee evaluation process from the remuneration and

nomination committee.

● Appointed an additional black female independent non-

executive director to the board on recommendation by the

remuneration and nomination committee, to align with the

inclusion and diversity policy and add additional valuable

skills to the board.

● Approved the going concern analysis, and solvency and

liquidity assessments on recommendation from the audit

committee.

● Approved the final and interim dividend declaration in line with

the proposed capital allocation structure.

● Nominated the independent external auditor for

recommendation for appointment by the shareholders at the

AGM on recommendation by the audit committee.

● Approved updated terms of references for all board

committees.

● Prepared for and successfully executed the inaugural AGM as

a listed business.

● Approved the acquisition of the remaining interest in AAIC

through the issue of Thungela shares.

● Approved the initial contribution of R1.2 billion into a self-

insurance structure which will serve as an additional insurance

funding mechanism.

● Approved the Elders production replacement project.

● Recommended the 2023 non-executive directors fees

on recommendation by the remuneration and nomination

committee for shareholder approval at the forthcoming AGM.

● Approved the remuneration report on recommendation by the

remuneration and nomination committee for inclusion in this

Integrated Annual Report.

● Approved the social and ethics committee report on

recommendation by the social and ethics committee for

inclusion in this Integrated Annual Report.

● Approved the risk and sustainability committee report on

recommendation by the risk and sustainability committee for

inclusion in this Integrated Annual Report.

● Approved the audit committee report on recommendation

by the audit committee for inclusion in the Annual Financial

Statements.

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94 Integrated Annual Report for the year ended 31 December 2022

KEY FOCUS AREAS FOR 2023

Key focus areas for the board in the year ending

31December 2023 will be, among others:

● Operating a fatality-free business.

● Safety, health and the environment.

● Continued development and training of board members to

become a world class board.

● Developing internal employees' board skills through mentoring.

● Appointing a lead independent non-executive director.

● Consider for approval the revised governance structure and

proposed memberships of the committees in the structure on

recommendation by remuneration and nomination committee

to align to market best practice and business requirements.

● Intensifying its focus on infrastructure challenges such as TFR

and power availability.

● Further refining the strategy of Thungela to ensure a sustainable

business plan and to be clear on diversification.

● Continued management of cost in line with business

requirements.

● B-BBEE aspirations.

● Social risk and impacts of mine closures.

● Pathway to zero emissions and decarbonisation.

● Rehabilitation, water management and high-risk underground

water structures.

● Reviewing financial and business performance against set

targets.

● Continued assessment of possible diversification options for

the Group in line with the strategic priorities of Thungela.

● Reviewing the overall integration approach to the Ensham

Business once the transaction completes, and the overall

management thereof as required.

#### Board committees

As provided for in Thungela’s MOI and board charter, the

board is supported and assisted by the audit committee, the

remuneration and nomination committee, the social and ethics

committee and the risk and sustainability committee which have

clear mandates and oversight responsibilities for various aspects

of the business.

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95Integrated Annual Report for the year ended 31 December 2022

The board also appoints special subcommittees to deal with

urgent and business critical matters to assist the board in making

strategic, business critical decisions.

The composition of the board and board committees is subject to

ongoing review, and changes proposed to this structure will be

announced in due course as approved by the board.

Audit committee

Remuneration and

nomination committee

Social and ethics

committee

Risk and sustainability

committee

Kholeka Mzondeki

(chairman)

Ben Kodisang

Thero Setiloane

Ben Kodisang (chairman)

Seamus French

Kholeka Mzondeki

Sango Ntsaluba

Thero Setiloane (chairman)

Seamus French

Lesego Mataboge

1

July Ndlovu

Sango Ntsaluba

Yoza Jekwa

Sango Ntsaluba (chairman)

Seamus French

Ben Kodisang

Kholeka Mzondeki

July Ndlovu

Thero Setiloane

See pages 22 to 25 of the

Annual Financial Statements for

full report.

See page 98 to 122 for full

report.

See page 124 and 125 for full

report.

See page 126 and 127 for full

report.

Focus areas

Required to report annually to

shareholders and oversees

the Group’s accounting and

financial reporting, external

audit, integrated reporting and

combined assurance.

Responsible for the process

of nominating, electing and

appointing board members,

CEO, CFO and board

succession planning, board

performance evaluation

process, and the remuneration

policy in terms of the board

andprescribed officers.

Responsible for overseeing and

reporting on ESG matters to the

extent that it is not covered in the

risk and sustainability committee,

ethics, stakeholder relations

and responsible corporate

citizenship, and overseeing

people diversity, and regulatory

compliance and transformation.

Overall oversight of Group

risk, IT, sustainability, with

focus on safety, health and the

environment, and decides on

the Group’s risk appetite.

1

Lesego Mataboge, the executive head of human resources, is a member of the social and ethics committee.

BOARD AND BOARD COMMITTEE MEETINGS AND ATTENDANCE

Member Board Audit committee

Remuneration

and nomination

committee

Social and ethics

committee

Risk and

sustainability

committee

SS Ntsaluba 8/8 Invitee 2/3 2/2 4/4

KW Mzondeki 8/8 6/6 3/3 – 4/4

TML Setiloane 8/8 5/6 – 2/2 4/4

BM Kodisang 7/ 8 6/6 3/3 – 3/4

SG French 7/8 – 2/3 2/2 4/4

YN Jekwa

1

2/2 – – – –

J Ndlovu 8/8 Invitee Invitee 2/2 4/4

GF Smith 8/8 Invitee Invitee – Invitee

L Mataboge

2

– – –

2/2

–

Regularly scheduled

|

ad hoc

3

4

|

4 4

|

2 2

|

1 2

| –

4

| –

1

Appointed as an independent non-executive director with effect from 12 August 2022.

2

Lesego Mataboge, the executive head of human resources, attended the meetings as member.

3

The board and subcommittees held

ad hoc

meetings throughout the year in addition to regularly scheduled meetings to discuss various time critical matters.

The responsibilities delegated to each committee are formally

documented in their respective terms of reference, which have

been approved by the board and are reviewed annually.

Copies of the latest approved terms of reference are available on

the Thungela website.

The current composition of each of the committees is set out below:

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96 Integrated Annual Report for the year ended 31 December 2022

#### GOVERNANCE PRACTICES

CODES, REGULATIONS AND COMPLIANCE

The board is responsible for Thungela’s compliance with

relevant and applicable laws, codes and standards, which is an

integral part of the Group’s culture in ensuring the achievement

of its strategy. The board has delegated the implementation of

an effective compliance framework to the legal and risk and

assurance teams. Supervision of risk management is delegated to

the risk and sustainability committee, which reviews and monitors

compliance.

Thungela complies with various codes and regulations such as

the Companies Act of South Africa, the JSE Listings Requirements

and UK Listing Rules and King IV. Internal audits are regularly

performed to assess compliance with legal and industry

requirements. Thungela is in compliance with the provisions of the

Companies Act of South Africa and is operating in conformity with

its MOI.

KING IV

The board is committed to good corporate governance practices

when executing its fiduciary duties and is fully committed to

compliance with the governance requirements as set out in

King IV. The board is satisfied that Thungela has adopted

the 16principles outlined in King IV after conducting a self-

assessment and is monitoring the application of the recommended

practices on a consistent basis.

Thungela as a JSE-listed company is required in terms of the JSE

Listings Requirements to report on the extent to which the principles

set out in King IV are applied. The details may be found in the

Thungela King IV register which is available at

https://www.thungela.com/investors/corporate-governance.

INTERNAL ASSURANCE

The internal risk and assurance function provides independent and

objective assurance over Thungela’s risk management, internal

controls, governance, and the processes in place for ensuring the

effectiveness and efficiency of the internal control environment.

#### REGULATORY COMPLIANCE

Thungela recognises the importance of complying with legislation

as well as adhering to non-binding codes and standards

impacting mining operations. The compliance process is an

important element in embedding a compliance culture at Thungela

and providing the board and management with the assurance of

compliance with relevant legal and regulatory requirements.

The compliance function is divided between the legal and risk and

assurance disciplines and is aligned to the strategic objectives.

The Group is developing a system to track and monitor regulatory

compliance to allow the adoption of appropriate remedial or

mitigating steps, where necessary.

On a quarterly basis, the compliance function provides reports

to the risk and sustainability committee on the level of regulatory

compliance to applicable mining and related legislation,

regulations, standards, best practices and codes. Representatives

of the risk and assurance function attend the quarterly risk and

sustainability meeting by invitation.

ANNUAL COMPLIANCE CERTIFICATE

The annual compliance certificate confirming the Group’s

compliance with the JSE Listings Requirements for the period was

completed in April 2023 and submitted to the JSE as required.

TRADING IN SECURITIES

Thungela has developed and published on its internal website

a dealing code for the dealing in securities, which is aligned

with the JSE Listings Requirements. The dealing code sets out

provisions on how trade in Thungela shares should be conducted

by Thungela directors, prescribed officers, the company secretary

and restricted employees. The dealing code, in line with the JSE

Listings Requirements, prohibits directors and restricted employees

from trading in any Thungela securities without obtaining prior

approval from the chairman of the board, the CEO or the

company secretary.

Directors, prescribed officers and the company secretary, and

any directors and the company secretary of Thungela’s major

subsidiaries, are also required to publicly disclose any dealings

inThungela shares by themselves or their associates.

The JSE Listings Requirements defines a period during which

trading is prohibited in Thungela shares (i.e. a closed period) as

follows:

● From 1 January each year to the date on which the annual

financial results are published.

● From 1 July each year to the date on which the interim financial

results are published.

● Any period when Thungela is trading under a cautionary

announcement.

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97Integrated Annual Report for the year ended 31 December 2022

● Any period when there exists any matter which constitutes price

sensitive information in relation to Thungela securities (whether

or not the director, prescribed officer, company secretary or

restricted employee has knowledge of such matter).

The prohibition applies equally to directors, prescribed officers,

restricted employees and restricted employees’ associates. At the

start of a closed period, directors and restricted employees are

formally advised by the company secretary of the commencement

and duration of the closed period. Trading embargoes are also

imposed on individuals who possess price sensitive information at

any given time.

All instances of non-compliance with the dealing code and

the JSE Listings Requirements have been reported to the JSE as

identified, and the appropriate actions were taken.

SPONSOR

Thungela understands the role and responsibilities of the sponsor

stipulated in the JSE Listings Requirements and has cultivated a

good working relationship with its sponsor, Rand Merchant Bank.

The Group is satisfied that the sponsor has executed its mandate

with due care and diligence for the year under review.

COMPANY SECRETARY

The Group’s company secretary is Francois Klem. He has been

appointed in line with the requirements of the Companies Act of

South Africa and the JSE Listings Requirements.

The duties of the company secretary include:

● Ensuring that board procedures are followed and reviewed

regularly.

● Ensuring compliance with the applicable rules and regulations

for the conduct of the affairs of the board.

● Providing the board and individual board members with

detailed guidance as to how their responsibilities should be

properly discharged in the best interests of the Group and in

line with good governance practices.

● Providing counsel and guidance to the board on its individual

and collective powers and duties.

● Eliciting responses, input and feedback for board and board

committee meetings.

● Preparing and circulating board and board committee papers

timeously.

● Ensuring preparation and circulation of proper minutes of

shareholder, board and board committee meetings.

● Maintaining statutory records in accordance with legal

requirements.

● Reporting to the board on any non-compliance with the

Thungela MOI or Companies Act of South Africa.

● Certifying in the relevant annual financial statements that all

of the companies in the Group have filed the required notices

and returns timeously in accordance with the Companies Act

of SouthAfrica.

● Ensuring that the Group’s interim and annual financial

statements and reports are properly distributed.

● Carrying out the other functions required of a company

secretary by the Companies Act of South Africa, the

JSEListings Requirements and the UK Listing Rules.

● Considering the regulatory universe, preparing and providing

the board with updates and proposed changes to laws and

regulations affecting the Group.

● Assisting the remuneration and nomination committee with the

appointment of directors.

● Advising the remuneration and nomination committee on all

legal and regulatory matters, including legal frameworks and

processes.

● Advising the board with regards to all regulatory filing and

public disclosure relating to Thungela’s governance processes.

● Drafting and distributing the notice of the AGM to all

shareholders.

● Drafting and release of announcements on both SENS

andRNS.

● Assisting with director induction and training programmes.

● Assisting with the board evaluation process done by an

external service provider, and the internal board evaluation

process.

● Acting as a business integrity implementation manager for

the Group and supporting human resources with the code of

conduct implementation, training and awareness process.

● Taking responsibility for the antitrust policy roll-out and

awareness including dawn raids.

● Assisting in the drafting of the governance sections of the

Integrated Annual Report and the Environmental, Social and

Governance Report, as well as the audit, social and ethics,

risk and sustainability, and remuneration and nomination

committee reports.

The board has considered and satisfied itself as to the

competence, qualifications and experience of the company

secretary. The board is further satisfied that in executing his duties

of governance and administration, Francois Klem maintains an

arms-length relationship with the board and its directors.

INFORMATION TECHNOLOGY AND

GOVERNANCE

The risk and sustainability committee is responsible for reviewing

and approving an IT governance framework, which delegates

to management the responsibility for the implementation thereof.

The IM function is responsible for the implementation of a holistic

approach to managing corporate information by implementing

processes, roles, controls and metrics that treat information as a

valuable business asset. Currently, the IM function is completing

the separation process from Anglo American, with the aim to

conclude the process largely by the end of 2023. Quarterly

progress updates are presented to the risk and sustainability

committee, which reports into the quarterly boardmeeting.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

98 Integrated Annual Report for the year ended 31 December 2022

Section 1:

Background statement

Section 2:

Remuneration philosophy andpolicy

Section 3:

Implementation report

Providing the overall context of the report

and highlighting specific matters of

particular significance for remuneration

decisions.

Describing the Group’s overall

remuneration policy with a particular focus

on executive directors and prescribed

officers.

Outlining the details of the remuneration

of the executive directors and prescribed

officers for the year under review.

REMUNERATION AND NOMINATION COMMITTEE

The purpose of the Thungela remuneration and nomination committee (RemCo) is

to support the board in executing its duties. Through the RemCo, the board ensures

that an appropriate remuneration policy is implemented to support the delivery

of the Group’s strategy on fair, responsible and transparent remuneration and

to approve the elements of remuneration for executive directors and prescribed

officers.

The RemCo confirms that it has complied with its obligations as reflected in the

terms of reference, a copy of which is available at www.thungela.com. The

committee has also complied with the provisions of the guidance contained

in King IV related to remuneration governance and the applicable JSE Listings

Requirements.

The RemCo is pleased to provide the remuneration report for Thungela for the

year ended 31December 2022. The report is presented in three parts, in line with

the relevant best practice as outlined in King IV and the JSE Listings Requirements.

Chairman

Ben Kodisang

Members

Sango Ntsaluba

Seamus French

Kholeka Mzondeki

## REMUNERATION REPORT

DELIVERING IN A YEAR OF COMPLEXITY AND

VOLATILITY

Thungela has once again delivered exceptional results while

executing its strategic priorities across several fronts. These results

are reflected in the review of financial performance set out on

pages 60 to 69. The key financial and operational outcomes that

were considered by the RemCo in relation to the remuneration

decisions set out in this report are the following:

● Adjusted EBITDA

∆

of R29.5 billion (2021: R10.0billion)

● Adjusted operating free cash flow

∆

of R18.1 billion

(2021:R3.9billion)

● FOB cost per export tonne

∆

of R1,079(2021: R830)

● Export saleable production of 13.1Mt (2021: 14.5Mt)

Following the environmental incident at Khwezela’s Kromdraai

site in February 2022, Thungela has driven a comprehensive

programme with multiple stakeholders to remedy the affected

area and put additional controls in place. TRCFR has increased

to 1.41 (2021:1.35), and the Group continues to drive multiple

programmes to support continuous improvement in its safety

culture and practices. Furthermore, it has delivered an annual

reduction in our carbon intensity of 8.3% (2021:0.9%).

#### SECTION 1: BACKGROUND STATEMENT

CONTINUING OUR REMUNERATION JOURNEY

In 2022, Thungela charted its own path in relation to remuneration

reflecting the RemCo taking full responsibility to ensure that our

decisions on remuneration continue to create value responsibly for

all of our stakeholders.

Thungela has faced multiple challenges that have not made this a

straightforward process. These challenges exist at local, regional

and global levels and we have considered this context as part of

our decision making as the RemCo.

This report outlines how Thungela drives fair and responsible

remuneration and drives the delivery of value for all of its

stakeholders.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

99Integrated Annual Report for the year ended 31 December 2022

Thungela continued to operate within a very uncertain

environment during the year with several factors

influencing results, namely:

● The continued poor rail performance resulting from the

operational issues experienced by TFR.

● Unusual levels of inflation largely driven by the Russian

invasion of Ukraine in February 2022 and its continuation

throughout the year.

● Elevated coal prices driven by various external market factors,

as set out on pages 38 and 39.

These factors are external and non-controllable, but Thungela has

managed the impacts through the continued focus on the delivery

of our strategic priorities. The Group's level of delivery, despite

these challenges, has been considered by the RemCo in relation

to the outcomes of the short-term incentives (STI) for 2022.

THE EVOLUTION OF OUR REMUNERATION

POLICY

The RemCo and the board are acutely aware of the requirement

for fairness and transparency in corporate remuneration policies,

especially given the volatility of the markets and the ongoing

increases in inflation and interest rates in South Africa and beyond.

We aim to diligently evolve our remuneration policy to provide

the correct balance between various stakeholder interests and

Thungela’s ability to attract, retain and engage people with the

skills and talent to power the delivery of our purpose. Balancing

these various interests was key for us in the process of evolving our

remuneration policy in 2022.

Key remuneration decisions by the RemCo in 2022:

● Approved the updated remuneration policy for the Group.

● Approved specific policies governing retention awards,

sign-on awards, and minimum shareholding requirements

(MSR).

● Approved the updated performance management process

and subsequent adjustments to our STI structure for middle

management employees.

● Approved retention payments for highly critical employees

and ensured that proposals remain in line with approved

policy.

● Awarded annual increases to the executive directors,

prescribed officers, the company secretary, and

management personnel as of 1January 2023.

● Granted our second conditional share award under the

approved remuneration policy which will vest in 2025

based on performance for the period 1 January 2022 to

31December 2024.

● Approved the 2021 performance outcomes, STIs and

deferred bonus share (DBS) awards for executive directors,

prescribed officers, and other applicable employees.

● Recommended for board support and shareholder approval

the proposed non-executive director fees.

Our commitment to fair and responsible remuneration practice

was a key focus area in 2022. During the year we initiated a

detailed review of the vertical pay gap between our highest and

lowest paid employees. We are monitoring our vertical pay gap

by tracking three different measures, namely:

● The Gini coefficient: a measure of the distribution of income

across a population, which uses coefficient ranges from

0 to 1 as an index, with 0 representing perfect equality and

1 representing perfect inequality. It compares the cumulative

proportions of the population against the cumulative

proportions of income they receive.

● The Palma ratio: a ratio of all income received by the 10% of

people with highest income divided by the share of income

received by the 40% of people with the lowest income.

● The 5:5 ratio: the total or average earnings of the top 5% of

the workforce, divided by the total or average earnings of the

5% of the workforce that earns the least.

All of these are measured using the total on-target remuneration

of the employees. Currently Thungela's vertical pay gap is lower

than the South African general market and the South African

mining average, but we will continue to focus on these metrics.

We are also continuing to analyse various other measures of fair

and responsible remuneration by tracking them through ongoing

analyses of income differentials, horizontal pay gaps and pay

equity outliers, while investigating how to drive and track fair and

responsible remuneration as part of our sustainability strategy.

Focus areas for the RemCo in 2023:

● Further enhancing our current STI structure through detailed

review of the impact of the new performance management

process and STI calculation.

● Monitoring the potential governance implications of the draft

Companies Act bill.

● Driving closer alignment between the strategic pillars of the

business and remuneration.

● Continued assessment and expansion of pay gap measures

to review and understand the level of pay fairness and

equality.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

100 Integrated Annual Report for the year ended 31 December 2022

VOTING ON REMUNERATION AND

SHAREHOLDER ENGAGEMENT

At Thungela's most recent AGM, the Group's shareholders took

part in a non-binding advisory vote on the remuneration policy, its

implementation and non-executive directors’ fees.

The results of the non-binding advisory votes received for

Thungela's inaugural remuneration report last year are as follows:

AGM voting outcomes

(%)

Remuneration policy

94.00

Implementation report

91.11

Non-executive directors’ fees

98.25

Although the voting outcomes were favourable, we have taken

the opportunity to constructively engage with our shareholders to

understand some of the reasons for the dissenting votes.

The two key issues that were raised by some investors in these

engagements were:

Issue raised Response

General lack of detail

in some aspects of the

remuneration report

In this remuneration report we

have included more detail

specifically on the long-term

incentive (LTI) and STI metrics

to ensure higher levels of

transparency.

Inclusion of dividend yield

as a metric in our long-term

incentive plan

On 15 November 2022, the

RemCo decided to remove

dividend yield as a metric

for the long-term incentive

plan (LTIP) in the updated

remuneration policy. This

will be effective for awards

granted in 2023.

We will present our remuneration policy and implementation

report, contained respectively in section 2 and section 3 of this

remuneration report, for two separate, non-binding votes at the

AGM on 31May 2023.

If 25% or more of shareholders vote against either or both

of these sections, Thungela will include a note as such in the

announcement reflecting the results of the AGM. Anydissenting

shareholders will also be invited to engage with Thungela. The

method of shareholder engagement will be decided by the

RemCo, and could include:

● E-mails and video conferencing

● Investor roadshows

● One-on-one meetings with shareholders

A summary of concerns and the RemCo response will be

included in the remuneration report for the year ending

31December2023.

ACCESS TO INFORMATION AND ADVISORS

Members of the RemCo have access to various sources of

information and advice to inform their independent judgement

on remuneration and related matters. This assists them to better

understand trends within the executive remuneration environment

related to regulations, compliance and stakeholder perceptions,

and risks associated with the current structure of remuneration.

The RemCo has received advice from Bowmans, a leading

African law firm, related to the development of the remuneration

policy and governance framework, and Bowmans has also

independently advised the RemCo in relation to the benchmarking

of executive and non-executive remuneration. Additional

benchmarking data was received from RemChannel. The Group’s

independent external auditor, PwC, has not provided advice to

the committee. Bowmans will continue asthe RemCo advisor until

31December2023.

We are satisfied that this advice was independent and objective.

CONCLUSION

The past year has been one in which Thungela continued to

deliver value in a complex and highly volatile environment. Ithas

also seen Thungela really establishing itself as a value creating

company for all of its stakeholders.

We are of the opinion that the remuneration policy achieved

its objectives in 2022 and we look forward to engaging with

our stakeholders to ensure we continue evolving and that our

approach to remuneration enables the effective delivery of our

purpose and strategy.

Ben Kodisang

Remuneration and nomination committee chairman

26 April 2023

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

101Integrated Annual Report for the year ended 31 December 2022

#### SECTION 2: REMUNERATION PHILOSOPHY AND POLICY

REMUNERATION ELEMENTS

The RemCo, in collaboration with management and advisors,

actively conducts a total remuneration benchmarking analysis

on an annual basis to ensure that our remuneration aligns with

and enables the delivery of the Group’s strategy. This includes an

analysis of all remuneration elements (being fixed remuneration,

STIs and LTIs) for the executive directors, prescribed officers and

non-executive directors. These elements are benchmarked against

an appropriate comparator group and external survey data

representative of the Group’s size and complexity.

The elements of remuneration included in the policy are:

● Fixed remuneration, including basic salary and benefits

● STIs comprised of cash payments and DBS awards

● LTIs

Fixed remuneration

The Group’s fixed remuneration is currently structured on a “basic

salary plus benefits” basis.

Basic salary

Executive and management employees

The basic salary of employees is reviewed on an annual basis

with increases effective from 1 January. As part of the annual

review process the Group is positioned competitively against

peers that are comparable in size, sector and business complexity.

Group performance, affordability, prevailing consumer inflation

and average industry and sector increases are considered in

determining the annual adjustments.

Annual increases are generally inflation-linked but where

affordable, additional budget is allocated for adjusting

remuneration levels that are not appropriately aligned to internal

pay ranges and/or market rates for a specific job. These market

adjustments are informed by positioning current salaries within

a tolerance pay range and comparative ratio for a specific

discipline, job or grade. Pay levels that are not within the tolerance

pay range are adjusted for closer alignment to the market’s 50

th

percentile.

Bargaining unit employees

In the case of bargaining unit employees, basic salary levels

depend on the outcome of wage negotiations with representative

unions.

Benets

Core benefits are offered as a condition of service, with some

elective flexible offerings for employees in our management

group. Core benefits primarily comprise retirement, risk, and

medical scheme participation. The Group regularly reviews

these benefits for affordability, flexibility, and perceived value

toemployees.

REMUNERATION PHILOSOPHY

Thungela’s reward philosophy underpins the Group’s strategy by

focusing on delivering a high-performance culture. This culture

allows our employees to continually reinforce our purpose and

values through their ongoing performance.

We have adopted a remuneration philosophy that is designed

to attract, retain and incentivise individuals to support the

development and realisation of the Group’s business strategy,

thereby creating sustainable value for all stakeholders.

APPLICATION OF THE REMUNERATION POLICY

Our remuneration policy applies to the whole of Thungela and

all subsidiaries on an organisation-wide basis, unless otherwise

agreed. In instances where Thungela does not have effective

management control, this policy will apply as far as it has been

agreed with the other shareholders.

REMUNERATION PRINCIPLES

The Group’s remuneration policy has been aligned with the

recommendations of King IV and is based on the following

principles with the aim of delivering fair and responsible

remuneration.

1

Alignment with

Group strategy

and culture

Remuneration practices are constantly re-

assessed to ensure that they are aligned with the

Group’s strategy and support the entrenchment of

its values and leadership behaviours.

2

Competitive pay

levels

Reward is set at a competitive level within the

relevant market to ensure that the Group attracts,

motivates and retains highly talented individuals.

3

Internal equity

Reward is managed to adhere to the principle of

responsible, equal, fair, and competitive pay.

4

Link with

stakeholder

interests

Incentive-based rewards are linked to achieving

excellence and aligned with stakeholder interests

over the short, medium and long term.

5

Risk-based

approach

LTI schemes are designed and applied to

minimise stakeholder exposure to unreasonable

risk.

6

Relevance

Performance measures and targets for incentive

plans are structured to operate effectively

throughout the business cycle and support the

business strategy. These are also continually

reviewed to ensure that they remain aligned to

market trends, stakeholder and any legislative or

regulatory requirements.

7

Communication

Transparent communication of the reward policy

and implementation to all our stakeholders

through ongoing engagement using various

channels.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

102 Integrated Annual Report for the year ended 31 December 2022

Business results are measured by an overall scorecard approved

by the RemCo on an annual basis. The scorecard is split into four

performance categories with 10 overarching metrics, namely:

Performance

Category Metric | Measure

Weighting

(%)

Safety and

Health

10%

TRCFR | % improvement on average for the

previous 3 years

HIV % treatment | % of employees who

know their status

5

5

ESG

10%

Level 4 – 5 environmental incidents |

number of incidents

Energy intensity | % of annual improvement

(year-on-year)

Inclusive procurement | % of addressable

spend

Inclusion and diversity | % HDPs in

management

2.5

2.5

2.5

2.5

Production

30%

Export saleable production | number of

export saleable production tonnes

FOB cost per export tonne



| FOB cost per

export tonne excluding royalties

∆

(Rand/tonne)

20

10

Finance

20%

Adjusted EBITDA



| Rand million

Adjusted operating free cash flow



|

Randmillion

10

10

Our annual STI is designed to encourage and reward taking

responsibility for the success of Thungela by continually delivering

with an owner’s mindset. Based on the design principles of the

new performance management process we also worked with

our external reward advisor to redesign the STI structure for our

middle management employees to:

● Ensure that our STIs are distributed more fairly across our

different bands

● Create an ownership culture

● Attract and retain talent

● Align with market best practice

The maximum STI award as a percentage of basic salary is

outlined below:

CEO

■ Annual cash bonus ■ Deferred bonus shares

CFO, prescribed officers

and senior management

95

48

40

80

More details of the composition of the STI performance conditions

are provided in the implementation report, together with the

outcomes for the 2022 financial year as it relates to executive

remuneration.

Currently, management employees are only allowed to belong

to one recognised closed medical scheme, but this is continually

monitored to identify opportunities for adding additional flexibility.

Retirement benefits are provided through defined contribution

funds, with contribution levels aligned to market best practice and

the rules of the fund.

Short-term incentives

The original structure and process of our STI was inherited from

Anglo American.

% of

annual basic

salary

Total value of the

STI for the year

Business results

70%

Individual results

30%

STI cash

67%

STI DBS

33%

At the end of 2021, we embarked on a process to redesign our

performance management process as well as reconsidering the

structure of our STI.

Based on support from external parties, engagement with

internal stakeholders and considering market views related to

performance management, we reintroduced the concept of

individual results into our performance management process and

our STI calculation. We have kept the additive approach, but

the STI calculation now comprises business results and individual

results as the two legs of performance measurement.

The calculation of the STI for senior management and above employees is outlined below:

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

103Integrated Annual Report for the year ended 31 December 2022

Long-term incentives

Thungela’s LTI plans have a time horizon of more than a year and

are divided into two categories: conditional and forfeitable share

awards.

Conditional share awards

Annual awards of shares in Thungela which will vest after a three-

year period subject to the continuous employment of the individual

and the achievement of key performance conditions that are

aimed at delivering value to all stakeholders. Dividends paid on

underlying shares are rolled up into the award and are settled as

dividend equivalent shares on the vesting date, if and to the extent

the awards vest.

Maximum awards of conditional shares expressed as a

percentage of basic salary are as follows:

CEO

100%

CFO

80%

Prescribed officers

80%

Senior management (EUpper)

80%

Forfeitable share awards

Annual or

ad hoc

awards of shares in Thungela, the vesting of

which will be determined by the employee fulfilling the applicable

employment condition. These shares are held by an escrow agent

on behalf of the employee until the vesting date. These shares

attract voting and dividend rights for the period they are held in

escrow but can only be traded once they have vested. Thungela’s

remuneration policy makes provision for four types of forfeitable

shares:

Deferred bonus

shares

These make up a portion of the

employee’s STI.

Governance: remuneration policy

Sign-on shares Used to compensate new employees

for share values forfeited as a result of

joining Thungela.

Governance: remuneration policy and sign-on

award policy

Retention shares Used in limited instances to retain key

talent below the executive committee

level.

Governance: remuneration policy and retention

award policy

Milestone shares Used to award senior employees

achieving agreed milestones i.e.

delivery of key projects or corporate

finance events.

Governance: remuneration policy

BENCHMARKING

We make use of reputable surveys i.e., RemChannel to provide

points of comparison for determining external equity within our

remuneration environment. Macroeconomic factors for example,

consumer price index (CPI), are taken into consideration when

comparing remuneration to the external market, and survey

information is always adjusted to take both the assumed

movement in salaries and the time elapsed between the date of

the survey and the date when the analysis is performed.

MARKET REFERENCE FOR EXECUTIVE DIRECTORS

AND PRESCRIBED OFFICERS

For our executive directors and prescribed officers, our external

reward advisor assists us by proposing a requisite comparator

group that is used for the purposes of performing remuneration

benchmarks. In future, the comparator group will be assessed for

appropriateness every two to three years, but given our current

operating environment, this is currently assessed on an annual

basis.

We have made two changes in our comparator group in 2022

to reflect our substantially increased market capitalisation and

revenue compared to those originally considered on listing. The

comparator group comprises of eight JSE-listed mining companies

with primarily South African resident executives.

External remuneration comparator group

Tharisa plc

Pan African Resources plc

DRD Gold Limited

Harmony Gold Mining Co Limited

Royal Bafokeng Platinum Limited

African Rainbow Minerals Limited

Northam Platinum Limited

Exxaro Resources Limited

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

104 Integrated Annual Report for the year ended 31 December 2022

REMUNERATION MIX SCENARIOS

The graphs below illustrate the remuneration outcomes at

different levels of performance with each element disclosed as

apercentage of annual basic salary.

The maximum award values for the cash and the DBS portions of

the STI, and the annual conditional share award are aligned with

the policy percentages provided above.

The ‘on-target’ values are determined as 60% of the maximum

for the STI and LTI. The LTI value excludes share price movements

and is disclosed based on the award value for the current year

multiplied by the applicable vesting percentage.

CEO (%)

Minimum

On-target

Maximum

100

100

100

57

95

29

48

48

80

■ Basic salary ■ STI Cash ■ STI DBS ■ LTI

CFO AND PRESCRIBED OFFICERS (%)

Minimum

On-target

Maximum

100

100

100

48

80

24

40

48

80

■ Basic salary ■ STI Cash ■ STI DBS ■ LTI

CONDITIONAL SHARE AWARDS

The second award of conditional shares was made in March

2022 and will be measured over the period 1 January 2022 to

31 December 2025. We have previously noted that our executive

directors and prescribed officers will have an additional two-

year holding period following the initial three-year performance

and employment period. While this additional holding period

is common practice in UK listed companies for their executive

directors, none of our JSE-listed comparators impose such a

further holding period.

Our MSRs will also ensure an adequate level of holdings by

prescribed officers following the vesting of the awards. For

consistency with the commitment for an additional holding period

in respect of our executive directors, but to align with local

practice for our prescribed officers, the RemCo decided that the

two-year holding period will remain for the executive directors but

will no longer be imposed for the prescribed officers.

The performance conditions for this award were kept the

same as those applicable to the inaugural award in 2021 as it

continues to create the right balance between the interests of

various stakeholders. We have adjusted some of the targets by

considering our current levels of performance and the changes in

the environment in which we are remunerating.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

105Integrated Annual Report for the year ended 31 December 2022

The performance conditions for the 2022 conditional award are as follows:

Performance

category

Performance

area

Weighting

(%) Performance measure Threshold On-target Stretch

Shareholders

25%

Relative TSR

(local)

7. 5

Performance against index return of local

competitors

Index return

Index return

+ 3% p.a.

Index return

+ 6% p.a.

Relative TSR

(global)

7. 5

Performance against index return of

global competitors

Index return

Index return

+ 3% p.a.

Index return

+ 6% p.a.

Dividend

yield

10 Performance against index yield

Index yield

–1%

Index

yield

Index yield

+1%

Financial

20%

Cash margin

per export

saleable tonne

20

% change in cash margin from 2020

base (price and foreign exchange

neutral)

(3)% —% 3%

Production

Sustainability

25%

Life of business 15

% life extended as a result of resource

to reserve conversion (additional LOM

saleable tonnes/ base LOM saleable

tonnes) (adjusted for reserve depletion)

—% 10% 20%

Lifex capital

intensity

10

Capex per incremental saleable tonne

from lifex projects relative to most recent

projects (Mafube and Navigation

weighted) (relative %)

(3)% —% 5%

ESG

30%

Carbon

emissions

10

% reduction in GHG emissions (2016

baseline)

11% 12% 13%

Fresh water

import

2.5 ML reduction 137 152 167

Potable water

usage

2.5 ML reduction 269 299 329

Water

treatment

2.5 % change against a 40% target (5)% —% 5%

Water reuse/

recycle

2.5 % change against a 75% target (8)% —% 5%

Inclusion and

diversity

10

% HDP representation in middle

management and up against a 65%

target

(3)% —% 5%

The TSR peer groups for the local and global metrics are outlined

below:

Local TSR peer group

Salungano Group Limited

MC Mining Limited

Exxaro Resources Limited (excluding earnings and dividend per

share from iron ore)

Global TSR peer group

Arch Resources Inc

New Hope Corp Limited

Peabody Energy Corp

Whitehaven Coal Limited

Yankuang Energy Group Company Limited

Banpu Power Public Company Limited

PT Adaro Energy Tbk

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

106 Integrated Annual Report for the year ended 31 December 2022

From 2023, the dividend yield metric will no longer be used for

the conditional share awards. Based on market benchmarking

we have identified that dividend yield is not a common

performance condition within comparator LTI measures. It was

originally included based on our understanding, prior to listing,

that dividend yield would be an important investor requirement,

however the post listing growth in the share price has changed this

perception. We will be maintaining the 25% for the shareholder

performance category. This means that the TSR metrics will in

future be weighted at 12.5% each.

MINIMUM SHAREHOLDING REQUIREMENTS

Executive directors and prescribed officers are required to

accumulate and hold a predetermined and market-aligned

minimum shareholding. The MSR must be accumulated from LTI

and DBS awards on an elective basis before these awards vest.

These individuals are required to accumulate and hold an

appropriate percentage of their share incentive awards to meet

the target. The extent to which targets have been met is calculated

by multiplying the closing share price at year end by the number

of shares held and expressing this as a percentage of their annual

fixed remuneration at the time, with the following target holdings

set for executives:

● 200%for the CEO

● 100%for the CFO and prescribed officers

Current members of the Group executive committee will be

required to build up the target shareholding over the fiveyears

from 7 June 2021. Members of the Group executive committee

who are appointed in the future will be required to build up the

target shareholding over the five years following their date of

Group executive committee appointment.

We have completed a market benchmarking exercise in 2022 on

the MSR percentages for our executive directors and prescribed

officers and have found them to be line with peer groups in the

mining industry. No changes have therefore been made to the

overarching MSR percentages that need to be achieved. We

have introduced a formalised policy which governs and sets

out the requirements related to the MSR and the impact of not

achieving these requirements by the fulfilment date.

CONTRACTUAL COMMITMENTS

All executive directors and prescribed officers have permanent

employment contracts with Thungela or its subsidiaries. The

contracts prescribe a notice period of six months for the executive

directors and three months for the prescribed officers. Executive

directors and prescribed officers are subject to a restraint-of-trade

period of six months from the date of termination of their contract.

Our service contracts and the associated contractual commitments

were reviewed by Bowmans as part of our listing process to

ensure that they are aligned with market practice and related

governance and legislative requirements. These contracts will

be regularly reviewed to ensure that they remain aligned with all

requirements.

OTHER POLICY PROVISIONS

Termination benefits

There are no contractual obligations

to effect payment on termination,

other than in respect of payment

for the notice period and accrued

leave balances. The STI and LTI will

be dealt with based on the nature of

the termination and at the RemCo’s

discretion.

STI LTI

Ineligible termination

Resignation, dismissal.

Not eligible for any STI cash

and unvested DBS awards will

be fortified.

The right to receive any

shares or cash awards will

immediately be forfeited.

Eligible termination

Death, retirement,

disability, dismissal for

operational reasons.

STI cash payments will be

pro-rated for the year and the

vesting of all unvested DBS

awards will be accelerated

the termination date.

All awards will be

accelerated, but will be pro-

rated to reflect the time served

of the applicable vesting

periods and the RemCo’s

estimate of the level of

achievement of performance

conditions.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

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107Integrated Annual Report for the year ended 31 December 2022

Malus and clawback

The malus and clawback policy may

be implemented based on various

trigger events, including:

● Material misstatement of

Group results and performance

measures that result in incorrect

or inappropriate determination of

variable pay awards.

● Gross misconduct or behaviour

by the individual bringing the

Group into disrepute.

● Material failing in risk

management, especially in the

case of events affecting the

environment and communities.

● Unacceptable safety outcomes,

especially in the case of fatalities,

or where safety outcomes are

significantly below the thresholds

for the year and management

is deemed responsible for this

outcome.

● Material environmental incidents.

STI cash STI DBS LTI

Malus is the

ability of the Group

to reduce unvested

or unpaid awards

before the end of

the vesting period

or prior to payment.

From the end of the

performance period

to the STI payment

date.

During the period

prior to the vesting of

the DBS awards.

During the

performance period

covered by the award

(pre-vesting).

Clawback is the

ability of the Group

to recoup, in full or

in part, the value

of vested shares

for payments for

the duration of the

clawback period.

Three years from the

STI payment date.

Three years from

the vesting of each

tranche of the DBS

awards.

Three years from the

vesting date.

NONEXECUTIVE DIRECTORS’ FEES

The non-executive directors’ fees are based on an annual retainer

for board and board committee roles. The board chairman

and the lead independent director's fees are determined on an

‘all-inclusive’ basis and additional fees are not paid for board

committee membership. The other non-executive directors receive

fees for their board roles in addition to the fees for their roles as

chairman or members of board committees.

The current fee policy, details of actual fees paid per non-

executive director and the fees proposed for the 2023 financial

year are included in the implementation report. The proposed fees

will be included in the notice of the AGM for approval through a

special resolution by the shareholders.

NONBINDING ADVISORY VOTE ON

REMUNERATION POLICY

The remuneration policy, as described in section 2 of the

remuneration report, excluding those arrangements specifically

applicable to the Group’s listing and that do not form part of the

ongoing remuneration policy, as noted above, is subject to a non-

binding advisory vote by shareholders at the AGM. In the event

that more than 25% (of those shareholders voting) vote against

the policy, the RemCo will consult with dissenting shareholders

to determine the reasons for their objections. Any such concerns

will be considered by the RemCo when considering changes

for the subsequent year. A summary of the concerns and the

RemCo’s response thereto will be included in the following year’s

remuneration report.

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

![]()

108 Integrated Annual Report for the year ended 31 December 2022

#### SECTION 3: IMPLEMENTATION REPORT

SCOPE

This section outlines the remuneration received by Thungela’s

executive directors, prescribed officers and non-executive

directors for the year under review. It covers the remuneration

elements and awards that were made and settled during 2022 in

the following two categories:

1

Awards approved by Anglo

American to support and

reward the successful listing

of Thungela and retain talent

to ensure stability during the

transition.

● Retention and milestone

awards (forfeitable

shares)

● Retention awards (cash)

2

Awards that were made

in line with Thungela's

remuneration policy.

● 2022 STI (cash)

● 2022 DBS (forfeitable

shares)

● 2022 LTIP (conditional

shares)

The implementation report highlights the level of delivery within our

first full year of performance as an independent, listed company

and how this has translated into the remuneration outcomes of the

executive directors and prescribed officers.

BASE SALARY ADJUSTMENTS

Based on market insights and benchmarking from Bowmans

and RemChannel, supported by an analysis of the historical and

forecasted CPI environment, a 4.5% increase on basic salary

was approved by the RemCo for executive directors, prescribed

officers and management employees as of 1January 2023.

Increases for bargaining unit employees are affected in the middle

of the calendar year and these have been successfully negotiated

with our recognised union for the next three years from 2022 to

2024. The figure below provides a comparative view of increases

between executive, management, and bargaining unit employees

against CPI.

Base salary adjustments (%)

1

2021

■ Bargaining unit ■ Management

■ Executives ● Consumer price index

2022 2023

6.5

3.5 3.5

7.5

4.5 4.5

7.0

6.0

4.5

7.0

6.2

6.0

1

For 2023, increases are as approved by the RemCo, and CPI as per IMF forecast.

No other adjustments were made to the base salaries for

executive directors or prescribed officers during 2022.

2022 SHORTTERM INCENTIVE OUTCOMES

As indicated in section 2 of the report, the structure and

calculations used to calculate the performance outcomes related

to the Group’s STI were updated during 2022 to better reflect the

requirements of Thungela.

As part of the determination of the performance outcomes for

2022, the RemCo considered the impact of both the continued

underperformance of TFR, and the unusual inflation experienced

on Thungela’s ability to deliver on production and financial

performance targets. The processes followed to normalise the

outcomes resulting from these challenges were independently

reviewed to ensure that they are reflective of Thungela’s

performance agnostic of non-controllable external factors.

The calculation of the STI was outlined in section 2, but the actual

outcomes are presented in this section.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

109Integrated Annual Report for the year ended 31 December 2022

The figure below outlines the four performance categories which comprise the business results (70%) component of the STI with the

proportional weighting thereof. Itfurther includes the outcome of the business results when compared to the ‘on-target’ percentage.

BUSINESS RESULTS PERFORMANCE CATEGORIES AND OVERALL RESULT (%)

Performance

category Metric | Measure

Weighting

(%) Result %

Safety and Health

10/70

TRCFR 5 0

HIV % treatment 5 100

ESG

10/70

Level 4 – 5 environmental incidents 2.5 25

Energy intensity 2.5 100

Inclusive procurement 2.5 100

Inclusion and diversity 2.5 100

Production

30/70

Export saleable production 20 100

FOB cost per export tonne

∆

10 84

Finance

20/70

Adjusted EBITDA

∆

10 33

Adjusted operating free cash flow

∆

10 55

70 72

The remaining portion of the STI (30%) is determined by individual

results for each executive director and prescribed officer. For the

executive directors, the RemCo approves a balanced scorecard

on an annual basis. The balanced scorecard is comprised of three

sections, namely:

● Key priorities

● Top risks

● Our pillars of sustainable value

The pillars of sustainable value are shared, but the key priorities

are specific outcomes required by the individual executive director

and therefore comprise the individual deliverables. The tables

below outline the individual results for each executive director

against their balanced scorecard.

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

![]()

110 Integrated Annual Report for the year ended 31 December 2022

Chief executive officer

July Ndlovu

The performance outcomes for the CEO for 2022 compared to

minimum, on-target and stretch remuneration levels and 2021

performance is illustrated alongside:

(%)

Minimum

On-target

Maximum

Actual

performance

2022

Actual

performance

2021

100 100 100 100 100

57

95

70

77

29

48

36

39

■

Basic salary

■

STI Cash

■

STI DBS

Individual deliverable category

Weighting

(%)

Performance description

Level of

achievement

Eliminate all fatalities 5

Although we have seen a slight decline in

TRCFR, the Group has continued to build on

the foundational safety programmes we have

put in place.

Drive our ESG aspirations 5

Published our first Climate Change Report

as per the requirements of the TCFD.

Developing new programmes like our

renewable energy strategy to assist in

reducing our energy and carbon intensity.

Maximise the full potential of

existing assets

10

Approval was granted for the implementation

of Elders in 2022 and further studies have

been successfully progressed. Supported the

business by driving ongoing engagement

and management of TFR.

Create future diversification

options

5

Reviewed multiple merger and acquisition

opportunities and have executed our

geographic diversification strategy through

the acquisition of the Ensham Business.

Optimise capital allocation 5

Delivered a consistent approach to capital

allocation with capital expenditure remaining

in line with guidance, while also delivering

the value-accretive acquisition of the

remaining 27% shareholding in AAIC.

Overall performance 30

Below minimum threshold Target not met Target met Target exceeded Above stretch target

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

111Integrated Annual Report for the year ended 31 December 2022

Chief financial officer

Deon Smith

Individual deliverable category

Weighting

(%)

Performance description

Level of

achievement

Eliminate all fatalities 2

Although we have seen a slight decline in

TRCFR, the risk of fatalities is under continued

focus and mitigation strategies are given a

lot of focus by the CFO.

Drive our ESG aspirations 3

Took a leading role in investigating the

commercial components of delivering on

our ESG commitments and has also ensured

the delivery of a structured governance

framework for Thungela.

Maximise the full potential of

existing assets

10

Led the delivery of the commercial construct

which led to the approval of Elders and

further enhanced the commercial elements of

the Zibulo North Shaft project.

Create future diversification

options

10

Assumed the responsibility for leading this

strategic pillar and has delivered a pipeline

of merger and acquisition opportunities,

the close out of the acquisition of the

Ensham Business, and the progression of the

commercial construct for accessing our gas

resource.

Optimise capital allocation 5

Developed a comprehensive capital

allocation policy, which includes a strong

consideration of social elements. This strategy

has delivered value-accretive outcomes

with the implementation of a self-insurance

programme and closing out of the purchase

of the remaining AAIC shareholding.

Overall performance 30

The performance outcomes for the CFO for 2022 compared to

minimum, on-target and stretch remuneration levels and 2021

performance is illustrated alongside:

Below minimum threshold Target not met Target met Target exceeded Above stretch target

(%)

Minimum

On-target

Maximum

Actual

performance

2022

Actual

performance

2021

100 100 100 100 100

48

80

64

65

24

40

32

32

■ Basic salary ■ STI Cash ■ STI DBS

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

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08 GROUP

INFORMATION

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112 Integrated Annual Report for the year ended 31 December 2022

REMUNERATION OUTCOMES FOR OUR EXECUTIVE DIRECTORS AND PRESCRIBED OFFICERS

The disclosures that follow set out the details of the 2022 remuneration outcomes for the executive directors and prescribed officers of

Thungela. The disclosures cover the following three components:

1

Total single figure of

remuneration

The schedules are aligned with the total single figure of remuneration disclosure requirements

of KingIV and set out the total remuneration for the years ended 31December 2022 and

31December 2021.

2

Statement of unvested

awards and cash flows

The schedules of unvested awards and cash flows are aligned with King IV disclosure requirements,

which state that the value of awards at year end represents the face value of shares after adjusting

for share price movements since award date and the targeted vesting level. The cash on settlement

represents the cash value of all awards that were settled during 2022

.

2

Minimum shareholding

requirements

The MSR achievement tables outline the percentage fulfilment of the MSR policy level at

31December 2022.

REMUNERATION OUTCOMES FOR JULY NDLOVU  CEO

1

Schedule of total single figure of remuneration

Rand thousand 2022 2021

Basic salary 7,671 7, 3 4 0

Retirement and benefits

1

1,203 1,152

Other

2

30 30

Guaranteed pay 8,904 8,522

STI cash

3,4

5,414 5,059

STI DBS

5,6

2,736 2,556

Thungela LTIPs

7

— —

Total current policy 8,150 7, 615

Anglo American LTIPs

8

— 24,846

Thungela retention and milestone awards

9,10

112,403 33,737

Other LTIs

11

— 100

Total Anglo American policy and demerger 112,403 58,683

Total remuneration 129,457 74,820

1

Retirement and benefits include pension fund contributions, medical aid contributions and other allowances.

2

Other payments such as UIF, leave encashments and long service awards.

3

Thungela cash component of the STI which is attributable to the 2022 financial year, but to be paid in the 2023 financial year.

4

Thungela cash component of the STI which is attributable to the 2021 financial year, but to be paid in the 2022 financial year.

5

Thungela deferred bonus component of the STI which is attributable to the 2022 financial year, but awarded in the 2023 financial year.

6

Thungela deferred bonus component of the STI which is attributable to the 2021 financial year, but awarded in the 2022 financial year.

7

Thungela LTIP awards will be reflected in the final year of the performance period and therefore those awarded in2021and 2022 will only be reflected in the 2023 and 2024 financial year.

8

The value of the Anglo American LTIPs which vested in the2021 financial year due to the demerger from Anglo American.

9

Thungela milestone awards granted on 11 November 2021. Tranche 1 of these awards vested in full on 4 June 2022 based on the achievement of the employment condition.

10

Anglo American retention awards granted in June 2021, as set out in the PLS. These are reflected in full on award at the listing price because no company performance conditions are applicable.

11

The value of the Thungela shares provided to individuals that owned Anglo American shares under the rules of the demerger.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

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113Integrated Annual Report for the year ended 31 December 2022

2

Statement of unvested awards and cash flows for the 2022 financial year

Award price

(Rand/share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Milestone shares

2

Milestone awards

2021 (1) 11- N o v -21 04-Jun-22 25.00 449,829 — — (449,829) —

112,403,271 —

Milestone awards

2021 (2) 11- N o v -21 04-Jun-23 25.00

449,829 — — — 449,829 — 120,441,715

899,658 — — (4 49,829) 4 49,829 112,403,271 120,441,715

Conditional shares

3

LTIP 2021 16 -Nov-21 16-Nov-24 36.34 201,962 59,168 — — 261,130

— 41,950,535

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 73,172 — — 73,172

— 11,755,0 82

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 5,306 — — 5,306

— 1,420,682

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 5,306 — — 5,306

— 1,420,682

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 5,307 — — 5,307 — 1,420,949

201,962 148,259 — — 350,221 — 5 7,967,9 3 0

1

The 30-day volume-weighted average price (VWAP), for determining the fair value of unvested awards on 31 December 2026 is R267.75 per share.

2

Milestone shares are special awards of forfeitable shares related to the listing and do not form part of the ongoing remuneration policy of the Group.

3

Conditional shares were granted under our remuneration policy. Conditional shares were calculated on a vesting rate of 60% which is the ‘on target’ percentage as stated in section 2 of this

remuneration report.

4

Deferred bonus shares are forfeitable shares that are granted under our remuneration policy as part of our annual STI process.

3

Minimum shareholding requirements at 31 December 2022

MSR fulfilment date

1

2026

Number of MSR shares 963,587

Value of MSR shares

2

R258,000,419

Fulfilment of MSR (%)

3

2,898

1

The MSR fulfilment date is the financial year by which the executive is required to meet 100% of the MSR requirements.

2

The 30-day VWAP for determining the fair value of MSR shares on 31 December 2022 is R267.75 per share.

3

The fulfilment percentage is the value of the MSR shares as a percentage of the target MSR value (200% of annual fixed remuneration) to be held.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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114 Integrated Annual Report for the year ended 31 December 2022

REMUNERATION OUTCOMES FOR DEON SMITH  CFO

1

Schedule of total single figure of remuneration

Rand thousand 2022 2021

Basic salary 4,953 4,368

Retirement and benefits

1

799 709

Other

2

26 27

Guaranteed pay 5,778 5,104

STI cash

3,4

3,182 2,537

STI DBS

5,6

1,591 1,268

Thungela LTIPs

7

— —

Total current policy 4,773 3,805

Anglo American LTIPs

8

— 10,695

Thungela retention and milestone awards

9,10

56,202 17,039

Other LTIs

11

— 53

Total Anglo American policy and demerger 56,202 2 7, 7 8 7

Total remuneration 66,753 36,696

1

Retirement and benefits include pension fund contributions, medical aid contributions and other allowances.

2

Other payments such as UIF, leave encashments and long service awards.

3

Thungela cash component of the STI which is attributable to the 2022 financial year, but to be paid in the 2023 financial year.

4

Thungela cash component of the STI which is attributable to the 2021 financial year, but to be paid in the 2022 financial year.

5

Thungela deferred bonus component of the STI which is attributable to the 2022 financial year, but awarded in the2023 financial year.

6

Thungela deferred bonus component of the STI which is attributable to the 2021 financial year, but awarded in the2022 financial year.

7

Thungela LTIP awards will be reflected in the final year of the performance period and therefore those awarded in 2021 and 2022 will only be reflected in the 2023 and 2024 financial year.

8

The value of the Anglo American LTIPs which vested in the 2021 financial year due to the demerger from Anglo American.

9

Thungela milestone awards granted on 11 November 2021. Tranche 1 of these awards vested in full on 4 June 2022 based on the achievement of the employment condition.

10

Anglo American retention awards granted in June 2021, as set out in the PLS. These are reflected in full on award at the listing price because no company performance conditions are applicable.

11

The value of the Thungela shares provided to individuals that owned Anglo American shares under the rules of the demerger.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

115Integrated Annual Report for the year ended 31 December 2022

2

Statement of unvested awards and cash flows for the 2022 financial year

Award price

(Rand/share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Milestone shares

2

Milestone awards

2021 (1) 11- N o v -21 04-Jun-22 25.00 224,914 — — (224,915) —

56,201,510 —

Milestone awards

2022 (2) 11- N ov - 21 04-Jun-23 25.00

224,915 — — — 224,915 — 60,220,991

449,829 — — (224,915) 224,915 56,201,510 60,220,991

Conditional shares

3

LTIP 2021

16 -Nov-21

16-Nov-24 36.34 84,668 24,805 — — 109,473

— 17,586,837

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 37,8 0 2 — — 37,8 0 2

— 6,072,891

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 2,647 — — 2,647

— 708,734

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 2,647 — — 2,647

— 708,734

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 2,647 — — 2,647 — 708,734

84,668 70,548 — — 155,216 — 25,785,932

1

The 30-day VWAP, for determining the fair value of unvested awards on 31 December 2026 is R267.75 per share.

2

Milestone shares are special awards of forfeitable shares related to the listing and do not form part of the ongoing remuneration policy of the Group.

3

Conditional shares were granted under our remuneration policy. Conditional shares were calculated on a vesting rate of 60% which is the ‘on target’ percentage as stated in section 2 of this

remuneration report.

4

Deferred bonus shares are forfeitable shares that are granted under our remuneration policy as part of our annual STI process.

3

Minimum shareholding requirements at 31 December 2022

MSR fulfilment date

1

2026

Number of MSR shares 425,136

Value of MSR shares

2

R113,830,164

Fulfilment of MSR (%)

3

1,970

1

The MSR fulfilment date is the financial year by which the executive is required to meet 100% of the MSR requirements.

2

The 30-day VWAP for determining the fair value of MSR shares on 31 December 2022 is R267.75 per share.

3

The fulfilment percentage is the value of the MSR shares as a percentage of the target MSR value (100% of annual fixed remuneration) to be held.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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116 Integrated Annual Report for the year ended 31 December 2022

REMUNERATION OUTCOMES FOR PRESCRIBED OFFICERS

1

Schedule of total single figure of remuneration

JPD van

Schalkwyk L Martin LE Mataboge N Sithole

C Venter BM Dalton

11

Rand thousand 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021

Basic salary 3,862 3,406 3,354 3,070 2,383 2,228 2,383 2,217 2,383 2,184 2,856 2,045

Retirement and

benefits

1

628 612 559 519 410 384 389 360 369 346 488 330

Other

2

46 24 25 43 24 22 150 122 72 130 35 16

Guaranteed pay

4,536 4,042 3,938 3,632 2,817 2,634 2,922 2,699 2,824 2,660 3,379 2,391

STI cash

3,4

2,110 1,995 1,833 1,782 1,416 1,294 1,416 1,287 1,302 1,268 1,698 1,195

STI DBS

5,6

1,055 998 916 891 708 647 708 644 651 634 849 598

Thungela LTIPs

7

— — — — — — — — — — — —

Total current

policy

3,165 2,993 2,749 2,673 2,124 1,941 2,124 1,931 1,953 1,902 2,547 1,793

Anglo American

LTIPs

8

— 6,736 — 10,695 — 4,370 — 4,370 — — — —

Thungela retention

and milestone

awards

9

1,484 — 1,381 — 1,042 — 1,018 — 990 — — —

Other LTIs

10

— 2,926 — 31 — 28 — 25 — 5 — 3,999

Total Anglo

American policy

and demerger

1,484 9,662 1,381 10,726 1,042 4,398 1,018 4,395 990 5 — 3,999

Total

remuneration

9,185 16,697 8,068 17, 0 31 5,983 8,973 6,064 9,025 5,767 4,567 5,926 8,183

1

Retirement and benefits include pension fund contributions, medical aid contributions and other allowances.

2

Other payments such as UIF, leave encashments and long service awards.

3

Thungela cash component of the STI which is attributable to the 2022 financial year, but to be paid in the 2023 financial year.

4

Thungela cash component of the STI which is attributable to the 2021 financial year, but to be paid in the 2022 financial year.

5

Thungela deferred bonus component of the STI which is attributable to the 2022 financial year, but awarded in the 2023 financial year.

6

Thungela deferred bonus component of the STI which is attributable to the 2021 financial year, but awarded in the 2022 financial year.

7

Thungela LTIP awards will be reflected in the final year of the performance period and therefore those awarded in 2021 and 2022 will only be reflected in the 2023 and 2024 financial year.

8

The value of the Anglo American LTIPs which vested in the 2021 financial year due to the demerger from Anglo American.

9

Anglo American cash-based retention awards granted in June 2020, as set out in the PLS.

10

The value of the Thungela shares provided for Anglo American shares held under the BSP under the rules of the demerger. It also includes the vesting of a retention award for Johan van Schalkwyk

and a sign-on award to Bernard Dalton.

11

Appointed as of 1 April 2021.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

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117Integrated Annual Report for the year ended 31 December 2022

2

Table of unvested awards and cash flows for the 2022 financial year

JOHAN VAN SCHALKWYK

Award

price

(Rand/

share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Retention award

2

Retention award 01-Jun-20 07- Jun-22 n/a

— — — — — 1,483,896 —

— — — — — 1,483,896 —

Conditional shares

3

LTIP 2021 16 -Nov-21 16 -Nov-24 36.34 67,613 19,809 — — 87,4 2 2

— 14,044,344

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 29,476 — — 29,476

— 4,735,319

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 2,082 — — 2,082

— 5 57,4 5 6

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 2,082 — — 2,082

— 5 57,4 5 6

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 2,083 — — 2,083 — 557,723

67,613 55,532 — — 123,145 — 20,452,298

LESLIE MARTIN

Award

price

(Rand/

share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Retention award

2

Retention award 01-Jun-20 07- Jun-22 n/a

— — — — — 1,381,344 —

— — — — — 1,381,344 —

Conditional shares

3

LTIP 2021 16 -Nov-21 16 -Nov-24 36.34 63,247 18,530 — — 81,777

— 13,137,475

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 25,600 — — 25,600

— 4,112,640

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 1,860 — — 1,860

— 498,015

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 1,860 — — 1,860

— 498,015

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 1,860 — — 1,860 — 498,015

63,247 49,710 — — 112,957 — 18,74 4,160

1

The 30-day VWAP, for determining the fair value of unvested awards on 31 December 2022 is R267.75 per share.

2

Prescribed officers received a cash-based incentive that is aimed at retaining key employees to ensure the stabilisation of Thungela as a separate entity. These are special awards related to the

demerger and do not form part of the ongoing remuneration policy of the Group.

3

Conditional shares were granted under our remuneration policy. Conditional shares were calculated on a vesting rate of 60% which is the ‘on target’ percentage as stated in section 2 of this

remuneration report.

4

Deferred bonus shares are forfeitable shares that are granted under our remuneration policy as part of our annual STI process.

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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118 Integrated Annual Report for the year ended 31 December 2022

LESEGO MATABOGE

Award

price

(Rand/

share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Retention award

2

Retention award 01-Jun-20 07- Jun-22 n/a

— — — — — 1,041,582 —

— — — — —

1,041,582 —

Conditional shares

3

LTIP 2021 16 -Nov-21 16 -Nov-24 36.34 47,4 5 8 13,904 — — 61,362

— 9,857,805

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 18,183 — — 18,183

— 2,921,099

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 1,350 — — 1,350

— 361,463

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 1,350 — — 1,350

— 361,463

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 1,350 — — 1,350 — 361,463

47, 4 5 8 36 ,137 — — 83,595 — 13,863,293

MPUMI SITHOLE

Award

price

(Rand/

share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Retention award

2

Retention award 01-Jun-20 07- Jun-22 n/a

— — — — — 1,017,76 8 —

— — — — —

1,017, 76 8 —

Conditional shares

3

LTIP 2021 16 -Nov-21 16 -Nov-24 36.34 46,872 13,732 — — 60,604

— 9,736,033

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 18,183 — — 18,183

— 2,921,099

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 1,343 — — 1,343

— 359,588

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 1,343 — — 1,343

— 359,588

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 1,344 — — 1,344 — 359,856

46,872 35,945 — — 82,817 — 13,736,16 4

1

The 30-day VWAP, for determining the fair value of unvested awards on 31 December 2022 is R267.75 per share.

2

Prescribed officers received a cash-based incentive that is aimed at retaining key employees to ensure the stabilisation of Thungela as a separate entity. These are special awards related to the

demerger and do not form part of the ongoing remuneration policy of the Group.

3

Conditional shares were granted under our remuneration policy. Conditional shares were calculated on a vesting rate of 60% which is the ‘on target’ percentage as stated in section 2 of this

remuneration report.

4

Deferred bonus shares are forfeitable shares that are granted under our remuneration policy as part of our annual STI process.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

119Integrated Annual Report for the year ended 31 December 2022

CARINA VENTER

Award

price

(Rand/

share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Retention award

2

Retention award 01-Jun-20 07- Jun-22 n/a

— — — — — 990,000 —

— — — — —

990,000 —

Conditional shares

3

LTIP 2021 16 -Nov-21 16 -Nov-24 36.34 4 5,109 13,216 — — 58,325

— 9,369,911

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 18,183 — — 18,183

— 2,921,099

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 1,323 — — 1,323

— 354,233

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 1,323 — — 1,323

— 354,233

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 1,324 — — 1,324 — 354,501

45,10 9 35,369 — — 80,478 — 13,353,977

BERNARD DALTON

Award

price

(Rand/

share)

Share movement

Award type Award date

Vesting

date

Cash on

settlement

(Rand)

Year-end

fair value

1

(Rand)Opening Awarded Forfeited Vested Closing

Conditional shares

3

LTIP 2021 16 -Nov-21 16 -Nov-24 36.34 60,162 17,626 — — 7 7,7 88

— 12,496,642

LTIP 2022 07-Mar-22 07-Mar-25 135. 54 — 21,797 — — 21,797

— 3,501,688

Forfeitable shares - Deferred bonus shares

4

DBS 2022 (1) 22-Mar-22 22-Mar-23 159.72 — 1,247 — — 1,247

— 333,884

DBS 2022 (2) 22-Mar-22 22-Mar-24 159.72 — 1,247 — — 1,247

— 333,884

DBS 2022 (3) 22-Mar-22 22-Mar-25 159.72

— 1,248 — — 1,248 — 334,152

60,162 43,165 — — 103,327 — 17,000,250

1

The 30-day VWAP, for determining the fair value of unvested awards on 31 December 2022 is R267.75 per share.

2

Prescribed officers received a cash-based incentive that is aimed at retaining key employees to ensure the stabilisation of Thungela as a separate entity. These are special awards related to the

demerger and do not form part of the ongoing remuneration policy of the Group.

3

Conditional shares were granted under our remuneration policy. Conditional shares were calculated on a vesting rate of 60% which is the ‘on target’ percentage as stated in section 2 of this

remuneration report.

4

Deferred bonus shares are forfeitable shares that are granted under our remuneration policy as part of our annual STI process.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

12 0 Integrated Annual Report for the year ended 31 December 2022

3

Minimum shareholding requirements at 31 December 2022

Number of Value of Fulfilment of MSR

Prescribed officer MSR fulfilment date

1

MSR shares MSR shares

2

(%)

3

JPD van Schalkwyk 2026 7, 3 4 7 R1,9 6 7,15 9

43

L Martin 2026 40,654 R10,885,109 276

LE Mataboge 2026 4,644 R1,243,431 37

N Sithole 2026 4,680 R1,253,070 44

C Venter 2026 4,530 R1,212,908 42

BM Dalton 2026 3, 742 R1,001,921 35

1

The MSR fulfilment date is the financial year by which the prescribed officer is required to meet 100% of the MSR requirements.

2

The 30-day VWAP for determining the fair value of MSR shares on 31 December 2022 is R267.75 per share.

3

The fulfilment percentage is the value of the MSR shares as a percentage of the target MSR value (100% of annual fixed remuneration) to be held.

TERMINATION OF OFFICE PAYMENTS

King IV recommends that the implementation report should contain details of payments made as a result of the termination of employment

of executive directors or prescribed officers. During 2022, there have been no such termination payments made.

NONEXECUTIVE DIRECTORS’ FEES

The remuneration of non-executive directors is inclusive of board attendance fees, board committee attendance fees and

ad hoc

board

fees for any additional work and meetings conducted.

The fees paid to non-executive directors during the year under review are set out as follows:

Director Chairing Appointment date

2022 fees

(Rand thousand)

2021 fees

(Rand thousand)

SS Ntsaluba

1

Board 1 January 2021 1,568 1,602

KW Mzondeki

2

Audit committee 12 February 2021 1,181 1,138

TML Setiloane

3

Social and ethics committee 7 March 2021 1,097 943

BM Kodisang

4

Remuneration and nomination committee 16 March 2021 1,097 909

SG French

5

4 June 2021 1,040 571

YN Jekwa

6

12 August 2022 268 —

1

The board chairman’s fee is inclusive of all committee appointments. The board chairman also chairs the risk and sustainability committee.

2

Kholeka Mzondeki also serves on the remuneration and nomination committee, as well as the risk and sustainability committee.

3

Thero Setiloane also serves on the audit committee and the risk and sustainability committee.

4

Ben Kodisang also serves on the audit committee and risk and sustainability committee.

5

Seamus French serves on the social and ethics committee, remuneration and nomination committee, and the risk and sustainability committee.

6

Yoza Jekwe serves on the social and ethics committee, and the risk and sustainability committee.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

121Integrated Annual Report for the year ended 31 December 2022

PROPOSED NONEXECUTIVE DIRECTORS’ FEES

The following table outlines the non-executive directors’ fees for each committee chairman and member along with the proposed non-

executive directors’ fees for 2023:

Position

Proposed fees for the

year ending

31December 2023

Fees for the year

ended

31December 2022

Board

Chairman

1,2

1661 550 1,567,500

Lead independent director

1

1187 200 1,120,000

Member 553,850 522,500

Audit committee

Chairman 332,310 313,500

Member 182,797 172,450

Remuneration and nomination committee

3

Chairman — 229,900

Member — 172,450

Social and ethics committee

3

Chairman — 229,900

Member — 172,450

Risk and sustainability committee

3

Chairman

2

— —

Member — 172,450

Investment committee

3

Chairman 243,694 —

Member 172,450 —

Social, ethics and transformation committee

3

Chairman 243,694 —

Member 172,450 —

Remuneration and human resources committee

3

Chairman 243,694 —

Member 172,450 —

Nominations and governance committee

3

Chairman 243,694 —

Member 172,450 —

Safety, health, environment and risk committee

3

Chairman

2

243,694 —

Member 172,450 —

Ad hoc

meeting fees

4

24,000 —

1

The board chairman and the lead independent director's fees are inclusive of all committee appointments.

2

The board chairman is also the chairman of the risk and sustainability committee.

3

An updated governance structure has been proposed for the board in 2023, which will be approved in due course. The proposed fees have been presented for the updated structure.

4

Proposed introduction of

ad hoc

meeting fees to deal with time critical matters limited to four additional meetings

per annum

. The amount is a per meeting fee.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

12 2 Integrated Annual Report for the year ended 31 December 2022

The 2022 fees were benchmarked against a comparator group

of companies, and all were found to be in the relevant tolerance

range, except for the member fees for all committees other than

the audit committee. As a result, we have proposed that the non-

executive director fees are increased in line with the 6% increase

approved by the RemCo for executive directors on 15 November

2022, apart from those member fees which were outside the

tolerance range. The proposed governance structure was aligned

to the principles of the benchmarking outlined above.

The proposed non-executive directors’ fees for 2023 were

recommended by the RemCo and were approved by the

board on 24March 2023. These fees will be voted on by the

shareholders at the AGM on 31May 2023 by special resolution.

DIRECTORS’ INTERESTS IN SHARES

According to the register of directors’ interests, maintained by

Thungela in accordance with the provisions of section 30(4)(d) of

the Companies Act of South Africa, the directors of Thungela have

disclosed their interests in the ordinary shares of Thungela as of

31December 2022.

REMUNERATION POLICY COMPLIANCE

The disclosure outlined in the implementation report is based on

rewards made in compliance with the Thungela remuneration

policy. There have been no deviations from the Thungela policy

in 2022.

NONBINDING ADVISORY VOTE ON THE

IMPLEMENTATION REPORT

The implementation report, as disclosed in Section 3 of the

remuneration report, is subject to a non-binding advisory vote

by shareholders at the AGM. In the event that more than 25%

(of those shareholders voting) vote against the implementation

report, the RemCo will consult with dissenting shareholders to

determine the reasons for their objections. Any such concerns

will be considered by the RemCo when considering changes

for the subsequent year. A summary of the concerns and the

RemCo’s response thereto will be included in the following year’s

remuneration report.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

12 3Integrated Annual Report for the year ended 31 December 2022 12 3

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

12 4 Integrated Annual Report for the year ended 31 December 2022

## SOCIAL AND ETHICS

## COMMITTEE REPORT

The committee is also responsible for the following areas, with

a key focus on socio-economic transformation and people and

transformation:

● Providing the board with assurance as to the integrity of the

sustainability information reported in the Integrated Annual

Report, the Environmental, Social and Governance Report and

the Climate Change Report.

● Monitoring policies and activities that promote equality, and

prevent unfair discrimination and corruption.

● Reviewing ethical policies and processes.

● Providing guidance on and oversight of the development

of responsible business practices and holding executives to

account for their effective planning, resourcing, implementation

and delivery.

● Ensuring internal policy alignment with Thungela’s purpose,

objectives and shared value outcomes.

● Reviewing governance systems, performance metrics, internal

and external assurance, and reporting for effective delivery

and accountability.

● Input into the risk management framework, ensuring that the

appropriate ESG risks are considered and reviewed as part of

the annual materiality assessment for integrated reporting.

● Reviewing significant employee conflicts of interest, cases of

misconduct or fraud, or any other unethical activity.

● Reviewing and approving Thungela’s annual socio-economic

development approach, key performance indicators,

objectives and community investment budget.

● Assessing performance against key indicators and considering

and making board recommendations on Thungela's impact on

local communities.

● Reviewing on a periodic basis sponsorships, donations and

charitable contributions.

● Consideration of decisions that may impact the Group’s

valuesand ethics.

● Providing oversight of strategic people issues, including

transformation and employee relations.

● Reviewing performance in human resource development,

diversity and retention against internal transformation targets.

● Making recommendations to the remuneration and nomination

committee.

● Reviewing performance against the United Nations Global

Compact’s 10 principles, and making recommendations on

corruption from an Organisation for Economic Cooperation

and Development and Employment Equity Act perspective.

● Monitoring B-BBEE status and compliance with the Broad-

based Socio-Economic Empowerment Charter for the South

African mining industry and publishing the annual B-BBEE

verification certificate.

● Making recommendations to the board on possible

participation, cooperation and consultation on transformation,

community and social development issues with government,

non-governmental and employee organisations.

Thungela’s social and ethics committee is pleased to present its

report for the year ended 31 December 2022, in terms of section

72 and regulation 43 of the Companies Act of South Africa and

King IV. The committee has conducted its work in accordance with

its terms of reference which, as required, is reviewed annually, and

the revised terms of reference were approved at a board meeting

held on 18 March 2022.

In addition to its statutory responsibilities, the committee’s objective

is to help the board fulfil its responsibility to oversee and report on

ESG matters not covered by the risk and sustainability committee.

Ethics, stakeholder relations, responsible corporate citizenship,

diversity and inclusion, and B-BBEE compliance also fall within the

committee’s remit.

COMPOSITION

The social and ethics committee is chaired by Thero Setiloane,

an independent non-executive director and further comprises

independent non-executive directors Sango Ntsaluba, Seamus

French, and the recently appointed Yoza Jekwa, the CEO July

Ndlovu, and the executive head of human resources, Lesego

Mataboge. The composition of the social and ethics committee

complies with the requirements of the Companies Act of South

Africa (as applicable) and the recommendations of King IV.

The social and ethics committee may invite such other members

ofthe Group executive committee as considered appropriate and

may extend a standing invitation to them to attend the meetings

ofthe committee.

This committee meets at least twice a year prior to scheduled

meetings of the board. Attendance at meetings is set out on

page95.

ROLES AND RESPONSIBILITIES

The primary purpose of the social and ethics committee is

overseeing the Group’s activities in sustainable social and

economic development.

It is responsible for monitoring and ensuring Group compliance

with all applicable laws and the requirements set out in the

Companies Act of South Africa, as well as relevant codes and

standards relating to B-BBEE, employment equity, transformation,

governance, monitoring of the code of conduct, business integrity,

corporate social responsibility, consumer relationships and human

resources.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

12 5Integrated Annual Report for the year ended 31 December 2022

KEY FOCUS AREAS FOR 2022

For the year ended 31 December 2022, the committee had key

focus areas, including, but not limited to:

● Reviewed the corporate affairs report covering the corporate

affairs strategy, socio-economic development, B-BBEE

verification, inclusive procurement performance tracking,

enterprise development, mining charter compliance, and

stakeholder engagement.

● Reviewed the Group’s transformation strategy in relation

toB-BBEE requirements.

● Reviewed and recommended for board approval the issuing

ofthe B-BBEE report to the B-BBEE commission.

● Reviewed the social policy governing achieving Environmental,

Social and Governance ambitions and ensuring social risks

and impacts are managed through effective stakeholder

engagement.

● Reviewed Thungela’s standing in terms of the United Nations

Global Compact Principles.

● Reviewed the company’s continuous commitment to respecting

and upholding human rights throughout its operations

according to national and international proclaimed human

rights principles.

● Reviewed and recommended for board approval the

Environmental, Social and Governance Report and Climate

Change Report for publication and release to all stakeholders.

● Reviewed and considered the corporate governance report.

● Received reports relating to compliance to the code of ethics,

whistle-blowing reports and implementation of the business

integrity policies.

● Reviewed the King IV checklist for publication and release on

the Thungela website.

● Recommended the ESG and corporate governance policies

for board approval.

● Recommended for board approval the social and ethics

committee report for inclusion in the Integrated Annual Report.

● Reviewed and recommended for board approval the

committee terms of reference.

KEY FOCUS AREAS FOR 2023

Key focus areas for the year ending 31 December 2023 will be,

among others:

● Clearly quantifying and optimising the B-BBEE aspirations

ofthe Group, including plans to achieve set aspirations.

● Continued focus on licence to operate matters in terms of

stakeholder engagement.

● Talent retention and attraction.

● Increasing focus on inclusion and diversity.

● Increasing focus on governance.

● Thungela Education Initiative.

● Human Rights (due diligence).

● Membership of the United Nations Global Compact.

● Impact management – theory of change.

● Social risks and impacts of mine closure, and responsible mine

closure.

● Strategic event: Elders Project launch.

● Thungela “Impact with Purpose” brand campaign.

● Sustainable development goals prioritisation and reporting

integrated into the Environmental, Social and Governance

Report.

● Decarbonisation: develop a carbon reduction journey and

energy management plan.

● Comply with the requirements of the TCFD.

Thero Setiloane

Social and ethics committee chairman

26 April 2023

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

12 6 Integrated Annual Report for the year ended 31 December 2022

## RISK AND SUSTAINABILITY

## COMMITTEE REPORT

The Thungela risk and sustainability committee is pleased to

present its report for the year ended 31 December 2022. The

committee has conducted its work in accordance with its written

terms of reference, reviewed and approved by the board on

18March 2022. The terms of reference are subject to annual

review, and were reviewed in the third quarter of 2022, but no

changes were made.

The Thungela board of directors has mandated the committee

to fulfil its duties as the risk and sustainability committee of all the

companies within the Thungela Group, except in the event where

the interest in a subsidiary is equal to or less than 50%.

The committee’s main objective is the overall oversight of Group

risk, IT and sustainability, with a focus on safety, health and the

environment (SHE), and deciding on the Group’s risk appetite.

COMPOSITION

The risk and sustainability committee is chaired by Sango

Ntsaluba, the chairman of the board and an independent

non-executive director. The committee further comprises Thero

Setiloane, Ben Kodisang, Kholeka Mzondeki, and Seamus

French, all of whom are independent non-executive directors, and

July Ndlovu, the CEO.

The CFO and such other members of the Group executive

committee as considered appropriate have a standing invitation to

attend the meetings of the committee.

This committee meets at least four times a year prior to scheduled

meetings of the board. Attendance at meetings is set out on

page95.

ROLES AND RESPONSIBILITIES

The committee oversees, on behalf of the board, the identification,

monitoring and management of risks impacting the Group, and

the sustainability policies and practices.

In fulfilment of its responsibility, the committee’s functions include:

● Guiding and advising the board in setting risk tolerance and

risk appetite levels, on the guidance received from operational

management.

● Ensuring that the risk management plan is disseminated

throughout Thungela and integrated into the day-to-day

activities.

● Reviewing and approving an IT governance framework

which delegates to management the responsibility for

the implementation thereof, and reviewing reports on the

effectiveness of IT risks as part of the overall risk management

of the Group.

● Monitoring the appropriateness of the strategies in providing

oversight of the sustainability policies.

● Requesting and receiving reports of the Group’s operations

and, where appropriate from associates, joint operations,

subsidiaries and contractors, covering matters that have a

material impact on safety, health and environmental risks and

liabilities facing the Group.

● Reviewing and monitoring the implementation of policies for

the management of sustainable development of SHE.

● Reviewing reporting concerning risk management that is to

be included in the Integrated Annual Report in terms of being

timely, comprehensive and relevant.

● Reviewing and providing the board with assurance on the

integrity of the sustainability information reported on in

the Integrated Annual Report, Environmental, Social and

Governance Report and Climate Change Report.

● Overseeing the development and annual review of a policy

and plan for risk management to recommend to the board for

approval.

● Overseeing that frameworks and methodologies are

implemented to increase the possibility of anticipating

unpredictable risks.

● Ensuring that continual, thorough risk assessments

are conducted by operational management under a

pre-determined risk management plan.

● Monitoring the demonstration of management commitment

to the behaviours required by the policies and the resources

applied to achieving compliance with the policies within the

committee’s scope.

● Considering and making recommendations to the board on

climate change, decarbonisation and environmental issues

pertinent to Thungela's business.

● Commissioning and considering sustainable development

audits carried out both in terms of legal and company

requirements and reviewing the results of such audits.

● Satisfying itself that the management system is appropriate and

effective in managing SHE-related risks. The SHE management

system comprises appropriate hazard identification and risk

assessment processes, medical surveillance systems, accident/

incident investigation systems and other appropriate systems.

● Reviewing SHE elements of Thungela's strategic and business

plan, SHE policies, guidelines and operating practices,

external SHE reporting and regulatory disclosures, and

findings of the relevant auditors.

● Considering the performance of Thungela’s individual

operating units in the field of SHE performance and

compliance.

● Considering material local and international regulatory and

technical developments in the field of SHE management and

practice, and where appropriate, have the impact of these

assessed and provide appropriate strategic guidance.

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127Integrated Annual Report for the year ended 31 December 2022

● Annually reviewing the salient features highlighted in the

annual report for each mine on health and safety, as required

by section 2(1)(c) of the Mine Health and Safety Act, 1996.

● Satisfying itself on the effectiveness and appropriateness of

Thungela’s wellness programme.

● Considering the environment, health and public safety,

including the impact of Thungela’s activities and of its products

or services.

● Monitoring regulatory compliance.

To the extent that the committee is of the view that there is a

deficiency, shortcoming or anything else of concern on the part of

Thungela with respect to any of the above matters, management

will propose corrective action plans which the committee will

review and approve as required.

KEY FOCUS AREAS FOR 2022

For the year ended 31 December 2022, the committee had key

focus areas, including but not limited to:

● Reviewed and considered the quarterly IM governance and

related control environments updates.

● Reviewed and considered the quarterly integrated risk

management report, the executive risk register, and emerging

business risks.

● Reviewed and considered the annual event risk reviews.

● Reviewed Thungela’s response plans to significant safety

events.

● Reviewed and considered the quarterly safety and

sustainability report, with a focus on safety, medical

surveillance, environment and rehabilitation, carbon and

energy, carbon emissions water management, licence and

permitting, and land stewardship.

● Considered Thungela’s efforts across various environmental

and social factors.

● Reviewed the antitrust policy for onward recommendation for

board approval.

● Reviewed and recommended for board approval the risk and

sustainability committee report for inclusion in the Integrated

Annual Report and Environmental, Social and Governance

Report.

● Considered and reviewed the quarterly regulatory compliance

and legal update report with focus on litigation, and discussed

legal matters which pose a potential risk to the business.

● Considered and reviewed the report on underground water

retaining structures.

● Reviewed and recommended for board approval the

committee terms of reference.

KEY FOCUS AREAS FOR 2023

Key focus areas for the committee for the year ending

31December 2023 will be, among others:

● Operating a fatality-free business.

● Implementing learnings from the fatality which occurred in

February 2023.

● Safety and health.

● Response plans to address the risks identified.

● Rehabilitation and water management.

● The pathway to zero emissions and decarbonisation.

● Assurance on high-risk underground water structures.

● Planning for responsible mine closure.

Sango Ntsaluba

Risk and sustainability committee chairman

26 April 2023

127127

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12 8 Integrated Annual Report for the year ended 31 December 202212 8

BEING A RESPONSIBLE STEWARD OF INVESTORS’

CAPITAL AND THE ENVIRONMENT IN WHICH WE

OPERATE IS ROOTED IN OUR PURPOSE.

12 8

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12 9Integrated Annual Report for the year ended 31 December 2022 12 9

07

#### RESOURCES

#### AND RESERVES

12 9

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STATEMENT BY THE LEAD COMPETENT PERSON

By signing this statement, the lead Competent Person, Bart Jozef

Maria Van de Steen, confirms that the information disclosed in

this section of the Integrated Annual Report is compliant with

the SAMREC Code and the relevant JSE Listings Requirements

Section 12, Part 1. The Coal Resources and Coal Reserves are

published in the form and context in which they are intended.

The lead Competent Person has not been unduly influenced

by Thungela or any person involved in the compilation of this

report and its content. The lead Competent Person has 35 years

of relevant experience in the commodity under consideration

and is registered as a Professional Engineer with the recognised

professional body, the Engineering Council of South Africa.

Bart Jozef Maria Van de Steen

Head of resource development and operational excellence PhD

ECSA, Registration No: 20050122

COMPETENCY

Pursuant to the requirements of the JSE Listings Requirements

Section 12, Part 1 and clause 8 of the 2016 SAMREC Code,

a written consent statement by the Competent Person has been

signed in the individual asset Competent Person’s report (which

is available on request) declaring the Coal Resources and Coal

Reserves, and he/she has consented to the inclusion of his/her

estimates in the form and context in which they appear in this

section of the Integrated Annual Report.

A list of the Competent Persons, their affiliation and relevant years

of experience is available at the end of this section.

130 Integrated Annual Report for the year ended 31 December 2022130



#### INTRODUCTION

For the reporting of Coal Resources and Coal Reserves, Thungela conforms to the South African

Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2016 (the

SAMREC Code), adopted by the JSE, and accepted as the minimum standards, recommendations and

guidelines for public reporting of Coal Resources and Coal Reserves. The Group also conforms to the

JSE Listings Requirements Section 12, Part 1.

The estimates (tonnes and qualities) for individual assets are reported on a 100% basis and the

attributable ownership is stipulated in the Coal Resources and Coal Reserves statement. Resources are

reported on an exclusive basis.

## COAL RESOURCES AND

## COAL RESERVES

#### As at 31December 2022

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131Integrated Annual Report for the year ended 31 December 2022

The greater Goedehoop Colliery comprises the currently active

Goedehoop North Colliery (GHN) (formerly known as Bank

Colliery) and the closed Goedehoop South Colliery (GHS).

Since 2006 the two collieries have been managed as one

operation. Although the GHS Colliery closed in 2019, some of

the environmental and water management infrastructure remains

intact. Both of the collieries have their own processing plants

(GHS plant is now dismantled) and train loading facilities. There

are also GHN and GHS mineral residue deposits (MRDs).

The GHN Colliery is an underground bord and pillar coal mine

located approximately 165km east of Johannesburg in the

Mpumalanga province of South Africa.

LEGAL TENURE

The Goedehoop Colliery is covered by three granted and

executed new order mining rights (NOMRs), three granted and

executed converted mining rights (MRs) and one MR that is

awaiting grant and execution (Komati Power Station MR).

Thungela Operations Proprietary Limited (TOPL) owns 100%

of the MRs and has the exclusive right to mine coal on or under

theseareas.

GHN and GHS operate under several environmental

management programme reports (EMPr), environmental

authorisations (EAs) and water use licences (WULs). All the

required permits are in place for the activities at the colliery.

The colliery does not require a waste licence and no longer holds

a valid air emission licence (AEL) as incineration activities have

ceased.

#### OVERVIEW OF ASSETS

#### GOEDEHOOP

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132 Integrated Annual Report for the year ended 31 December 2022

Washability data for each coal seam is utilised separately in the

resource estimation process.

An external independent geological model audit was conducted

on the above-mentioned resource area, to confirm the structural

interpretations and the modelling processes.

MINING ACTIVITIES

The GHN Colliery has three sections mining the No 2 Seam

and two sections mining the No 4 Seam, using mechanised bord

and pillar mining. The minimum practical mining height in the

No4Seam is 2.7m while in the No 2 Seam maximum mining

height is 4.5m. The roof conditions are generally good and the

pillar design appropriate.

Due to varying seam height restrictions of the No 4 Seam and

No2Seam, the continuous miner (CM) equipment is adapted

to ensure maximum productivity. The cutting heights in the

No2Seam are dictated by an in-seam parting and safety factors

rather than actual seam heights.

Mining equipment, other than CMs, used underground, includes

shuttle cars, roof bolters, feeder breakers and a series of conveyor

systems, all supported by the required ancillary equipment.

The remaining LOM is estimated at three years with a total ROM

reserve of 12.1Mt. The colliery is investigating future opportunities

(opencast and underground) to extend the LOM. There are no

Inferred Coal Resources included in the LOM plan.

PRODUCTION AND COAL PROCESSING

The annual production ROM for GHN Colliery for 2022

is4.4Mt.

The 5,850kcal/kg Net As Received (NAR) (26.90MJ/kg)

export product is produced in a single stage processing wash

plant, which treats the coarse and finer coarse coal separately in

Wemco drums and dense medium cyclones, respectively.

Product and waste streams are sampled using automatic samplers

as the coal leaves the plant. Saleable product is then sent to either

the product silos or directly onto a stockpile adjacent to the silos.

Coal is then loaded onto trains and dispatched to theRBCT.

GHN and GHS await the outcome of several land claims, which

require validation or claimant verification while others require

gazetting, negotiation and settlement.

There are currently no known impediments to tenure security.

The surface rights are owned by various entities, including TOPL

Some of TOPL owned surface rights are leased to third-party

tenants.

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities for 2022 include 19 vertically cored, collar

surveyed targeting either the mineable No 4 Seam and/or

No2Seam. Additional cover is provided by underground

in-seam, non-core directional drilling, ahead of the mining faces.

Logging and sampling of the vertical cored boreholes are done

as soon as possible after drilling to avoid deterioration of the

coal core. The core is photographed and logging, sampling and

analytical results uploaded to Minescape Geological Database

(Minescape GDB), which includes validation processes during

importing of data.

Coal samples collected during 2022 were sent to the South

African National Accreditation System (SANAS) accredited

laboratory, Bureau Veritas (BV), based in Middelburg,

Mpumalanga.

For 2023 the planned exploration expenditure is estimated at

R1.5 million, with the main focus on the resource block south of

theOgies Dyke which is under investigation.

GEOLOGICAL SETTING AND MODELLING

The Goedehoop Colliery is located in the Witbank Coalfield

where generally five coal seams are present. These consist of,

from bottom, the No 1 Seam sequentially to the No 5 Seam at

the top, with inter-seam partings consisting of mainly siltstone

and sandstone. The No 4 Seam and No 2 Seam are the only

contributors to the GHN Colliery’s export product.

The Goedehoop area has been intruded by transgressive Karoo

dolerites in the form of sills and dykes and stringers. Minor faulting

occurs infrequently.

The Ogies Dyke, a major west-east trending intrusion of up to

20m thick and over 100km in length, sub-divides GHN into

twodomains. Resources declared south of the Ogies Dyke host

more complex structures. Some of the 2022 exploration activities

were focused on the resources south of the Ogies Dyke to improve

the knowledge of the structures and qualities.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model with estimates

ofraw qualities as gridded surfaces, from borehole information.

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133Integrated Annual Report for the year ended 31 December 2022

#### GOEDEHOOP NORTH MRD

The GHN MRD is a facility consisting of coarse and fine fraction

material, derived from previously mined and beneficiated coal.

The coarse material, together with some of the as-arising discard

from the coal handling preparation plant (CHPP), is currently

being reclaimed and sold to a third-party.

The estimated Coal Resource is derived from a geological model

constructed in the Datamine Minescape 3D modelling software,

using drillhole data together with a flown Digital Terrain Map

(DTM) of the topography and a pre-mined topography surface

asthe estimated base.

Nine vertically stacked horizontal layers have been defined to

reflect the variation in raw coal qualities. An assumed bulk density

of 1.6g/cm

3

for the coarse fraction was used to estimate the

tonnage. Nofines material is included in the Coal Resources or

Coal Reserves.

The material is loaded and transported directly to the contractor’s

plant for beneficiation.

#### GOEDEHOOP SOUTH MRD

The GHS MRD Coal Resources and Coal Reserves were

declared for the first time in 2021. The contractor has mined and

beneficiated 1.1Mt for 2022, to produce a saleable 4,800kcal/

kg product. Of the 1.1Mt, 0.7Mt was mined from the declared

reserves and 0.4Mt mined from the coarse material barrier wall,

not previously declared.

The GHS MRD comprises original coarse material and high-

quality fines slimes compartments, added in later years, enclosed

by coarse residue. A separate low grade slimes compartment was

added on the eastern side which is used for slimes disposal.

The estimated Coal Resource is derived from a geological model

constructed in the Datamine Minescape 3D modelling software,

using drillhole data, a flown DTM of the topography and pre-

mined topography surface as the estimated base.

Eight vertically stacked horizontal layers have been defined to

reflect the variation in raw coal qualities. An assumed bulk density

of 1.6g/cm

3

was used to estimate the tonnage. Nofines material

is included in the Coal Resources or Coal Reserves.

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134 Integrated Annual Report for the year ended 31 December 2022

The Greenside Colliery is an underground coal mine located

approximately 120km east of Johannesburg, close to the town

ofeMalahleni in the Mpumalanga province of SouthAfrica.

It forms part of the South African Coal Estate (SACE) complex,

together with Khwezela North (formerly known asLandau) and

Khwezela South (previously known as Kleinkopje).

The rapid load-out terminal (RLT) and the EWRP lie approximately

2.5km northeast of the colliery. The colliery hosts a MRD, a

coal preparation plant complex and two inclined shafts to the

underground workings.

LEGAL TENURE

The Greenside Colliery holds one granted and executed

converted MR and one granted, executed new order prospecting

right (NOPR) for which an MR application was lodged at

theDMRE and is pending approval.

There are a number of properties in the Greenside MR and

Landau MR which are common to both. There is accordingly an

overlap of the Greenside and Landau MRs. Through Thungela’s

resource optimisation strategy for the SACE complex, comprising

the Greenside MR, Landau MR and Kleinkopje MR Collieries,

resources have been rationalised over the life of these mines to

ensure profitable mining of the reserves.

Approval for a section 102 application, submitted to the DMRE

in February 2021 for certain portions under the Kleinkopje MR

(Khwezela South) to be included into the Greenside MR, is

awaited.

#### GREENSIDE

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135Integrated Annual Report for the year ended 31 December 2022

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model, with estimates

of raw qualities as gridded surfaces, from borehole information.

Washability data for each coal seam is utilised separately in the

resource estimation process.

MINING ACTIVITIES

The Greenside Colliery is an underground coal mine with five

sections (one prime section and four conventional sections) mining

the No 4 Seam at relatively shallow depths, using the mechanised

bord and pillar mining technique. The practical mining height

ranges between 2.8m and 4.5m. The roof conditions are

generally good and subsidence protection and undermining of

surface structures are well managed.

Mining equipment used underground includes CMs, shuttle cars,

roof bolters and a series of conveyor systems. Mining activities are

further supported by the required ancillary equipment. Currently

two incline shafts are used to access the underground workings.

Based on a 17.5Mt total ROM reserve, the LOM is estimated at

fiveyears. Inferred Coal Resources of 4.6% (equivalent to 0.8Mt

reserves) are included in the LOM plan.

The overall mine plan is to fully extract the remaining reserves in

the north with the prime section, while the remaining four sections

will continue mining the exposed reserves in the south-eastern

portion (East Block) of the mine.

PRODUCTION AND COAL PROCESSING

The annual production ROM for the Greenside Colliery for 2022

is 3.2Mt.

The washing plant complex produces a primary product

5,850kcal/kg NAR, with an intended primary product change

in 2026 and 2027. The middlings product produced is a

5,000kcal/kg NAR.

The plant (also known as the No 4 Seam plant) consists of three

modules, with modules 1 and 2 being identical and joined by a

spiral plant circuit. Module 3 is separate and has its own spiral

plant circuit. The plant is well maintained and quality control is

good with sufficient numbers of automatic samplers being used.

A flotation plant recovers the ultra-fines material from the

No4Seam plant discard stream using froth flotation.

The primary product is transported via a conveyor to RLT, from

where it is railed to the RBCT for export. Themiddlings product is

sold to the export and domestic markets.

Since receiving the original WUL, a selection of licences and

an exemption have been issued for water use related activities.

Greenside has submitted an amended, consolidated WUL and

is awaiting approval. The colliery operates under several EMPrs

and EAs.

The colliery does not require a waste management licence

(WML) in terms of the National Environmental Management:

Waste Act 59 of 2008.

There are currently no known impediments to tenure security.

The surface rights are owned by a number of different entities,

including TOPL. The TOPL owned properties are commonly leased

to third-party tenants.

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities for 2022 included 28 vertically cored, collar

surveyed, standard downhole geophysical surveyed surface

boreholes, targeting the mineable No 4 Seam. Additional cover

is by annual underground in-seam panel and directional non-core

drilling, ahead of the mining faces.

Logging and sampling of the vertical cored boreholes are done

as soon as possible after drilling to avoid deterioration of the

coal core. The core is photographed and logging, sampling and

analytical results uploaded to Minescape GDB, which includes

validation processes during importing.

Coal samples collected during 2022 were sent to the SANAS

accredited laboratory, BV, based in Middelburg, Mpumalanga.

For 2023 the planned exploration expenditure is estimated at

R4.4 million.

GEOLOGICAL SETTING AND MODELLING

The Greenside Colliery is located in the Witbank Coalfield

where five coal seams are present. These consist of, from bottom,

the No1Seam, sequentially to the No 5 Seam at the top, with

inter-seam partings consisting of mainly shale or siltstone and

sandstone, with thicknesses ranging between 1.5m and 23m. The

No 4 Seam is currently the only contributor to the colliery’s export

product.

The colliery is sub-divided into two distinct domains, by a

major northwest, southeast trending normal fault system with a

measured maximum throw of 30m in the southeast. The throw

gradually decreases to an approximately 1m throw towards the

northwest. Mining has been constrained by the fault system, with

development from the east and west stopping on approaching the

fault zone. Several dolerite dykes have been identified by drilling

and mining, but the impact on mining is limited to occasional cases

of poor ground conditions experienced during mining.

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136 Integrated Annual Report for the year ended 31 December 2022

#### GREENSIDE MRD

The Greenside MRD consists of discard material derived from the

No 5 Seam, No 4 Seam, No 2 Seam and No 1 Seam and an

old ash mound. The Bullnose, West Flanks and portions of the East

Flank, reported as mineable reserves in 2021, were depleted. The

East Flank resources were sterilised with waste piled on top. The

South Flank East and the South West portions are reported to be

mined.

New and old slimes areas are excluded. Volumes towards

the base of the MRD are excluded from the estimate due to

uncertainty of the base surface.

The total remaining volume of material in the MRD is significantly

larger than indicated in the Coal Resource statement. Further

evaluation is required before it can be fully classified.

The estimated Coal Resource is derived from a geological model

constructed in the Datamine Minescape 3D modelling software,

using drillhole data together with a DTM flown top surface.

Eleven vertically stacked horizontal layers define the variation

in raw coal qualities. An assumed bulk density of 1.6g/cm

3

was

used to estimate the tonnage.

A domestic product is derived from washing MRD material

through the No 5 Seam plant and blending it with material

derived from the No 4 Seam middlings. The product is then

soldtothe export market.

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137Integrated Annual Report for the year ended 31 December 2022

The Isibonelo Colliery comprises opencast reserves and resources

and underground Coal Resources. The underground resources are

pending a sale transaction, and for this reason are not declared

inthis report.

The colliery is located approximately 150km east of

Johannesburg, 13km northeast of the town of Secunda in the

Mpumalanga province of South Africa.

The opencast operation is constrained by the MR boundary,

a 70m corridor between the opencast resource and the

underground resource, and the rivers to the west and east of the

resource area, which form part of the MR boundary.

The operation consists of a north and south pit, with the main

offices and workshops approximately 16km south of the opencast

operations.

LEGAL TENURE

The Isibonelo Colliery holds one granted and executed converted

MR and two section 102 applications have been granted,

which include the Zimele Block and the Block F Triangle areas

into the current MR. An additional section102 application is

pending approval by the DMRE, which relates to the underground

Block4sale transaction. Inaddition, a section 102 pertaining to

a portion of portion RE/4 of the farm Rietfontein 101 IS, is yet to

besubmitted.

The Isibonelo Colliery operates under one WUL. The licence

includes and supersedes all activities previously licensed under

numerous water use related licences issued to the colliery. The

colliery operates under numerous approved EMPrs and EAs.

Three land claims require validation by the Restitution

Management Support Office (RMSO). TOPL has fulfilled its

obligations in this regard and any further action required is the

responsibility of the RMSO.

#### ISIBONELO

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138 Integrated Annual Report for the year ended 31 December 2022

There are currently no known impediments to tenure security.

The surface rights are owned by a number of different entities of

which the majority are owned by TOPL, and leased to a number

of tenants.

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities for 2022 included 39 vertically cored, collar

surveyed, downhole geophysical surveyed surface boreholes.

Additional geotechnical holes and overburden identification holes

were also drilled.

Logging and sampling of the vertical cored boreholes are done

as soon as possible after drilling to avoid deterioration of the

coal core. The core is photographed and logging, sampling and

analytical results uploaded to Minescape GDB, which includes

validation processes during importing of data.

Coal samples collected during 2022, were sent to the SANAS

accredited laboratory, BV, based in Middelburg, Mpumalanga.

For 2023 the planned exploration expenditure is estimated at

R3.8 million.

GEOLOGICAL SETTING AND MODELLING

The Isibonelo Colliery is located in the Highveld Coalfield where

four coal seams are present. These consists of, from bottom, the

underdeveloped No 2 Seam, sequentially to the No 5 Seam at

the top. Only the No 4 Seam is declared as Coal Resources and

Coal Reserves.

No faulting was detected during exploration drilling or mining

activities. A sill identified on the aeromagnetic survey as well as in

boreholes is situated above the No 4 Seam and has little effect on

the coal seam. Three thin dolerite dykes were intersected during

mining, but with little effect on the mining or coal seam.

The coal seams are modelled in the Datamine Minescape

3D modelling software, which uses pre-defined criteria with

interpolators to construct the coal seam model, with estimates

of raw qualities as gridded surfaces from borehole information.

There are no washability analyses since the colliery produces

araw product.

MINING ACTIVITIES

The colliery is an opencast operation consisting of a north pit

and a south pit. Both pits support a dragline operation and are

assisted by a pre-strip truck and shovel fleet.

The main equipment used in the pits includes two draglines,

hydraulic shovels, haul trucks, dozers, excavators, rotary drills,

water bowsers and cranes with the required ancillary support

equipment. The mine layout was designed to suit the available

mining equipment.

The revised mining schedule accelerates the mining of the south

pit due to lower costs, with reserves converted to resources

outside mine plan (RoMP) in the north pit, due to constraints in the

financial and economic modifying factors related to the CSA with

Sasol coming to an end in 2025. A potential new CSA is currently

beingdiscussed.

The remaining LOM is estimated at three years with total ROM

reserves of 12.6Mt. There are no Inferred Coal Resources

included in the LOM plan. The terms of the supply agreement with

Sasol determines the LOM.

PRODUCTION AND COAL PROCESSING

The actual production ROM for 2022 is 3.2Mt with a 100%

saleable raw product.

The colliery solely supplies to Sasol Synfuels Operations under

the CSA. The CSA contract was revised on 1 June 2019 and

expires on 30 June 2025.The targeted supply is 4.5Mtpa evenly

distributed over a 12-month period, for 2023 and 2024, with a

downscale in 2025.

The coal from the pit is transported to the ROM tip by truck. The

coal is crushed, screened and sized at the crushing and screening

plant. There is an automatic satellite sampling plant at the point of

sale. The coal analysis is critical to ensure quality compliance.

When available, additional raw coal, trucked from the Khwezela

South MRD (refer to the Khwezela overview), is blended with

the in-pit coal at a ratio of 1:6, to comply with the contractually

agreed annual supply.

The final product is transported by a 14km conveyor from the

crusher plant to point of sale at the Isibonelo bunker. From there

it is transported by a 22km long conveyor directly to the coal

stockyard situated at the Sasol Synfuels Operations plant, just

south of the town of Secunda.

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139Integrated Annual Report for the year ended 31 December 2022

Khwezela North (previously known as Landau) consists of

the current operating Navigation pit as well as the Kromdraai

and Umlalazi pits, which are currently being rehabilitated. The

Clydesdale SACE life extension project lies on the southern

boundary of the Landau MR. Coal Resources are not reported for

this project due to current environmental permitting considerations.

An active MRD (Blaauwkrans), receives as-arising material from

the Navigation plant. Inactive/dormant MRDs are also located in

thearea.

The Navigation pit is located approximately 120km east of

Johannesburg, 22km west of the town of eMalahleni in the

Mpumalanga province of South Africa. It forms part of the SACE

complex, together with Khwezela South (formerly known as

Kleinkopje) and the Greenside Colliery (refer to the Greenside

overview).

The Navigation pit is constrained by the MR boundary, Eskom

powerlines, the Transnet railway to the north, bounding the Clewer

settlement in the west, the Navigation CHPP and the Blaauwkrans

MRD to the south.

The RLT as well as the EWRP lie south of the pit.

LEGAL TENURE

Khwezela North holds one granted and executed converted

MR – the Landau MR.

Khwezela North operates under numerous approved EMPrs,

EAsand WULs.

The colliery does not have a WML. For the Kromdraai

rehabilitation programme, a WML has been submitted and

pending a record of decision from the DWS and the DMRE.

Amendments to the EMPr and WUL have also been submitted.

#### KHWEZELA

#### KHWEZELA NORTH

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140 Integrated Annual Report for the year ended 31 December 2022

One land claim, at Khwezela North, is to be settled by financial

compensation by the State, through the administration of the

RMSO.

There are currently no known impediments to tenure security.

The surface rights are owned by a number of different entities

ofwhich the majority are owned by TOPL and leased to various

tenants.

EXPLORATION ACTIVITIES AND EXPENDITURE

There were no exploration activities for 2022, due to contractual

complexities and wet weather conditions.

For 2023 the planned exploration expenditure is estimated at

R8.2 million. The postponed 2022 exploration drilling is included

with the 2023 drilling.

GEOLOGICAL SETTING AND MODELLING

Khwezela North is located in the Witbank Coalfield where

five coal seams are present. These consist of, from bottom, the

No 1Seam, sequentially to the No 5 Seam at the top, and all

contribute to the resource and reserve base. At the Navigation

pit, all seams, with the exception of the No 3 Seam, to a greater

or lesser extent, have previously been mined underground, with

the select portion of the No 2 Seam mined most extensively. The

No4 Seam, No 2 Seam and No 1 Seam currently contribute to

the colliery’s export product.

Northwest-southeast striking faults encountered at the Greenside

Colliery extend into the Navigation area but do not impact

the mining. Northeast-southwest trending dolerite dykes are

encountered but with little impact on mining.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model, with estimates

of raw qualities as gridded surfaces from borehole information.

Washability data for each coal seam is utilised separately in the

resource estimation process.

MINING ACTIVITIES

The Navigation pit is an opencast operation with a pre-strip

operation allocated to a truck and shovel fleet. The overall

stripping ratio is low compared to other similar opencast

operations. The main operational risks are the potential for

spontaneous combustion in the old workings.

The primary mining equipment includes a dragline, hydraulic

shovels, haul trucks, overburden drills and a coaling drill, and

issupported by the necessary ancillary equipment.

The main boxcut is in the north of the pit near the railway line

where the overburden is the shallowest. The boxcut is constrained

by available spoil space and will be developed in two parts. The

third boxcut will be developed once space has been made by

completing some of the multi-stage mining operations.

The LOM is estimated at seven years and the total ROM reserves

at 32.5Mt. Inferred Coal Resources of 4% (equivalent to 1.2Mt

reserves) are included in the LOM plan.

PRODUCTION AND COAL PROCESSING

The annual production ROM for 2022 is 3.0Mt. Due to the

constraints influencing pit extensions, little room is left for

expansion of the resources and reserves footprint.

The CHPP produces a primary export product nominal calorific

value of 5,700kcal/kg NAR. Aproduction change to

5,850kcal/kg was implemented in the fourth quarter of 2022.

The plant consists of two identical modules, A and B. The fines are

treated in spirals and the fines product coal added back to the

export product.

The primary product is stockpiled and transported to the RLT via

a conveyor, from where it is railed to the RBCT for export. During

2022 an additional stockpile was established at the Khwezela

South Bokgoni pit, due to the Navigation product stockpile

reaching its maximum capacity.

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141Integrated Annual Report for the year ended 31 December 2022

Khwezela South (formerly known as Kleinkopje) consists of the

Bokgoni 2A pit and the MRD (also known as Landau 3), both of

which were placed on care and maintenance with effect from

the first quarter of 2021. No Coal Reserves are declared. The

remaining Coal Resource from Bokgoni 2A is declared under

resources outside of mine plan. Other coal remnants within the MR

comprise the old Kleinkopje Colliery in the south, NorthWest and

Landau 1 and 2 Blocks as well as the MRD at Klippan.

LEGAL TENURE

Khwezela South holds one granted and executed converted MR

(Kleinkopje MR), and one PR for which a renewal application has

been submitted and is awaiting adjudication.

Approval for a section 102 application, submitted to the DMRE

for certain portions under the Kleinkopje MR to be excluded and

included into the Greenside MR is awaited.

The Kleinkopje MR has an authorised EMPr and EA.

Four land claims which require further action by the RMSO are

noted at Khwezela South. The RMSO needs to either validate or

gazette the claims.

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142 Integrated Annual Report for the year ended 31 December 2022

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities have been suspended since 2020. Previous

activities included vertical cored, collar surveyed, surface

boreholes and aeromagnetic surveying with a minimal amount of

standard downhole geophysics due to the flat-lying strata and the

high density of cored boreholes.

Logging and sampling of the vertical cored boreholes were done

as soon as possible after drilling to avoid deterioration of the coal

core. The core was photographed and logging, sampling and

analytical results uploaded in Minescape GDB, which included

validation processes during importing.

Coal samples were sent to SANAS accredited laboratories.

There is no 2023 budget for exploration activities at Khwezela

South.

GEOLOGICAL SETTING AND MODELLING

Khwezela South is located in the Witbank Coalfield where

five coal seams are present. These consist of, from bottom, the

No1Seam, sequentially to the No 5 Seam at the top and are

all, with the exception of the No 3 Seam, part of the resource

base. Asmall graben with a 10m throw lies to the northeast

of the Bokgoni 2A pit. No major dolerite intrusions have been

encountered.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model with estimates of

raw qualities as gridded surfaces, from borehole information.

Washability data for each coal seam is utilised separately in the

resource estimation process.

MINING ACTIVITIES

The Bokgoni 2A Pit was put on care and maintenance in 2021

and no mining took place in 2022.

PRODUCTION AND COAL PROCESSING

No coal processing took place in 2022.

#### KHWEZELA SOUTH MRD

The Khwezela South MRD (also known as Landau 3) consists of

discard material from the No 2 Seam, laid down during the early

stages of the facility’s construction, and an old ash dump. A poor-

quality top zone was formed when the discard of re-washed MRD

material was deposited during the last years of operation. The

MRD was built up in two stages, resulting in an old slightly better

quality section, and a new poorer qualityarea.

The estimated Coal Resource is derived from a geological model

constructed in the Datamine Minescape 3D modelling software,

using drillhole data together with a flown DTM of the topography

surface and a pre-mined basal topographic surface as the base

of the MRD.

Seven vertically stacked horizontal layers represent the variation

in raw coal qualities. An assumed bulk density of 1.5g/cm

3

was

used to estimate the tonnage.

During 2022, 1.4Mt coal was mined from the declared RoMP.

The coal was trucked to the Isibonelo Colliery where it was

blended with in-pit coal at a ratio of 1:6 and then sold to Sasol

Synfuels Operations.

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143Integrated Annual Report for the year ended 31 December 2022

The Mafube Colliery is an opencast operation in which SACO

holds a 50% direct interest and Exxaro holds the remaining 50%.

The JV is termed Mafube Coal Mining Proprietary Limited.

The colliery is located approximately 160km east of

Johannesburg and 30km east from the town of Middelburg in

theMpumalanga province of South Africa.

The opencast operation is constrained primarily by the MR

boundary. Internal to the MR the coal sub-crop defines the

resource limit.

The operation consists of six planned pits. The mining strategy is to

schedule the mining pits to maximise the Coal Reserve recovery by

maintaining steady-state production up to the end of LOM.

The declared resources and reserves are as evaluated and

estimated through Exxaro.

LEGAL TENURE

The Mafube Colliery holds one granted and executed NOMR

and one granted and executed converted MR. The coal in

the Springboklaagte Reserve MR has been depleted. Mining

operations currently occur in the Nooitgedacht Reserve MR.

The Mafube Colliery operates under numerous approved EMPrs,

EAs and WULs. Amendments to the EMPr for the Mafube Life

Extension Nooitgedacht and Wildfontein Operations (de-

bottleneck project) and the Nooitgedacht WUL has been issued.

The EIA, EMPr and EA for the mining of Rooipan was submitted to

the DMRE, and the colliery is now awaiting final scoping report

approval. An application for a WUL for the mining of Rooipan is

currently in progress.

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14 4 Integrated Annual Report for the year ended 31 December 2022

Several land claims are registered. Some have been dismissed,

others require validation or claimant verification, and a few require

further negotiations prior to settlement.

There are various competing applications over Mafube’s

MRs. Mafube has lodged objections and appeals against the

applications and the outcomes are pending.

Mafube Coal Mining has recently been notified of a legal

challenge in respect of the historic subdivision of portion 1 of

the farm Patattafontein 412 JS. Ifnot resolved, this may have an

insignificant impact (<3%) on the reserve base and mine planning.

The surface rights are owned by a number of different entities

with some portions of the surface rights owned by Mafube Coal

Mining leased to a number of tenants for agricultural purposes

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities for 2022 included 191 vertically cored and

collar surveyed boreholes. This included a total of 66 boreholes

drilled within the Rooipan catchment area as per the general

authorisation issued by the DWS.

Logging and sampling of the vertical cored boreholes are done

as soon as possible after drilling to avoid deterioration of the

coal core. The core is photographed and logging, sampling

and analytical results captured in an acQuire GIM Suite SQL

database, managed by Exxaro.

Coal samples collected during 2022, were sent to the SANAS

accredited laboratory, BV, based inMiddelburg, Mpumalanga.

For 2023 the planned exploration expenditure is estimated at

R14.4 million.

GEOLOGICAL SETTING AND MODELLING

The Mafube Colliery is located close to the northern edge

of the Witbank Coalfield where four coal seams are present.

These consist of, from bottom, the No 1 Seam, sequentially to

the No4 Seam at the top. The No 2 Seam is the main source of

the declared Coal Resources and Coal Reserves, with the No4

Seam and No 1 Seam also contributing.

No faulting was detected during exploration drilling or mining

activities. Dolerite intrusives, tentatively identified from the

aeromagnetic survey, have not been confirmed by drilling or

mining activities.

The geological model is constructed using the Geovia Minex

Dassault Systems software and is managed and maintained

by Exxaro. The gridded coal seam surfaces, interpreted from

boreholes, were constructed using set criteria or relationships

between the seams, using the growth algorithm. Raw and

washability quality grids were also constructed.

MINING ACTIVITIES

Currently, the No 2 Seam and No 1 Seam are being extracted.

The main equipment used in the pits are dozers, excavators, haul

trucks, coal and overburden drills with articulated dump trucks

used for topsoil removal.

The LOM is estimated at 21 years with total ROM reserves

of 123.1Mt. This is in line with the Mafube plant capacity of

5.8Mtpa ROM. Only 1% of the LOM plan is derived from Inferred

Coal Resources (equivalent to 1.7Mt reserves).

PRODUCTION AND COAL PROCESSING

The actual ROM production for 2022 is 5.4Mt. After processing,

this produced a 5,800kcal/kg NAR export product together with

a 4,800kcal/kg NAR middlings export product. An additional

raw domestic product has been identified and included in the

declared saleable products, to be included for the remainder of

the LOM starting in 2024.

The CHPP is operated by Mafube on behalf of the JV.

ROM coal is transported from the pit to the CHPP by a 7km

overland conveyor. The CHPP is a single module, treating coarse

and finer coal in separate dense medium cyclones. Both saleable

export products are transported by a 14km overland conveyor to

the RLT.

The CHPP also uses filter presses to process ultrafines. This

product is sold on demand to the inland market.

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145Integrated Annual Report for the year ended 31 December 2022

The Rietvlei Colliery comprises an established truck and shovel

opencast operation with two designed LOM pits and a third

representing out of mine plan resources. The colliery is located

27km northeast of the town of Middelburg in the Mpumalanga

province of SouthAfrica.

Butsanani Energy holds a 51% share of RMC and the balance is

held by Mwelase Group of Companies Proprietary Limited (15%)

and Emalangeni Mining Resources Proprietary Limited (34%).

Thungela holds 67% of Butsanani Energy through both TOPL

and SACO, with Vunani Mining Proprietary Limited holding the

remaining portion (33%). The effective ownership of RMC by

Thungela is 34%.

The opencast operation is constrained by the MR boundary,

sub-cropping of the coal seams, protected water features and a

railway line which passes through the southern portion of the area

as well as the provincial road in the northwest.

The operation consists of three designed pits, with the main

infrastructure close to the opencast operations.

LEGAL TENURE

The Rietvlei Colliery holds one granted and executed NOMR.

The colliery operates under one approved WUL, one approved

EMPr and one EA. The colliery does not have a WML. The

colliery has not completed construction of a pollution control dam

to date. The excess water is currently managed within the MR

area.

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146 Integrated Annual Report for the year ended 31 December 2022

There are currently no known impediments to tenure security.

The surface rights are owned by the South African government

and a lease agreement is in place.

EXPLORATION ACTIVITIES AND EXPENDITURE

Historical exploration activities were done by Anglo American

Coal South Africa. The information provided to RMC, when

RMC acquired the Rietvlei licence, included complete borehole

information.

The more recent geological activities, conducted by

GMGeotechnical Consultants cc (GM), were carried out

following GM’s standard logging and sampling procedures. All

pre-split holes possess downhole geophysical surveys, whereas

the exploration boreholes are photographed, logged and

sampled. All geological information is stored in Microsoft Excel

spreadsheets/database from where it is interrogated for errors.

For the most recent exploration drilling, all the samples were

analysed at the accredited Siza Coal and Mineral Laboratory,

inMiddelburg.

For 2023 the planned exploration expenditure is estimated at

R9million.

GEOLOGICAL SETTING AND MODELLING

The Rietvlei Colliery is located in the Witbank Coalfield where

two of the five coal seams are present. These consist of the

No 1 Seam and No 2 Seam, declared as Coal Resources and

Coal Reserves and currently contributing to the raw product.

No faulting was detected during exploration drilling or mining

activities. A dolerite intrusion in the far north was intersected by

boreholes as well as mining, but the effect on the coal seams is

minimal.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model with estimates

of raw qualities as gridded surfaces, from borehole information

as well as structural information from the pre-split holes. The

washabilities are available on all recent exploration boreholes,

and this data was incorporated into the geological model and

mine planning for 2022.

MINING ACTIVITIES

The colliery is an opencast operation consisting of three designed

pits, with mining activity taking place in pit 1 and2. The colliery is

a truck and shovel operation.

The main equipment used in the pits are excavators, haul trucks,

dozers, rotary drills, water bowsers and graders.

The remaining LOM is estimated at four years with a total ROM

reserves of 10.0Mt. There are no Inferred Coal Resources

included in the LOM plan.

PRODUCTION AND COAL PROCESSING

The annual production ROM for 2022 is 2.6Mt.

The coal from the pit is transported to the ROM tip by articulated

dump trucks. The coal is crushed, screened and analysed by an

on-site control laboratory at the crushing and screening plant.

Theproduct line has an in-line sampler and belt scales.

The initial LOM plan was based on both high grade and low

grade product sales to Eskom. The contract for the high grade

product came to an end in April 2021, with only a supply of low

grade coal to Eskom until the end of 2023, when the contract

lapses.

During 2022 a washing plant was introduced to reduce the

high sulphur content and to upgrade the ROM to a domestic or

export quality product. A drum module was also commissioned

for the dense medium processing. This module has the capacity

to process coarse coal. This necessitated a revised mine schedule

and an increase in the ROM for 2022.

The CHPP is located adjacent to the boxcut. The saleable product

will be transported from the plant directly to the customer by road.

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147Integrated Annual Report for the year ended 31 December 2022

Zibulo Opencast (OC) is located approximately 100km east of

Johannesburg, close to the town of Ogies in the Mpumalanga

province of South Africa.

It forms part of the Zibulo Colliery, which includes the

underground (UG) bord and pillar operation situated 16km

southwest of Ogies as well as the Zondagsfontein West project

area to the west of the underground operation.

The Zibulo MR is held by AAIC, which is 73% owned by SACO

and the remaining 27% interest was previously held by Inyosi, but

is now held by Thungela Resources Holdings Proprietary Limited

(TRH) with effect from 30 November 2022.

The pit is constrained by the MR boundary as well as the N12

highway in the north and the R545 road in the south. The northern

pit, nearing total extraction, is separated from the southern pit by

the Strategic Fuel Fund (SFF) pipeline servitude.

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148 Integrated Annual Report for the year ended 31 December 2022

LEGAL TENURE

Zibulo OC holds one granted and executed NOMR.

The pit operates under several EMPrs, EAs and WULs. Itdoes not

require a WML, and all the required environmental permits are in

place. An amendment to the WUL has been submitted to licence

additional activities.

The surface rights are owned by AAIC and a third party.

No land claims are recorded over the Zibulo OC MR.

There are currently no known impediments to tenure security.

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities for 2022 included eight vertically cored,

collar surveyed, downhole geophysical surveyed surface

boreholes. Some of the production (drill and blast) holes were

used for the structural interpretation.

Logging and sampling of the vertical cored boreholes are done

as soon as possible after drilling to avoid deterioration of the

coal core. The core is photographed and logging, sampling

and analytical results are uploaded in Minescape GDB, which

includes validation processes during importing of data.

Coal samples collected during 2022, were sent to the SANAS

accredited laboratory, BV, based inMiddelburg, Mpumalanga.

For 2023 the planned exploration expenditure is estimated at

R0.9 million.

GEOLOGICAL SETTING AND MODELLING

Zibulo OC is located in the Witbank Coalfield where typically

five coal seams are present. However, at Zibulo OC only three

seams occur, i.e. from bottom, the No 1 Seam, the No 2 Seam

and the No 4 Seam at the top. The No 5 Seam has been eroded

and the No 3 Seam is not present. The No 4 Seam and No 2

Seam both contribute to the colliery’s export product.

Zibulo OC is sub-divided into two distinct domains, north and

south, by the SFF pipeline servitude. No faults or dolerites are

present in the area. Granted WULs to mine the wetlands to the

east and south are available.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model, with estimates

of raw qualities as gridded surfaces from borehole information.

Washability data for each coal seam is utilised separately in the

resource estimation process.

MINING ACTIVITIES

The Zibulo OC pit is a truck and shovel contractor-operated mini-

pit. The northern portion of the pit is nearing total extraction, and

the boxcut development in the southern pit commenced in 2021.

Rock engineering aspects are well managed, with adequate risk

controls implemented.

Zibulo OC has the required infrastructure including a substation

and electrical reticulation, haul roads, mining equipment and a

ROM crushing plant.

The remaining LOM is estimated at four years with total ROM

reserves of5.0Mt, if the current mining rates are maintained. There

are no Inferred Coal Resources included in the LOM plan.

PRODUCTION AND COAL PROCESSING

The actual production ROM for 2022 is 0.7Mt. The coal is

combined with the Zibulo UG coal, producing a saleable

6,000kcal/kg NAR export product and a 4,800kcal/kg NAR

middlings export product.

The Zibulo OC operation supplements the underground

production ROM to the Phola Coal Processing Plant (PCPP) so

that the maximum allocated throughput capacity of 8Mtpa can

be achieved. The Zibulo OC coal is trucked to the PCPP which is

situated onthe western border of Ogies.

The PCPP is a 50:50 JV between AAIC and Seriti Power

Proprietary Limited. The plant has a nominal capacity of 16Mtpa,

of which the Zibulo Colliery is entitled to 8Mtpa according to the

JV agreement. The ROM from both the Zibulo OC and the Zibulo

UG is processed at the PCPP.

The PCPP has dedicated ROM and product stockpiles for each

of the JV partners. There are two rail loops connected to TFR with

two load-out facilities. Fine coal is fed to spirals and the spirals

product stream is split between the export and middlings product,

depending on the quality produced.

A flotation plant was commissioned in 2021, with the ultra-fines

feed only from the Zibulo Colliery. The product is mixed either with

the 6,000kcal/kg export product or the 4,800kcal/kg export

product, depending on the final quality.

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149Integrated Annual Report for the year ended 31 December 2022

Zibulo Underground (UG) is a bord and pillar operation located

approximately 100km east of Johannesburg, 16km southwest of

Ogies, in the Mpumalanga province of SouthAfrica.

It forms part of the Zibulo Colliery which includes the Zibulo OC

operation and the Zondagsfontein West Project.

The Zibulo MR is held by AAIC, which is 73% owned by SACO

and the remaining 27% interest was previously held by Inyosi, but

is now held by TRH with effect from 30 November 2022.

LEGAL TENURE

Zibulo UG holds one granted and executed NOMR which

comprises the current underground mine and the Zondagsfontein

West life extension project.

The colliery operates under several EMPrs, EAs and WULs. All the

required environmental permits are in place for the operation. An

amendment to the WUL has been submitted, to license additional

activities. Due to the inclusion of the Zondagsfontein West Project

area, in the LOM, an amendment to the current EMPr of Zibulo

UG, to cover the underground workings and surface infrastructure,

has been submitted to the DMRE and is awaiting approval.

The surface rights for Zibulo UG are currently owned by numerous

different entities including AAIC.

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15 0 Integrated Annual Report for the year ended 31 December 2022

A purchase agreement has been concluded to secure surface rights

for portion RE/11 of the farm Leeuwfontein 219 IR and is currently

in the registration process. Subsequently a purchase agreement has

been concluded to secure portion RE/2 of the farm Zondagsfontein

253 IR among others. The aforementioned portions are critical for

the Zibulo life extension project.

Five land claims are registered over the Zibulo UG MR which

require either dismissal, gazetting, validation or approval by the

RMSO. The claims do not impact the current underground mining.

There are currently no known impediments to tenure security.

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities for 2022 included 56 vertical cored, collar

surveyed, standard downhole geophysical surveyed surface

boreholes. Additional cover is by underground in-seam panel and

directional non-core drilling ahead of mining faces.

Logging and sampling of the vertical cored boreholes are done

as soon as possible after drilling to avoid deterioration of the

coal core. The core is photographed and logging, sampling and

analytical results captured in Minescape GDB, which includes

validation processes during importing.

Coal samples collected during 2022, were sent to the SANAS

accredited laboratory, BV, based inMiddelburg, Mpumalanga.

For 2023 the planned exploration expenditure is estimated at

R10.7 million.

GEOLOGICAL SETTING AND MODELLING

Zibulo UG is located in the Witbank Coalfield where five coal

seams are present. These consist of, from bottom, the No 1 Seam,

sequentially to the No 5 Seam at the top, with inter-seam partings

consisting of mainly siltstone and sandstone, with thicknesses

ranging between 1m and 20m. The No 2 Seam is currently the only

underground contributor to the colliery’s export product.

Pre-Karoo paleo-highs influence the No 2 Seam thickness and

elevation, particularly where the seam truncates against these

paleo-highs.

The No 4 Seam and No 5 Seam are declared as RoMP, and

are considered to be economic Coal Resources for future mining,

with the select No 4 Seam as a domestic product and the highly

vitrinitic No 5 Seam as a possible metallurgical coal. However,

the No 5Seam potential is restricted by thickness, weathering and

extensive sill influence.

Faulting is minimal across Zibulo UG except for the major graben

structure in the north, striking east-west across the colliery. The

graben consists of a series of sub-parallel faults with varying throws

along strike. The graben was also intersected in the neighbouring

underground workings of Khutala Colliery and has a magnetic

signature clearly visible on the aeromagnetic survey. Five fence line

patterns were drilled to better define the extent of the graben at

ZibuloUG.

Dolerite intrusions and associated stringers occur throughout the

area and large sills appear close to the surface affecting mostly

theNo 5 Seam.

The coal seams are modelled in the Datamine Minescape 3D

modelling software, which uses set criteria with interpolators to

construct the depositional coal seams environment together with the

raw qualities as gridded surfaces, from the borehole information.

Washability data is treated separately in the resource estimation

process.

MINING ACTIVITIES

Zibulo UG is a bord and pillar operation targeting a selective

mining horizon between 3.3m and 4.5m thick in the No 2 Seam.

The mine was designed to operate with eight sections. During 2021

a prime section was established to improve the productionrates.

The operation is equipped with CMs, shuttle cars, feeder-breaker

systems and conveyor belt systems. The UG infrastructure consists

of a vertical shaft for transporting man and material, an incline shaft

for the conveyance of coal and an appropriate ventilation system.

A graben in the north divides the reserve into two domains, the coal

quality on either side is similar and both domains are scheduled to

be mined.

The LOM is estimated at 10 years and is supported by a total ROM

reserve base of 57.2Mt. The increase in LOM years and the ROM

reserve base from 2021, is due to the re-evaluation of the north-of-

graben reserve footprint, which forms part of the Zondagsfontein

West feasibility study (FS), to optimise the value of the life extension

of Zibulo.

There are no Inferred Coal Resources included in the current

underground colliery. A 25% Inferred Coal Resources in mine

plan is included in the overall LOM with the inclusion of the

Zondagsfontein West project in the total LOM. The Inferred Coal

Resources in mine plan are envisaged to be mined from 2035 and

an action plan is in place to reduce the percentage, before mining

commences in the area.

PRODUCTION AND COAL PROCESSING

The actual production ROM for Zibulo UG for 2022 is 5.3Mt,

producing a combined saleable 6,000kcal/kg NAR export

product and a 4,800kcal/kg NAR middlings export product.

The underground ROM coal is transported to the PCPP via a 16km

long overland conveyor. The product coal from both the Zibulo OC

and the Zibulo UG is loaded for export at the PCPP RLT and railed

to the RBCT. The majority of the middlings coal is railed to the RBCT

for blending with other coal products, with a small amount sold free

on rail or free on truck to inland customers.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

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151Integrated Annual Report for the year ended 31 December 2022

The Elders project revised FS, covering the extraction of both

the No 4 Seam and No 2 Seam, was completed in June 2022.

Following this the project was approved by the Thungela board in

August 2022.

The Elders project area is located approximately 60km south of

the town of Middelburg in the Mpumalanga province of South

Africa.

Within the Elders MR, three distinct domains exist, with a far

north opencast domain (not reported since not in line with the

strategy for underground mining), the central underground domain

(resources and reserves reported) and the southwest underground

domain (not reported due to the impact of transgressive sills

compartmentalising and devolatilising the coal seams).

The focused project area, is the underground central area with the

economic target being the No 4 Seam and No 2 Seam, of which

the No2Seam has the better quality.

The declared resources and reserves, in this report, are made up

of these two economic seams.

The project area is constrained by the MR boundary, a railway

line to the northeast, a paleo-high truncating the seams in the

south and southeast as well as sub-crops in the north and west

due to the pre-Karoo topography.

The Olifants River and Viskuile River flow through the north and

centre of the study area and an extensive wetland is present in

the area. The 1:100-year flood line of the rivers cuts across the

planned mining areas.

LEGAL TENURE

TOPL holds a MR that was granted in terms of section 23(1) of

the MPRDA in April 2018, under DMRE reference number MP

30/5/1/2/2/10117 MR (“the mining right“).

#### ELDERS

#### OVERVIEW OF ASSET PROJECTS

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

15 2 Integrated Annual Report for the year ended 31 December 2022

The mining right and section 11 to cede the mining right to AAIC

was executed in July 2020. The executed mining right and section

11 were simultaneously lodged at the Mining Titles Office for

registration purposes.

A sale of a portion of the mining right and a property agreement

was concluded with Sudor for Portion 5 of the farm Middelkraal

50 IS and Portion of Portion RE of the farm Middelkraal 50 IS (also

known as Pit 4). A section 102 application will be lodged with

the DMRE to abandon the portions in favour of Sudor. A tripartite

transaction is being finalised.

AAIC currently owns approximately 3,500ha of the total surface

rights relating to the approved mining right area. The surface rights

owned by AAIC sufficiently cover the planned surface infrastructure

to facilitate the planned mining operations. Therefore, no additional

surface rights will be acquired for the project.

The Elders project has an integrated WUL, an approved EMPr and

an approved EA. A WUL amendment was applied for in 2019

and authorised in July 2022. The WUL, including all amendments,

was approved in December 2022 and this licence superseded all

previous WULs issued to Elders.

Several project changes took place during the revised FS,

including activities pertaining to block plans, the ventilation shaft,

hauling of coal, widening of the R35 and the coal loading area.

Subsequently, the EIA application was submitted in November

2021 and approval was due in March 2022. The DMRE case

officer has recently received the record of decision from the

DWSwaste activities division.

The DMRE case officer will start finalising the EIA decision in

January 2023.

Four land claims are under investigation and registered with the

regional land claims commission.

There are currently no known impediments to tenure security.

The surface rights are owned by a number of different entities, of

which the majority is owned by AAIC and leased to various tenants.

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities including vertical cored, collar surveyed,

surface boreholes with standard downhole geophysical logs,

will commence in 2023, with seven holes planned in the initial

development areas.

Logging and sampling of the vertical cored boreholes will be done

as soon as possible after drilling, to avoid deterioration of the coal

core. The core will be photographed and logging, sampling and

analytical results will be uploaded to Minescape GDB, which

includes validation processes during importing.

No exploration activities occurred during 2022.

Five geotechnical holes (no coal quality samples taken) were

drilled in the boxcut area.

Since these holes have downhole geophysics, their stratigraphic

information is incorporated into the geological model.

For 2023 the planned exploration expenditure is estimated at

R1million.

GEOLOGICAL SETTING AND MODELLING

Elders is located close to the northern margin of the Highveld

Coalfield where five coal seams are present. These consist of,

from bottom, the No 1 Seam, sequentially to the No 5 Seam at

the top, with the No 4 Seam and No 2 Seam declared as Coal

Resources and Coal Reserves.

No faulting was detected during exploration drilling. However,

dolerite intrusives were identified on two aeromagnetic surveys

and a high resolution SkyTEM survey and results from the

geophysics survey tool, the MagSQUID. Boreholes have

confirmed some of these features and where the sills are close to

the coal seams devolatilisation and/or burning may be evident.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model, with estimates

of raw qualities as gridded surfaces from borehole information.

Washability data for each coal seam is utilised separately in the

resource estimation process.

MINING ACTIVITIES

The mine will be an underground bord and pillar operation

using primarily CMs. Access to the underground workings is

via a boxcut with portals onto the No 2 Seam and No 4 Seam

horizons. The mining operation will mine the No 2 Seam first,

followed by the No4 Seam.

The mine is designed with production from three (during ramp-up)

to five (at full production) CM sections during the different phases.

Construction on site commenced in quarter four of 2022, with the

establishment of a site office and the initial phase of the boxcut

development.

The LOM is estimated at 24 years and is supported by a ROM

reserve base of 80.9Mt, with first coal planned during quarter four

of 2023. Only 1% of the LOM plan is derived from Inferred Coal

Resources (equivalent to 0.7Mt reserves).

PRODUCTION AND COAL PROCESSING

The mine will produce around 3.5Mtpa, peaking at

4.2MtpaROM over the LOM. A 5,700kcal/kg NAR single

product, from the No 2 Seam is earmarked for the export market,

with a changeover to a domestic product of 4,500kcal/kg NAR,

from the No 4 Seam, for the local market.

Coal from the colliery will be transported by road and processed

at the existing third-party-owned and operated CHPP at

Goedehoop South, approximately 23km from Elders.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

15 3Integrated Annual Report for the year ended 31 December 2022

#### SOUTH RAND

South Rand holds one granted MR (92 MR), one pending MR

(10034 MR) and one pending renewal PR (70PR) (NOPR).

The area is well drilled with cored boreholes, quality analyses of

the different coal seams and downhole geophysical surveys since

the 2009 exploration programme. Exploration activities ceased at

the end of 2013.

South Rand is located in the South Rand Coalfield and is

structurally complex as a result of dolerite intrusions and faults.

The No 2 Seam is the main seam, with a select portion of the

No2 Seam, called the SM3, declared as Coal Resources.

The South Rand project is part of a disposal process with the

transfer of the granted MR, a pending MR and also the pending

renewal PR. RoMP will be declared until the transaction is

complete.

The South Rand project area is divided into two portions. The

northern portion, named the Heidelberg Project area and the

Balance Project area is situated to the south of the Heidelberg

Project. The project area is bounded to the north by an east-west

trending paleo-high, which divides the two project areas. The

Heidelberg Project is situated in the Gauteng province and the

South Rand Balance Project area is situated in both the Gauteng

and Mpumalanga provinces.

South Rand is owned by AAIC, which is 73% owned by SACO

and the remaining 27% interest was previously held by Inyosi, but

is now held by TRH with effect from 30 November 2022.

04 OUR

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05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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15 4 Integrated Annual Report for the year ended 31 December 2022

The Waterberg project comprises six farms, collectively known as

Dalyshope. It is a coal development project located close to the

Botswana border, 55km northwest of the town of Lephalale inthe

Limpopo province.

Dalyshope is the main study area and does not include the other

scattered areas which are part of the PR.

Dalyshope consists of two basic coal deposit types, i.e. the

upper multiple seam coal deposit type (typical of the Waterberg

Coalfield) and the lower thick interbedded seam coal deposit-

type (typical of the Witbank and Highveld Coalfields). Both these

coal deposit-types constitute the declared Coal Resources.

Dalyshope is constrained by the PR boundary and the

1:100-year flood line of the Limpopo River which traverses the

northwest corner of Dalyshope. A number of pristine pans, with

high environmental sensitivity, are found across Dalyshope and the

legal 500m buffer zones were added to the exclusion zones of

the potential opencast portion of the resource.

LEGAL TENURE

The Waterberg project holds two converted PRs.

The Waterberg 5 PR pertains to the nearby farm Boompan 237LQ

and other more distant farms, none of which are included in this

report.

The Waterberg 7 PR consists of the Dalyshope study area and

isolated farms. The isolated farms are not included in this report.

Both PRs have been renewed the permissible number of times and

have now expired. However, a Mining Rights Application (MRA)

covering both PRs was accepted by the DMRE in 2020 and a

decision is currently pending. Thungela may thus continue with

prospecting activities unless the MRA is denied.

Various authorisations and licences were applied for in 2020, in

support of the proposed mining operations, including an EA, a

WML and an WUL as well as a Tree Permit. All these applications

await approval.

#### WATERBERG

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

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15 5Integrated Annual Report for the year ended 31 December 2022

There are no known land claims or other impediments to tenure

security on the Dalyshope study area.

The surface rights are owned by different entities. TOPL owns

the surface rights of the farms covering the declared resources.

Operations on any of the other farms would need surface rights

tobe acquired.

EXPLORATION ACTIVITIES AND EXPENDITURE

Exploration activities performed by Anglo American Coal South

Africa (ceased in 2015) included vertical cored, collar surveyed,

surface boreholes and an aeromagnetic survey, as well as a

2D seismic survey. The majority of boreholes possess standard

downhole geophysics data. The downhole geophysics are

required to accurately correlate the coal zones and interbeds,

and establish the correct sampling intervals.

Logging and sampling of the vertical cored boreholes are done

as soon as possible after drilling to avoid deterioration of the

coal core. The core is photographed and logging, sampling and

analytical results captured in Datamine GDB, which includes

validation processes during importing of data.

Exploration resumed in December 2019, and is managed under

contract by Universal Coal Development IV Proprietary Limited

(UCD). Exploration activities include surface drilling, downhole

geophysics, geotechnical drilling and large diameter drilling.

Coal samples are sent to SANAS accredited laboratories.

For 2023 there is no planned exploration expenditure.

GEOLOGICAL SETTING AND MODELLING

The Dalyshope study area is located close to the southwestern

edge of the Waterberg Coalfield, within the Ellisras Basin.

At Dalyshope, the coal is found in the upper Grootegeluk

Formation and the lower Goedgedacht Formation of the

EccaGroup.

The interbedded Grootegeluk Formation is divided into the Prime

Zone and the underlying Transition Zone. Coal Resources are

derived from the Prime Zone.

The Goedgedacht Formation contains coal seams similar to

the Witbank Coalfields. Three seams, ES1 Seam, ES2 Seam

and ES3Seam, are identified in the Dalyshope area, with the

ES2Seam being the target seam.

Several small displacement faults have been inferred by

2Dseismic lines survey in the southern portion of the Dalyshope

area. Another anomaly in the north was identified by the low

resolution aeromagnetic survey and 2D seismic line, but no

abnormal features were intersected by closely spaced boreholes

drilled to target the anomaly. Nodolerite intrusions have been

intersected in any of the boreholes.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model, with estimates

of raw qualities as gridded surfaces from borehole information.

Washability data is utilised to determine the percentage of a 1.8

cutpoint density product.

STUDIES RELATED TO MINING AND COAL

PROCESSING

TOPL signed a farm-out agreement with UCD on 3March 2020

over the Dalyshope project area. In terms of the agreement, UCD

is appointed as contractor to conduct and fund the continuation

of prospecting activities over Dalyshope, where for a minimum

expenditure UCD can earn an agreed participating interest in the

project.

Certain conditions are in place that must be met before UCD can

earn the participating interest.

Various studies have been undertaken or are in progress to

develop an appropriate exploitation plan. This work is managed

by UCD, as part of the agreement.

The current plan envisages four open pits, but only two pits have

been tentatively scheduled.

With borehole data being reviewed for the plant design

parameters, a modular cyclone plant is under consideration to

produce an export and domestic product.

A preliminary geotechnical assessment focused on civil

aspects and studies is underway regarding the preparation

of the block plan and layout. This is further supported by the

associated mechanical, electrical and instrumentation designs

and requirements. Water is planned to be sourced from multiple

potential sources which may include the Gas Project (located in

the northern part of the Coalfield) or the Mokolo and Crocodile

River (West) water augmentation project. The respective pipeline

routes are to be determined.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

15 6 Integrated Annual Report for the year ended 31 December 2022

Zondagsfontein West (ZFNW) project is an underground life

extension project to the current Zibulo UG operation with the

North Shaft FS concluded in September 2022 and was audited/

reviewed in October 2022. The project will be submitted for

board consideration in 2023.

ZFNW forms part of the Zibulo Colliery, which includes the

Zibulo OC operation situated 3km north of Ogies and the

underground bord and pillar operation situated 16km southwest

of Ogies. The project area is located approximately 90km east

ofJohannesburg, in the Mpumalanga province of South Africa.

The Zibulo MRs are owned by AAIC, which is 73% owned

by SACO and the remaining 27% interest was previously

held by Inyosi, but is now held by TRH with effect from

30November2022.

The Zibulo UG operation started in the southeast portion of the

MR and is developing northwards, with plans to cross the graben

structure (refer to the Zibulo overview) and then mine north of

the graben, whereafter it is expected to expand into the ZFNW

project area.

ZFNW is constrained by the MR boundary, the current Zibulo UG

LOM in the east, and the Wilge River as part of the MR boundary

in the west. Subcrops and pinch-outs against paleo-highs also

restrict the resource base.

LEGAL TENURE

Zibulo UG holds one granted and executed NOMR which

comprises the current underground mine and also includes the

ZFNW life extension project.

During the FS phase, an amendment to the current EMPr of Zibulo

UG, to cover the underground workings and surface infrastructure

for the project, was submitted to the DMRE and is awaiting

approval.

#### ZONDAGSFONTEIN WEST

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

157Integrated Annual Report for the year ended 31 December 2022

Five land claims are registered over Zibulo UG MR which require

either dismissal, gazetting, validation or approval by the RMSO.

The claims do not impact the FS.

There are currently no known impediments to tenure security.

The surface rights for the Zibulo Colliery are currently owned by

numerous different entities including AAIC.

A purchase agreement has been concluded to secure surface

rights for portion RE/11 of the farm Leeuwfontein 219 IR and is

currently in the registration process. Subsequently a purchase

agreement has been concluded to secure portion RE/2 of the

farm Zondagsfontein 253 IR amongst others.

EXPLORATION ACTIVITIES AND EXPENDITURE

No exploration activities occurred during 2022.

The planned exploration expenditure for 2023, is incorporated

inthe Zibulo UG estimated expenditure ofR10.7 million.

GEOLOGICAL SETTING AND MODELLING

ZFNW is located towards the western edge of the Witbank

Coalfield where five coal seams are present. These consist of,

from bottom, the No 1 Seam, sequentially to the No 5 Seam at

the top, with inter-seam partings consisting of mainly siltstone and

sandstone. The No 2 Seam is currently the only contributor to the

declared UG Coal Resources. No opencast Coal Resources are

declared at present.

Pre-Karoo paleo-highs influence the No 2 Seam thickness and

coal qualities, where the seam is truncated against these paleo-

highs. A paleo-valley is also evident in the west.

Faulting is expected to be minimal except for the area adjacent to

the graben structure. The magnetic signature of the graben, clearly

visible on the aeromagnetic survey at Zibulo UG, disappears in

the west. Since no significant displacement has been identified by

the drilling, it is assumed that the effect of the graben tails off to the

southwest of the study area.

Dolerite intrusions and associated stringers with minimal effect on

the coal seams occur at Zibulo UG and it is anticipated that these

will continue in the ZFNW study area. Several dykes have been

interpreted from the aeromagnetic survey. Based on experience

from Zibulo UG, these are likely to be Pre-Karoo in age and

would have no impact on the coal seams.

The coal seams are modelled in the Datamine Minescape

3D modelling software which uses pre-defined criteria with

interpolators to construct the coal seam model, with estimates

of raw qualities as gridded surfaces from borehole information.

Washability data for each coal seam is utilised separately in the

resource estimation process.

MINING ACTIVITIES

An underground bord and pillar operation using CMs, similar

to the Zibulo UG operation, is planned. Construction of a new

access shaft north of the graben, in the Zibulo UG mining area

and an overland conveyor to tie-in to the current Zibulo UG

overland conveyor are anticipated.

All surface and underground access infrastructure for the planned

mining operation were finalised during the FS.

The LOM for the extension is estimated at 16 years with the

planned start of shaft bottom development in the north towards the

west, envisaged for 2025, and first coal production mining in the

west to start in 2029. There will be a simultaneous ramp-down in

the Zibulo UG reserves from 2028.

The LOM is supported by a total ROM reserve base of 85.1Mt,

with a 33% Inferred Coal Resources in mine plan (equivalent to

28.1Mt reserves), included in the overall LOM. The Inferred Coal

Resources in mine plan is envisaged to be mined from 2035 and

an action plan is in place to reduce the percentage, before mining

commences in the area.

PRODUCTION AND COAL PROCESSING

ROM production is expected to peak at 8.4Mtpa, which is

equivalent to the plant capacity. A 6,000kcal/kg NAR from the

No 2 Seam is in line with the Zibulo UG export product, with

the remainder of the coal producing a product for the domestic

market.

Coal processing is scheduled to occur through the PCPP, which

will have spare capacity, due to the expected closure of the

Zibulo OC in the next four years.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

15 8 Integrated Annual Report for the year ended 31 December 2022

CLASSIFICATION AND ESTIMATION OF COAL

RESOURCES AND COAL RESERVES

Coal Resource classification is based on the South African guide

to the systematic evaluation of coal exploration results, Coal

Resources and Coal Reserves (SANS10320:2020) and outlined

in the 2016 SAMREC Code, which classifies Coal Resources

into categories (Reconnaissance, Inferred, Indicated and

Measured) on a function of increasing geological confidence in

the estimate and is based on the density of points of observation,

physical continuity of the coals seams and the distributions of coal

qualities. Coal Resources at the Group’s operations and projects

exceed the minimum drillhole density criteria outlined in SANS

10320:2020. Other geological parameters considered include

seam depth, seam thickness and structural features (faults, dykes,

sills, paleo-highs etc.). For operations producing a saleable export

product, cored drill holes with sampled and analysed washability

data points of observations are used to define the Resource

classification category for each seam individually.

All Coal Resources must have reasonable prospects for eventual

economic extraction (RPEEE). Typically, the term “eventual” refers

to a period of up to 50 years. Other parameters to consider

include, but are not limited to, legal tenure and regulatory

compliance (particularly environmental compliance), cultural

and socio-political aspects, engineering parameters including

mining methods and geotechnical considerations, marketing and

commercial (including economic) assumptions and infrastructure

development requirements.

Geological factors applied during the Coal Resource estimation

process are similar for most of the operations/projects where

Coal Resources are declared. They include, but are not limited

to, minimum/maximum seam thickness cutoffs, maximum raw

ash percentage, coal qualities (e.g. calorific value, volatiles,

sulphur), overburden ratio limits (opencast), depth below surface

(underground) limits, exclusion zones due to areas of structural

complexity and/or igneous intrusions and geological loss

percentages which reflect the confidence in the resource estimate.

Coal Resource estimates are derived from resource models, built

in the 3D geological modelling software Minescape, a Datamine

product. The resource models are reviewed internally every year.

For the 2022 reporting cycle all operations report resources on

a first principle basis, which includes a re-evaluation of the Coal

Resources.

Coal Reserves are classified as either Proved or Probable Coal

Reserves dependent upon the Coal Resource classification

included in the Coal Reserves, along with other factors of

uncertainty pertaining to the mine design or coal quality.

Modifying factors used to convert Coal Resource estimates to

Coal Reserve (ROM and Saleable) estimates include, but are not

limited to, mining method, mining loss, mining extraction, practical

mining heights, contamination/dilution, overall mining recovery,

wash plant factors, surface moisture (correction factor), and

commodity prices among other financial parameters. Application

of the modifying factors should create a reasonable schedule

of the expected performance on a ROM and a saleable coal

product basis. The modifying factors for each operation are

signed off by the relevant responsible persons and this provides

assurance that all factors are appropriate. The modifying factors

are tracked and reconciled to ensure improved forecasts of Coal

Reserve estimates.

The Coal Reserve estimate is derived from a mining model

scheduled in the scheduling software package XPAC, an RPM

product. For the 2022 reporting cycle all operations report

reserves on a first principle basis, which includes a re-evaluation

of the Coal Reserves.

The figure below illustrates the relationship between Exploration

Results, Coal Resources and Coal Reserves and sets out the

framework for classifying tonnage and quality estimates as

outlined in the 2016 SAMREC Code.

[OFFICIAL]

Inferred

Indicated

Measured

Probable

Proved

Increasinggeologicalknowledgeandconfidence

CoalResources

CoalReserves

ExplorationResults

Considerationofmining,metallurgical,processing,infrastructural,economic,marketing,legal,

environmental,socialandgovernmentalfactors(themodifyingfactors)

#### ESTIMATED COAL RESOURCES AND COAL RESERVES STATEMENT

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

15 9Integrated Annual Report for the year ended 31 December 2022 15 9

The following flow chart illustrates the complete planning cycle for reporting of reserves on a first principle basis:

[OFFICIAL]

Strategy planning

Resource development

planning

Studies / Exploration

Life of mine planning

Resource development

pipeline review

Business planning

Monthly operational

planning

PurposePurpose

• Formulates the overall company strategy

• Sets the framework for all other plans

• Identifies full potential of resource value

• Outlines path to reach full resource value

• Investigates value-add-options in detail

• Establishes roadmap for implementation

• Describes plan on how to exploit resource

• Contains all approved projects and options

• Basis of reserves Reporting

• Aggregates LOM, RDP and projects to get a

consolidated view on enterprise value

• Translates LOM into detailed 2-year plan

• Becomes the main benchmark for execution

• Translates BP into short-term plan (monthly)

• Allows re-forecasting using actuals

Planning LevelPlanning Level

HorizonHorizon FrequencyFrequency LeadLead

Thungela

Asset

Asset

Asset

Thungela

Asset

Asset

Unlimited

Asset Life

Depending

on Asset

Asset Life

Asset Life

2 years

18 months

Yearly

3 Years

Cycle

Ongoing

Yearly

Yearly

(Trade Configuration)

Yearly

Monthly

EXCO

Operation

Projects

Operation

Mine Planning

Operation

Operation

Resource development pipeline review

Strategy planning

Resource

development

planning

Business

planning

Monthly

operational

planning

LOM planning

Studies / Exploration

Aggregates LOM, Resource development

planning (RDP) and projects to get a

consolidated view on enterprise value

Risks that could result in a material change of the Coal Resources or Coal Reserves are also assessed and quantified. The main Coal

Reserve risks are the Rand coal price for the product together with the rail capacity constraints. There are limited Coal Resource risks due

to the conservative approach Thungela takes in environmentally sensitive areas.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

160 Integrated Annual Report for the year ended 31 December 2022

#### COAL RESERVES

(1)



#### At 31December 2022

2022 2021

ROM

tonnes

(2)

Yield

(3)

Saleable

tonnes

(2)

Saleable

qualities

(4)

ROM

tonnes

(2)

Yield

(3)

Saleable

tonnes

(2)

Saleable

qualities

(4)

Ownership

%

Life

(years)

Mining

method Classification Mt ROM % Mt kcal/kg Mt ROM % Mt kcal/kg

Goedehoop 100 3 UG

Thermal

(Export)

Proved 11. 7 47. 7 5.4 6,080 16.8 53.7 9.1 5,960

Probable 0.4 43.6 0.2 6,10 0 0.9 51.3 0.5 5,970

Total 12.1 4 7. 5 5.6 6,080 17. 7 53.6 9.5 5,960

Greenside 100 5 UG

Thermal

(Export)

Proved 15.9 58.6 9.3 6,320 25.0 64.5 15.8 5,870

Probable 0.9 42.2 0.4 6,390 0.1 70.7 0.1 5,980

Total 16.8 57. 7 9.7 6,320 25.1 64.5 15.9 5,870

Isibonelo 100 3 OC

Synfuel

Proved 12.6 100.0 12.6 4,820 18.4 100.0 18.4 4,660

Probable — — — — 5.2 100.0 5.2 4,650

Total 12.6 100.0 12.6 4,820 23.6 100.0 23.6 4,660

Khwezela

North

100 7 OC

Thermal

(Export)

Proved 29.2 51.0 12.6 6,040 2 7. 8 44.8 13.3 6,020

Probable 2.1 42.5 0.7 6,050 5.9 39.7 2.5 6,040

Total 31.3 50.4 13.3 6,040 33.7 43.9 15.8 6,020

Mafube 50 21 OC

Thermal

(Export)

Proved 80.6 65.0 44.2 5,260 26.7 65.3 18.0 5,430

Probable 40.8 64.7 25.6 5,300 23.0 62.5 14.8 5,380

Total 121.4 64.9 69.8 5,270 49.7 64.0 32.8 5,410

Thermal

(Domestic)

Proved 100.0 12.7 4,470 — — —

Probable 100.0 1.2 4,520 — — —

Total 100.0 13.9 4,470 — — —

Rietvlei 34 4 OC

Thermal Proved 10.0 60.0 5.3 5,850 4.4 100.0 4.4 5,080

(Domestic) Probable — — — — — — — —

Total 10.0 60.0 5.3 5,850 4.4 100.0 4.4 5,080

Zibulo 100 10

Thermal UG Proved 36.0 65.5 23.4 5,710 32.9 42.1 13.9 6,500

(Export) Probable 21.2 65.3 13.7 5,790 20.1 42.4 8.5 6,500

Total 57. 2 65.4 37.1 5,74 0 53.0 42.2 22.4 6,500

Thermal UG Proved — — — 29.6 9.8 5,260

(Domestic) Probable — — — 30.6 6.2 5,260

Total — — — 30.0 15.9 5,260

Thermal OC Proved 5.0 78.8 3.7 5,690 5.7 4 7. 3 2.6 6,450

(Export) Probable — — — — — — — —

Total 5.0 78.8 3.7 5,690 5.7 47.3 2.6 6,450

Thermal OC Proved — — — 31.5 1.6 5,260

(Domestic) Probable — — — — — —

Total — — — 31. 5 1.6 5,260

Total 75

Thermal Proved 201.0 62.3 98.6 5,630 15 7. 6 54.8 72.8 5,850

(Export) Probable 65.4 64.2 40.6 5,490 55.2

53.7 26.4 5,820

Total 266.4 62.9 139.2 5,590 212.8 54.5 99.1 5,840

Total 46

Thermal Proved 88.2 18.0 4,880 49.4 15.8 5,210

(Domestic) Probable 38.7 1.2 4,520 30.6 6.2 5,260

Total 85.1 19.2 4,860 44.1 22.0 5,220

Total 100

Synfuel Proved 100.0 12.6 4,820 100.0 18.4 4,660

Probable — — — 100.0 5.2 4,650

Total 100.0 12.6 4,820 100.0 23.6 4,660

Mining method: OC = Opencast/Cut, UG = Underground.

Reserve Life = The scheduled extraction period in years for the total Coal Reserve in the approved LOM plan.

For the multi-product operations, the ROM tonnes apply to each product.

The saleable tonnes cannot be calculated directly from the ROM Reserve tonnes and should not be directly applied to the ROM tonnes.

Ownership percentages for totals are weighted by saleable tonnes and should not be directly applied to the ROM tonnes.

Table footnotes appear at the end of the section.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

161Integrated Annual Report for the year ended 31 December 2022

#### COAL RESERVES

(1)

#### MRDS

#### At 31December 2022

2022 2021

ROM

tonnes

(2)

Yield

(3)

Saleable

tonnes

(2)

Saleable

qualities

(4)

ROM

tonnes

(2)

Yield

(3)

Saleable

tonnes

(2)

Saleable

qualities

(4)

Ownership

%

Life

(years) Classification Mt ROM % Mt kcal/kg Mt ROM % Mt kcal/kg

Goedehoop

NorthMRD 100 1

Thermal (Domestic) Proved — — — — — — — —

Probable 1.3 100.0 1.3 3,020 2.9 100.0 2.9 3,020

Total 1.3 100.0 1.3 3,020 2.9 100.0 2.9 3,020

Goedehoop

SouthMRD 100 2

Thermal (Export) Proved — — — — — — — —

Probable 5.8 100.0 5.8 3,340 6.5 30.0 1.9 4,800

Total 5.8 100.0 5.8 3,340 6.5 30.0 1.9 4,800

Greenside MRD 100 1

Thermal (Export) Proved — — — — — — — —

Probable 2.4 34.9 0.8 5,500 3.3 74 . 6 2.4 4,560

Total 2.4 34.9 0.8 5,500 3.3 74.6 2.4 4,560

Total Reserves

MRDs 100

Total (Export) Proved — — — — — — — —

Probable 8.2 92.1 6.6 3,600 9.8 54.8 4.4 4,670

Total 8.2 92.1 6.6 3,600 9.8 54.8 4.4 4,670

Total Reserves

MRDs 100

Total (Domestic) Proved — — — — — — — —

Probable 1.3 100.0 1.3 3,020 2.9 100.0 2.9 3,020

Total 1.3 100.0 1.3 3,020 2.9 100.0 2.9 3,020

MRD = Mineral residue deposit.

Table footnotes appear at the end of the section.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

162 Integrated Annual Report for the year ended 31 December 2022

#### COAL RESOURCES

(5)

#### At 31December 2022 (exclusive from Reserves)

2022 2021

MTIS

(5)

Coal

quality

(6)

MTIS

(5)

Coal

quality

(6)

Ownership % Mining method Classification Mt kcal/kg

(6)

Mt kcal/kg

(6)

Goedehoop 100 OC/UG Measured 225.5 5,240 209.5 5,220

Indicated 6.0 5,550 8.5 5,660

Total Measured and Indicated 231.5 5,250 218.0 5,230

Inferred (in LOM plan)

(7)

— — — —

Inferred (excl LOM plan)

(8)

6.9 5,530 2.9 5,820

Total Inferred 6.9 5,530 2.9 5,820

Greenside 100 UG Measured 8.8 5,600 8.1 5,730

Indicated 4.5 5,570 1.5 5,510

Total Measured and Indicated 13.3 5,590 9.6 5,700

Inferred (in LOM plan)

(7)

1.3 5,450 1.8 5,520

Inferred (excl LOM plan)

(8)

4.0 5,620 2.0 5,570

Total Inferred 5.3 5,580 3.8 5,550

Isibonelo 100 OC Measured 16.0 5,18 0 3.7 4,840

Indicated — — 3.4 4,900

Total Measured and Indicated 16.0 5,180 7.1 4,870

Inferred (in LOM plan)

(7)

— — — —

Inferred (excl LOM plan)

(8)

— — — —

Total Inferred — — — —

Khwezela North 100 OC Measured 11. 0 5,170 7. 5 5,210

Indicated 4.5 5,200 3.1 5,180

Total Measured and Indicated 15.5 5,18 0 10.5 5,200

Inferred (in LOM plan)

(7)

1.0 5,310 2.7 5,050

Inferred (excl LOM plan)

(8)

2.2 5,440 2.8 5,190

Total Inferred 3.2 5,400 5.5 5,120

Khwezela South 100 OC Measured 28.8 6,020 28.8 6,020

Indicated 5.0 6,010 5.0 6,010

Total Measured and Indicated 33.8 6,020 33.8 6,020

Inferred (in LOM plan)(

7)

— — — —

Inferred (excl LOM plan)

(8)

0.5 6,19 0 0.5 6,190

Total Inferred 0.5 6,19 0 0.5 6,190

Mafube 50 OC Measured 15.9 5,090 5 7. 0 5,030

Indicated — — 5.5 4,960

Total Measured and Indicated 15.9 5,090 62.4 5,020

Inferred (in LOM plan)

(7)

1.7 4,210 1.7 5,210

Inferred (excl LOM plan)

(8)

0.9 4,700 0.9 5,110

Total Inferred 2.6 4,380 2.6 5,180

Rietvlei 34 OC Measured 19.7 5,020 23.7 5,080

Indicated 3.0 5,020 5.0 5,070

Total Measured and Indicated 22.7 5,020 28.7 5,080

Inferred (in LOM plan)

(7)

— — — —

Inferred (excl LOM plan)

(8)

— — — —

Total Inferred — — — —

Zibulo 100 UG Measured 221.6 4,900 230.7 4,980

Indicated 10 7. 4 4,750 111. 3 4,800

Total Measured and Indicated 329.0 4,850 341.9 4,920

Inferred (in LOM plan)

(7)

— — — —

Inferred (excl LOM plan)

(8)

78.7 4,720 80.5 4,720

Total Inferred 78.7 4,720 80.5 4,720

Total Resources 97 Measured 5 4 7. 3 5,150 568.8 5,140

Indicated 130.4 4,880 143.2 4,930

Total Measured and Indicated 677.7 5,10 0 712.0 5,10 0

Inferred (in LOM plan)

(7)

4.0 4,890 6.2 5,230

Inferred (excl LOM plan)

(8)

93.2 4,840 89.6 4,800

Total Inferred 97. 2 4,840 95.8 4,830

Mining method: OC = Opencast/Cut, UG = Underground.

Ownership percentages for total is weighted by Total MTIS.

2022/2021 Zibulo MTIS and Coal Qualities excludes Project Zondagsfontein West (reported separately under Projects).

2022/2021 Total Resource excludes Project Zondagsfontein West.

Table footnotes appear at the end of the section.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

163Integrated Annual Report for the year ended 31 December 2022

#### COAL RESOURCES

(5)

#### MRDS

#### At 31December 2022 (exclusive from Reserves)

2022 2021

MTIS

(5)

Coal

quality

(6)

MTIS

(5)

Coal

quality

(6)

Ownership % Classification Mt kcal/kg

(6)

Mt kcal/kg

(6)

Goedehoop North MRD 100 Measured 15.6 3,290 — —

Indicated — — — —

Total Measured and Indicated 15.6 3,290 — —

Inferred (in LoM Plan)

(7)

— — — —

Inferred (excl LoM Plan)

(8)

— — — —

Total Inferred — — — —

Goedehoop South MRD 100 Measured — — — —

Indicated — — — —

Total Measured and Indicated — — — —

Inferred (in LOM plan)

(7)

1.0 3,130 — —

Inferred (excl LOM plan)

(8)

— — 0.7 3,140

Total Inferred 1.0 3,130 0.7 3,140

Greenside MRD 100 Measured — — 3.1 3,750

Indicated — — — —

Total Measured and Indicated — — 3.1 3,750

Inferred (in LOM plan)

(7)

— — — —

Inferred (excl LOM plan)

(8)

— — — —

Total Inferred — — — —

Khwezela South MRD 100 Measured 2.9 3,790 4.3 3,790

Indicated — — — —

Total Measured and Indicated 2.9 3,790 4.3 3,790

Inferred (in LOM plan)

(7)

— — — —

Inferred (excl LOM plan)

(8)

— — — —

Total Inferred — — — —

Total Resources MRDs 100 Measured 18.5 3,370 7. 4 3,770

Indicated — — — —

Total Measured and Indicated 18.5 3,370 7. 4 3,770

Inferred (in LOM plan)

(7)

1.0 3,130 — —

Inferred (excl LOM plan)

(8)

— — 0.7 3,140

Total Inferred 1.0 3,130 0.7 3,140

MRD = Mineral residue deposit.

Table footnotes appear at the end of the section.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

16 4 Integrated Annual Report for the year ended 31 December 2022

#### COAL RESERVES

(1)

#### PROJECTS

#### At 31December 2022

2022 2021

ROM

tonnes

(2)

Yield

(3)

Saleable

tonnes

(2)

Saleable

qualities

(4)

ROM

tonnes

(2)

Yield

(3)

Saleable

tonnes

(2)

Saleable

qualities

(4)

Ownership

%

Life

(years)\*

Mining

Method Classification Mt ROM % Mt kcal/kg Mt ROM % Mt kcal/kg

Elders 100 24

Thermal  UG Proved 43.0 57. 6 26.3 5,880 — — — —

(Export) Probable 37. 2 34.6 0.1 5,900 — — — —

Total 80.2 46.9 26.4 5,880 — — — —

Thermal UG Proved — — — — — —

(Domestic) Probable 100.0 34.0 4,490 — — —

Total 100.0 34.0 4,490 — — —

Zondagsfontein

West

100 16

Thermal UG Proved — — — — — — — —

(Export) Probable 57. 0 58.0 33.2 5,420 — — — —

Total 57.0 58.0 33.2 5,420 — — — —

Thermal UG Proved — — — — — —

(Domestic) Probable — — — — — —

Total — — — — — —

Total Projects 100

Thermal Proved 43.0 57. 6 26.3 5,880 — — — —

(Export) Probable 94.2 5 7.9 33.3 5,420 — — — —

Total 137. 2 57. 8 59.6 5,620 — — — —

Total Projects 100

Thermal Proved — — — — — —

(Domestic) Probable 100.0 34.0 4,490 — — —

Total 100.0 34.0 4,490 — — —

\*Reserve Life = The scheduled extraction period in years for the total Coal Reserve in the approved LOM Plan.

For the multi-product reserves, the ROM tonnes apply to each product.

The saleable tonnes cannot be calculated directly from the ROM Reserve tonnes and should not be directly applied to the ROM tonnes.

Ownership percentages for totals are weighted by saleable tonnes and should not be directly applied to the ROM tonnes.

Table footnotes appear at the end of the section.

#### COAL RESOURCES

(5)

#### PROJECTS

#### At 31December 2022 (exclusive from Reserves)

2022 2021

MTIS

(5)

Coal

quality

(6)

MTIS

(5)

Coal

quality

(6)

Ownership % Classification Mt kcal/kg

(6)

Mt kcal/kg

(6)

Elders 100 Measured 29.4 5,040 136.2 5,190

Indicated 8.3 4,860 20.7 4,940

Total Measured and Indicated 37. 6 5,000 156.9 5,160

Inferred 8.4 4,940 7. 7 4,970

South Rand 100 Measured 79.5 4,860 79.5 4,860

Indicated 171.8 4,850 171.8 4,850

Total Measured and Indicated 251.3 4,850 251.3 4,850

Inferred 233.5 4,590 233.5 4,590

Waterberg 100 Measured 892.1 2,930 620.6 2,850

Indicated 532.3 2,850 768.5 2,800

Total Measured and Indicated 1,424.4 2,900 1,389.1 2,820

Inferred 672.1 2,980 722.3 3,040

Zondagsfontein West 100 Measured 6.5 4,910 4 7.1 4,910

Indicated 7. 4 4,780 63.3 4,780

Total Measured and Indicated 14.0 4,840 110 . 4 4,840

Inferred 44.8 4,670 44.0 4,720

Total Projects 100 Measured 1,0 07. 5 3,160 883.4 3,500

Indicated 719.8 3,370 1,024.3 3,310

Total Measured and Indicated 1, 7 2 7. 3 3,250 1,9 0 7. 6 3,400

Inferred 958.8 3,470 1, 0 0 7. 5 3,490

Ownership percentages for total is weighted by Total MTIS.

Project Zondagsfontein West reported separately (excluded from Zibulo)

Projects Elders and Zondagsfontein West Inferred resources includes Inferred included LOM Plan and excluded LOM Plan

Project Waterberg combined OC and UG MTIS and qualities

Due to the uncertainty attached to Inferred Coal Resources, it cannot be assumed that all or part of an Inferred Coal Resource will necessarily be upgraded to an Indicated or Measured Coal Resource

after continued exploration.

Table Footnotes appear at the end of this section.

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

AT A GLANCE

03  STRATEGY AND

VALUE CREATION

![]()

165Integrated Annual Report for the year ended 31 December 2022

Greenside:Coal Reserves decreased due to production and the

reallocation of Coal Reserves to Coal Resources at Waterpan

(delayed regulatory permission) and at 3A North (following

technical review). The decrease is partially offset by the revision of

the LOM plan.

Isibonelo:Coal Reserves decreased due to production and the

reallocation of Coal Reserves to Coal Resources from the North

Pit as per the existing CSA.

Khwezela North: Coal Reserves decreased due to production

and the removal of the No 5 Seam reserves because of mining

limitations. Offset by the transfer of inferred resources included

in the LOM plan, to proved reserves resulting from additional

exploration drilling. Increase in the Coal Resources is due to the

reporting of the No 4 Seam upper resources.

Mafube:Coal Reserves decreased due to production, offset by

the conversion of the Coal Resources to Coal Reserves at Rooipan

and revision of the LOM plan.

Rietvlei:Coal Reserves decreased due to production,

compensated by the conversion of Coal Resources to Coal

Reserves due to an increase in coal processing capability of the

plant enabling an extended product range.

Zibulo OC: Coal Reserves decreased due to production.

Zibulo UG: Coal Reserves decreased due to production which

is more than offset by the conversion of Coal Resources to Coal

Reserves by optimising the current LOM plan north of the graben.

Goedehoop North MRD: Transfer of inventory coal to Coal

Resources based on a review of the RPEEE criteria.

Goedehoop South MRD: Change in saleable Coal Reserves as

a result of contractual agreement for the sale of raw tonnes to a

third-party for beneficiation.

Khwezela South MRD:Depletion directly from Coal Resources

due to favourable market conditions.

PROJECTS

Estimations for Elders and Zondagsfontein West are on a first

principle report basis, resulting in a re-evaluation of the Coal

Resources and first time Coal Reserves reporting.

Elders:First time Coal Reserves reporting following board

approval in August 2022.

Zondagsfontein West : First time Coal Reserves reporting as a

result of the completion of an FS for the life extension of the Zibulo

Colliery.

South Rand: Coal Resources are part of a pending sale process.

#### TABLE FOOTNOTES

1.  Coal Reserves are quoted on a ROM basis in million tonnes,

which represents the tonnes delivered to the plant. Saleable

reserve tonnes represent the estimated product tonnes. Coal

Reserves (ROM and saleable) are reported on the applicable

moisture basis. Rounding of figures may cause minor

computational discrepancies.

2.  ROM tonnes are quoted on an as delivered moisture basis

and saleable tonnes on a product moisture basis.

3.  Yield – ROM % represents the ratio of saleable reserve tonnes

to ROM reserve tonnes and is quoted on a constant moisture

basis or on an air-dried to air-dried basis.

4.  The coal quality for Coal Reserves is quoted as kilocalories

per kilogram (kcal/kg). Kilocalories per kilogram represent

calorific value (CV) on a Gross As Received (GAR) basis. CV

is rounded to the nearest 10kcal/kg.

5.  Coal Resources are quoted on a mineable tonnes in-situ

(MTIS) basis in million tonnes, which are additional to those

Coal Resources that have been modified to produce the

reported Coal Reserves. Coal Resources are reported on an

in-situ moisture basis. Rounding of figures may cause minor

computational discrepancies.

6.  The coal quality for Coal Resources is quoted on an in-

situ heat content as kilocalories per kilogram (kcal/kg),

representing CV rounded to the nearest 10kcal/kg.

7.   Inferred (in LOM plan) refers to inferred Coal Resources that

are included in the LOM extraction schedule of the respective

operations and are not reported as Coal Reserves.

8.  Inferred (excl LOM plan) refers to inferred Coal Resources

outside the LOM plan but within the mine lease area.

#### EXPLANATORY NOTES

OPERATIONS

Estimations for all operations are on a first principle report basis,

resulting in a re-evaluation of the Coal Resources and Coal

Reserves.

Goedehoop:Coal Reserves decreased primarily due to

production and end of panel losses. Increase in Coal Resources

due to reviewing the RPEEE criteria.

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

![]()

166 Integrated Annual Report for the year ended 31 December 2022

RESOURCE AND RESERVE RECONCILIATION

2021 VS 2022

The 2021 Coal Resources and Coal Reserves estimations

were based on depletion and therefore mainly impacted by

production. The 2022 estimations are derived from first principle

competent persons reports, and significant to material changes

to the resource and reserve base are recorded. These changes

are tracked by the various reconciliation categories in the below

graphs.

The comparison between the total Coal Reserves (including

MRDs) of 31December 2021 and 31December 2022 is

illustrated in Figure 1.

Production:The tonnes mined and adjustments for the over/

underestimations of mining from the previous reporting period.

Conversion:Resources to reserves mainly due to revised LOM

plans at the Mafube and Zibulo Collieries, increase in plant

capacity at the Rietvlei Colliery and the inclusion of the Rooipan

area at the Mafube Colliery.

Economic Assumptions:Reallocation of reserves to RoMP at the

Isibonelo Colliery from North Pit as per existing CSA.

Transfer:Reallocation of reserves to RoMP due to exclusions

of the Waterpan and 3A North area from the LOM plan at the

Greenside Colliery, offset by the inclusion of inferred in LOM plan

to reserves resulting from additional exploration drilling.

Reconciliation Adjustment: Losses/gains from layout changes

and sterilised coal.

2021

Production

225.5

31.5

97.7

8.1

4.2

3.5

275.9

Conversion

Economic

assumptions

New

information

Model

refinement

Methodology

Transfer

2022

Reconciliation

adjustment

Acquisitions

Disposals

Stockpiles

New

technology

Tonnes (Mt)

Operations year-on-year changes in coal reserves 2021 vs 2022

Tonnes (Mt)

FIGURE 1: OPERATIONS – YEAR-ON-YEAR CHANGES IN COAL RESERVES2021 VS 2022

Model Refinement:Re-evaluation of resources and results of

additional exploration drilling.

Methodology:Change in modelling interpolation methodology.

Transfer:Inventory coal to resources for conversion to reserves

and inclusion of inferred in LOM plan to reserves resulting from

additional exploration drilling.

Reconciliation Adjustment: Inclusion of the No 4 Seam upper to

resources outside of mine plan at Khwezela North.

The comparison between the total Coal Resources (excluding

projects) of 31December 2021 and 31December 2022 is

illustrated in Figure 2.

Depletion: RoMP depleted.

Conversion: Resources to reserves mainly due to revised LOM

plans at the Mafube and Zibulo Collieries, increase in plant

capacity at the Rietvlei Colliery, inclusion of Rooipan area in

reserves.

Economic Assumptions:Reallocation of reserves to RoMP at the

Isibonelo Colliery from North Pit as per existing CSA.

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167Integrated Annual Report for the year ended 31 December 2022

2021

Depletion

815.9

1.4

111.8

9.2

73.2

0.5

3.4

5.5

794.5

Conversion

Economic

assumptions

New

information

Model

refinement

Methodology

Transfer

2022

Reconciliation

adjustment

Acquisitions

Disposals

Stockpiles

New

technology

Tonnes (Mt)

2021

Production

137.2

137.2

Conversion

Economic

assumptions

New

information

Model

refinement

Methodology

Transfer

2022

Reconciliation

adjustment

Acquisitions

Disposals

Stockpiles

New

technology

Tonnes (Mt)

Thungela resources projects year-on-year changes in coal reserves 2021 vs 2022

Tonnes (Mt)

2021

Depletion

221.7

14.9

7.6

2,915.2

2,686.2

Conversion

Economic

assumptions

New

information

Model

refinement

Methodology

Transfer

2022

Reconciliation

adjustment

Acquisitions

Disposals

Stockpiles

New

technology

Tonnes (Mt)

Thungela resources projects year-on-year changes in coal resources 2021 vs 2022

Tonnes (Mt)

FIGURE 2: OPERATIONS – YEAR-ON-YEAR CHANGES IN COAL RESOURCES OUTSIDE MINE PLAN2021 VS 2022

Conversion:First time reserves reporting of reserves at the Elders

and Zondagsfontein West projects.

FIGURE 3: PROJECTS – YEAR-ON-YEAR CHANGES IN COAL RESERVES2021 VS 2022

Model Refinement:Re-evaluation of the underground multi-seam

resources at the Waterberg project.

Methodology: Change in software application at the Elders

project and change in cut-off parameter (minimum overburden) at

the Zondagsfontein West project.

FIGURE 4: PROJECTS – YEAR-ON-YEAR CHANGES IN COAL RESOURCES2021 VS 2022

The comparison between the total Coal Reserves (Projects) of

31December 2021 and 31December 2022 is illustrated in

Figure 3.

The comparison between the total Coal Resources (Projects)

of 31December 2021 and 31December 2022 is illustrated in

Figure 4.

Conversion: Resources for first time reserve reporting at the Elders

and Zondagsfontein West projects.

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168 Integrated Annual Report for the year ended 31 December 2022

#### COMPETENT PERSONS REGISTER 2022

#### RESOURCES

Asset Competent Person

1

Relationship with Group

2

Professional Registration/Affiliation

Years of

Relevant

Experience

Goedehoop N. Haniff Full-time Employee SACNASP (400316/04) 16

Goedehoop MRDs N. Haniff Full-time Employee SACNASP (40 0316/04) 16

Greenside N. Haniff Full-time Employee SACNASP (40 0316/0 4) 16

Greenside MRD N. Haniff Full-time Employee SACNASP (40 0316/04) 16

Isibonelo M.L. Lemekoana Full-time Employee SACNASP (122617) 14

Khwezela North N. Haniff Full-time Employee SACNASP (40 0316/04) 16

Khwezela South N. Haniff Full-time Employee SACNASP (40 0316/04) 16

Khwezela MRD N. Haniff Full-time Employee SACNASP (40 0316/04) 16

Mafube D. Xaba Full-time Employee SACNASP (400019/05) 22

Rietvlei K. Black Independent Consultant to Rietvlei

Mining Company Proprietary Limited

3

SACNASP (400295/12) 15

Zibulo M.L. Lemekoana Full-time Employee SACNASP (122617) 14

Elders U. Herrmann Full-time Employee SACNASP (400081/97) 21

South Rand M.L. Lemekoana Full-time Employee SACNASP (122617) 14

Waterberg N. Haniff Full-time Employee SACNASP (40 0316/04) 16

Zondagsfontein West M.L. Lemekoana Full-time Employee SACNASP (122617) 14

#### RESERVES

Asset Competent Person

1

Relationship with Group

2

Professional Registration/Affiliation

Years of

Relevant

Experience

Goedehoop M. Katuruza Full-time Employee SACNASP (400214/14) 15

Goedehoop MRDs M. Katuruza Full-time Employee SACNASP (400214/14) 15

Greenside M. Simakuhle Full-time Employee SACNASP (400248/08) 18

Greenside MRD M. Simakuhle Full-time Employee SACNASP (400248/08) 18

Isibonelo G.L. Govender Full-time Employee SAGC (GPrMS0210) 11

Khwezela North E. Phelane Full-time Employee SACNASP (202221/13) 15

Khwezela South E. Phelane Full-time Employee SACNASP (202221/13) 15

Khwezela MRD E. Phelane Full-time Employee SACNASP (202221/13) 15

Mafube D. Xaba Full-time Employee SACNASP (400019/05) 22

Rietvlei L. Raaths Independent Consultant to Rietvlei

Mining Company Proprietary Limited

3

SAIMM (702015) 31

Zibulo M.F. Breed Full-time Employee ECSA (20130531) 17

Zondagsfontein West M.F. Breed Full-time Employee ECSA (20130531) 17

Elders K.R. Donaldson

Full-time Employee at Mindset Mining

Consultants Proprietary Limited

4

ECSA (200590031) 35

1

Competent Person signed consent form, relevant to each asset, is included in the individual Competent Persons’ report.

2

Thungela Resources Limited, 25 Bath Avenue, Rosebank, Johannesburg, 2196, Gauteng, South Africa.

3

Rietvlei Mining Company Proprietary Limited, 151 Katherine Street, Vunani House, Sandton, 2196, Gauteng, South Africa.

4

Mindset Mining Consultants Proprietary Limited, 298 Stokkiesdraai Street, Erasmusrand, Pretoria, 0181, Gauteng, South Africa.

THUNGELA INTEGRATED ANNUAL REPORT 2022

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169Integrated Annual Report for the year ended 31 December 2022 169

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RESERVES

08 GROUP

INFORMATION

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170 Integrated Annual Report for the year ended 31 December 2022170

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171Integrated Annual Report for the year ended 31 December 2022 171171

08

#### GROUP

#### INFORMATION

![]()

172 Integrated Annual Report for the year ended 31 December 2022

Ordinary shares

The Thungela share register at 31December 2022 can be analysed as follows:

2022

Shareholder spread

Number of

shareholders

% of total

shareholders

Number of

shares

% of issued

share capital

1 to 1,000 shares 50,696 93.81 3,898,788 2.78

1,001 to 10,000 shares 2,391 4.42 7,359,333 5.24

10,001 to 100,000 shares 741 1.37 23,242,509 16.54

100,001 to 1,000,000 shares 193 0.36 49,931,076 35.54

1,000,001 shares and above 24 0.04 56,060,879 39.90

Total 54,045 100.00 140,492,585 100.00

2021

Shareholder spread

Number of

shareholders

% of total

shareholders

Number of

shares

% of issued

share capital

1 to 1,000 shares 48,932 95.32 3,757,716 2.76

1,001 to 10,000 shares 1,74 3 3.40 5,156,013 3.78

10,001 to 100,000 shares 473 0.92 15,549,949 11. 41

100,001 to 1,000,000 shares 157 0.31 48,095,543 35.28

1,000,001 shares and above 27 0.05 63,752,587 46.77

Total 51,332 100.00 136,311,808 100.00

2022

Distribution of shareholders

Number of

shareholders

% of total

shareholders

Number of

shares

% of issued

share capital

Banks and nominee accounts 273 0.51 7,450,265 5.30

Brokerage accounts 168 0.31 2 4 ,6 57,0 5 6 17. 5 5

Individuals and private trusts 49,983 92.49 18,459,988 13.14

Insurance and assurance companies 153 0.28 2,659,089 1.89

Investment companies 93 0.17 2,972,460 2.12

Mutual funds 721 1.33 43,306,976 30.82

Other corporations 368 0.68 517,4 7 0 0.37

Pension and provident funds 1,17 7 2.18 29,325,142 20.87

Private corporations 1,097 2.03 10 ,8 27, 5 32 7. 71

Sovereign wealth funds 12 0.02 316,607 0.23

Total 54,045 100.00 140,492,585 100.00

2021

Distribution of shareholders

Number of

shareholders

% of total

shareholders

Number of

shares

% of issued

share capital

Banks and nominee accounts 187 0.37 9,392,513 6.89

Brokerage accounts 138 0.27 2 7, 76 6 ,13 3 20.37

Individuals and private trusts 48,431 94.35 18,514,209 13.58

Insurance and assurance companies 299 0.58 1,973,946 1.45

Investment companies 71 0.14 1,388,204 1.02

Mutual funds 556 1.08 41,872,288 30.72

Other corporations 406 0.79 359,306 0.26

Pension and provident funds 799 1.56 18,710,431 13.72

Private corporations 438 0.85 15,536,386 11. 4 0

Sovereign wealth funds 7 0.01 798,392 0.59

Total 51,332 100.00 136,311,808 100.00

THUNGELA’S PUBLIC AND NON-PUBLIC SHAREHOLDING 2022

## SHAREHOLDER

## INFORMATION

THUNGELA INTEGRATED ANNUAL REPORT 2022

01 INTRODUCTION 02 THUNGELA

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03  STRATEGY AND

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173Integrated Annual Report for the year ended 31 December 2022

2022

Shareholding type

Number of

shareholders

% of total

shareholders

Number of

shares

% of issued

share capital

Non-public shareholders

Directors and prescribed officers 11 0.02 1,483,237 1.06

Treasury shares held by Group companies 1 0.00 1,955,113 1.39

Public shareholders 54,033 99.98 137,05 4 , 2 35 97. 55

Total 54,045 100.00 140,492,585 100.00

2021

Shareholding type

Number of

shareholders

% of total

shareholders

Number of

shares

% of issued

share capital

Non-public shareholders

Directors and prescribed officers

1

9 0.02 1,808,261 1.33

Treasury shares held by Group companies 1 0.00 1,363,119 1.00

Public shareholders 51,322 99.98 133,140,428 9 7. 6 7

Total 51,332 100.00 136,311,808 100.00

1

Seamus French was awarded Thungela shares as part of the scheme of arrangement during 2021 which is indirectly held in a nominee account. The comparative information has been amended to

reflect the indirect interest not previously disclosed.

Major shareholders

According to Thungela’s share register at 31 December, the following shareholders held shares equal to or in excess of 5.0% of the issued

ordinary share capital of the Company:

2022

Beneficial shareholding of more than 5.0%

Number of

shares

% of issued

share capital

Government Employees Pension Fund 17, 38 0 ,912 12.37

Total 17,3 8 0 ,912 12.37

2021

Beneficial shareholdings of more than 5.0%

Number of

shares

% of issued

share capital

Anglo American

1

10,855,155 7.9 6

Government Employees Pension Fund 10,520,984 7. 7 2

Total 21,376,139 15.68

1

Anglo American's interest in Thungela is held through Tarl Investment Holdings (RF) Proprietary Limited, Epoch Two Investment Holdings (RF) Proprietary Limited and Epoch Investment Holdings (RF) Proprietary

Limited.

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174 Integrated Annual Report for the year ended 31 December 2022

Term used Definition

AAIC Anglo American Inyosi Coal Proprietary Limited

AAML Anglo American Marketing Limited

AEL Air emission licence

AGM Annual general meeting

Anglo American  The Anglo American plc Group, and its subsidiaries

AOPL Anglo Operations Proprietary Limited, also referred to as TOPL

APM Alternative performance measure(s)

ART Antiretroviral treatment

ASA Anglo South Africa Proprietary Limited

B-BBEE Broad-based black economic empowerment

Benchmark coal price Benchmark price reference for 6,000kcal/kg thermal coal exported from the RBCT

BSP Bonus share plan

Butsanani Energy Butsanani Energy Investment Holdings Proprietary Limited

BV Bureau Veritas

Capex Capital expenditure

Capital support agreement The agreement concluded between ASA and Thungela regulating the terms and conditions upon which ASA will support

the thermal coal sales of the Group

CA(SA) Chartered Accountant South Africa

CEO Chief executive officer

CFO Chief financial officer

CHPP Coal handling preparation plant

CO

2

Carbon dioxide

CO

2

e Carbon dioxide equivalent

Coal Reserves Modified indicated and measured coal resources, including consideration of modifying factors that affect extraction. It is

the economically extractable material

Coal Resources The in-situ coal for which there are reasonable prospects for eventual economic extraction

Colliery Training College Colliery Training College Proprietary Limited

Conditional shares Shares or share awards awarded to participants under the Thungela share plan which are subject to certain

performance conditions and employment conditions

Contingent Resources The quantities of gas estimated to be potentially recoverable from known accumulations by application of development

projects, but which are not currently considered to be commercially recoverable due to one or more contingencies

CPI Consumer price index

CPP The Nkulo Community Partnership Trust, also referred to as the Community Partnership Plan

CPR Competent persons report

CSA Coal Supply Agreement

CV Calorific Value of thermal coal

DFFE Department of Forestry, Fisheries and the Environment

Demerger The process to separate Thungela from Anglo American, as fully described in the PLS

DMRE Department of Mineral Resources and Energy

DTM Digital Terrain Map

## GLOSSARY

THUNGELA INTEGRATED ANNUAL REPORT 2022

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175Integrated Annual Report for the year ended 31 December 2022

Term used Definition

EA Environmental assessments

EBITDA Earnings before interest, tax, depreciation, and amortisation

ECSA Engineering Council of South Africa

EIA Environmental impact assessment

Employment condition The conditions of employment to be satisfied in order for participants under the Thungela share plan for awards to vest

on the vesting date

Employment period A specified period of employment over which the employment conditions must be met

EMPr Environmental management programme report

EPP The Sisonke Employee Empowerment Scheme also referred to as the Employee Partnership Plan

ESG Environmental, social and governance

EWRP eMalahleni water reclamation plant

Exxaro Exxaro Coal Mpumalanga Proprietary Limited

FCA Financial Conduct Authority of the UK or its successor from time to time

FOB Free on board

FOR Free on rail

Forfeitable shares Shares or share awards awarded to participants pursuant to the Thungela share plan, the vesting of which is subject to

the fulfilment of the employment condition over the employment period

FS Feasibility Study

FSMA The UK Financial Services and Markets Act 2000 (as amended from time to time)

Gas in Place (GIP) The quantity of gas that is estimated to exist originally in naturally occurring accumulations before any extraction or

production

GDB Geological database

GHG Greenhouse gas

GHN Goedehoop North Colliery

GHS Goedehoop South Colliery

GJ Gigajoule

Goedehoop Goedehoop Colliery

Greenside Greenside Colliery

Group Thungela and its subsidiaries, joint arrangements and associates

HDP Historically disadvantaged person(s)

IASB International Accounting Standards Board

ICMM The International Council on Mining and Metals

IFRS International Financial Reporting Standards as issued by the IASB and the IFRS Interpretations Committee (previously

known as the IFRIC). When used before a number this references a specific standard to be applied

IMF International Monetary Fund

Indicated Coal Resource The portion of the Coal Resource for which the derived quantities and qualities are estimated with sufficient confidence,

although lower in confidence than a measured Coal Resource, in the geological evidence, to allow for the application

of modifying factors to support mine planning and the evaluation of the economic viability of the resource. An indicated

Coal Resource may only be converted to a probable Coal Reserve

Inferred Coal Resource The portion of the Coal Resource for which the derived quantities and qualities are estimated with lower confidence in

the geological evidence. An inferred Coal Resource is not converted to a Coal Reserve

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08 GROUP

INFORMATION

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176 Integrated Annual Report for the year ended 31 December 2022

Term used Definition

Internal restructure The internal restructuring of the Group undertaken in preparation for the Demerger, as fully described in note 2A of the

Annual Financial Statements

Inyosi Inyosi Coal (RF) Proprietary Limited

Isibonelo Isibonelo Colliery

ISIN International Securities Identification Number

JSE Johannesburg Stock Exchange Limited

JV Joint venture

Khwezela Khwezela Colliery

King IV The King IV Report on Corporate Governance

TM

for South Africa, 2016. Copyright and trademarks are owned by the

Institute of Directors in South Africa NPC and all of its rights are reserved

km Kilometre(s)

kt A measure representing 1,000 tonnes

Lifex Capex to extend the life of existing operations

LOM Life of mine, duration of time to extract possible resources

LOM plan A design and financial/economic study of an existing operation in which appropriate assessments have been made of

existing geological, mining, social, governmental, engineering, operational, and all other modifying factors, which are

considered in sufficient detail to demonstrate that continued extraction is reasonably justified

LSE London Stock Exchange

LTI Long-term incentive

LTIP Long-term incentive plan

Mafube Coal Mining Mafube Coal Mining Proprietary Limited

Mainstreet Mainstreet 1756 (RF) Proprietary Limited, the entity which holds the investment in RBCT

MAR Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse

and the delegated acts, implementing acts, technical standards and guidelines thereunder as modified and as such

legislation forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, and as modified by

UK domestic law from time to time

Measured Coal Resource The portion of the Coal Resource for which the derived quantities and qualities are estimated with sufficient confidence

in the geological evidence, to allow for the application of modifying factors to support detailedmine planning and

the evaluation of the economic viability of the resource. A measured Coal Resource may be converted to a proved or

probable Coal Reserve

Minerals Council The Minerals Council South Africa is a mining industry employers’ organisation that supports and promotes the South

African mining industry.

Mineral Resource A concentration or occurrence of material of intrinsic economic interest in or on the earth’s crust in such form, quality

and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade and

continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.

Mineral Resources are sub-divided, in order of increasing geological confidence, into inferred, indicated and measured

categories

Modifying Factors Considerations used to convert mineral resources to mineral reserves, including, but not restricted to, mining, processing,

metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors

MOI Memorandum of incorporation

MPRDA The South African Mineral and Petroleum Resources Development Act 28 of 2002

MR Mining right

MRA Mining right application

MRD Mineral residue deposit

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177Integrated Annual Report for the year ended 31 December 2022

Term used Definition

MSR Minimum shareholding requirement

Mt Million tonnes

MTIS Mineable tonnes in situ

Mtpa Million metric tonnes per annum

NAR Net as received

Nasonti Technical Nasonti Technical Services Proprietary Limited

NCI Non-controlling interest

NEMA The South African National Environmental Management Act 107 of 1998 (as amended from time to time)

NOMR New order mining right

NOPR New order prospecting right

OC Opencast/cut operations/mine

Offtake agreement The offtake agreement between the company, TOPL and AAML, dated 6 March 2021

Overburden The material that lies above the mining area of economic interest

Pamish Pamish Investments No. 66 Proprietary Limited

PCPP Phola Coal Processing Plant

Performance condition A performance condition to be met by a participant in the Thungela share plan

Phola Phola Processing Plant Proprietary Limited

PLS Combined Prospectus and Pre-listing statement of Thungela, published on 8 April 2021

PR Prospecting right Modified indicated or measured Coal Resources, including consideration of modifying factors that

affect extraction. It is the economically extractable material

Pro forma financial

information

The Pro forma consolidated statements of profit or loss for the year ended 31 December 2021 and 31December2020,

along with supporting pro forma analysis of operating profit/(loss) and pro forma APMs

Proved Coal Reserves Modified measured Coal Resources, including consideration of modifying factors that affect extraction. It is the

economically extractable material

RBCT Richards Bay Coal Terminal Proprietary Limited, or the Richards Bay Coal Terminal

Reasonable Prospect for

Eventual Economic Extraction

(RPEEE)

An assessment done by the Competent Person in respect of technical and economic factors likely to influence the

prospect of economic extraction. Multiple factors are considered including geological, mining, metallurgical, economic,

legal, governmental, environmental, and socio-political factors

RemCo Remuneration and nomination committee

Reserve Life The period in years in the approved life of mine plan for scheduled extraction of proved and probable Coal Reserves

RLT Rapid load-out terminal

RMB Rand Merchant Bank

RMC Rietvlei Mining Company Proprietary Limited

RMSO Restitution Management Support Office

RNS Regulatory News Service

ROM Run of mine, representing the material extracted from mining operations before it is processed into saleable product

RoMP Resources outside of Mine Plan

SACE South African Coal Estate

SACNASP South African Council for Natural Scientific Professions

SACO South Africa Coal Operations Proprietary Limited

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178 Integrated Annual Report for the year ended 31 December 2022

Term used Definition

SAGC South African Geomatics Council

Saleable reserves The reported saleable reserve product type is subject to prevailing market conditions and may be sold in accordance

with the current environment

SAMREC Code South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2016 Edition

SANS 10320:2020 South African National Standard 10320: “The South African guide to the systematic evaluation of coal resources and

coal reserves” Second Edition

SANAS South African National Accreditation System

SARS South African Revenue Services

Sasol Sasol Mining Proprietary Limited

SA Thermal coal operations Anglo American’s South African Thermal coal operations which were the subject of the demerger, as defined in the PLS

SFF Strategic Fuel Fund

SIB Stay in business

SLP Social and labour plan

Sponsor JSE sponsor of Thungela, namely, RMB

Synfuel A coal specifically for the domestic production of synthetic fuel and chemicals

t A measure representing one tonne

Tcf A measure representing trillion cubic feet

TCFD Task Force on Climate-related Financial Disclosures

TFR Transnet Freight Rail, a division of Transnet SOC Limited

The Companies Act of South

Africa

The Companies Act 71 of 2008 (as amended)

The <IR> Framework The International Integrated Reporting Framework

Thermal domestic Low to high-volatile thermal coal primarily for domestic consumption for power generation

Thermal export Low to high-volatile thermal coal primarily for export in the use of power generation

Thungela or the Company Thungela Resources Limited

Thungela share plan The long-term share incentive plan adopted by Thungela to attract, retain, incentivise and reward high-calibre

employees

Thuthukani Thungela's enterprise and supplier development programme

TOPL Thungela Operations Proprietary Limited (known as AOPL until the name was formally changed on 1 March 2022)

Transnet Transnet SOC Limited

TRCFR Total recordable case frequency rate per million man hours

TSR Total shareholders’ return

UG Underground

UIF Unemployment insurance fund

UK The United Kingdom of Great Britain and Northern Ireland

UK Disclosure Guidance and

Transparency Rules

The rules relating to the disclosure of information made in accordance with section 73A(3) of FSMA

UK Listing Rules The listing rules relating to admission to the UK Official List

UK Officials List The official list of the FCA

USD United States Dollar

THUNGELA INTEGRATED ANNUAL REPORT 2022

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179Integrated Annual Report for the year ended 31 December 2022

Term used Definition

WANOS Weighted average number of ordinary shares outstanding

WML Waste Management Licence

WUL Water Use licence

ZAR South African Rand

Zibulo Zibulo Colliery

04 OUR

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08 GROUP

INFORMATION

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180 Integrated Annual Report for the year ended 31 December 2022

## MEASURING PERFORMANCE

for the year ended 31December 2022

Key performance indicators (KPIs) 2022 2021

Safety and health

Fatalities 0 1

Total recordable case frequency rate 1.41 1.35

Environment

Total energy consumed (million GJ) 3.01 3.42

GHG emissions (kt CO

2

e) 748 819

Freshwater abstraction (ML) 767 865

Water efficiency (reuse/recycle) (%)

1

96 95

Water treatment (%) 57 57

Number of level 3 – 5 environmental incidents 2 1

Wellness

Total % of employees who know their HIV status 95 94

Total % of HIV positive employees on ART 93 93

People

Employees – full time 4,592 4,446

Employees – contractors 1,983 2,000

HDPs in management (%) 76 74

Women in management (%) 29 28

Women in core mining (%) 23 27

Voluntary labour turnover (%) 5.0 3.2

Production (Mt)

Export saleable tonnes

2

13.1 15.0

Domestic saleable tonnes 6.9 10.1

1

The water efficiency value for 2021 was updated based on the revised calculation methodology which uses a disaggregated approach to include water reuse in washing plants with thickeners and

filter presses. Further detail on the revised calculation methodology will be included in the Environmental, Social and Governance Report.

2

2021 Pro forma export saleable tonnes.

APPENDIX 1

THUNGELA INTEGRATED ANNUAL REPORT 2022

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![]()

181Integrated Annual Report for the year ended 31 December 2022

## UK LISTING RULES

## DISCLOSURE TABLE

Disclosure as required by section 9.8.4 C of the UK Listing Rules has been provided below:

Listing Rule Information per the Rule Disclosure

9.8.4 (1) Interest capitalised by the Group in the period under review, including any

related tax relief

Not applicable

9.8.4 (2) Published unaudited financial information (LR 9.2.18 R) Not applicable

9.8.4 (4) Long-term incentive schemes involving a director (LR 9.4.3 R) Refer to the remuneration report

pages98to122.

9.8.4 (5) Waiver of or agreement to waive any emoluments from the company or

subsidiary by a director

None

9.8.4 (6) Details of waiver of future emoluments by a director None

9.8.4 (7) Non pro rata allotment of the Company’s shares for cash, not specifically

authorised by the shareholders

All allotments of shares were approved by the

shareholders. Detailed disclosure can be found

in note 35 of the Annual Financial Statements.

9.8.4 (8) Non pro rata allotment of major subsidiaries shares for cash, not specifically

authorised by the shareholders

None

9.8.4 (9) If the Company is a subsidiary of another company, details of the parent

undertaking

Not applicable

9.8.4 (10) Contracts of significance involving the Group and a director or controlling

shareholder

None

9.8.4 (11) Provision of services contract to the Company or subsidiaries by acontrolling

shareholder

Not applicable

9.8.4 (12) Shareholder has waived or agreed to waive any dividends One shareholder on the LSE has waived any

dividends to be declared, the value of which is

below 1% of the dividend declared.

9.8.4 (13) Shareholder has agreed to waive any future dividends One shareholder on the LSE has waived any

dividends to be declared, the value of which is

below 1% of the dividend declared.

9.8.4 (14) Agreement between the Company and a controlling shareholder

(LR9.2.2.ADR)

Not applicable

APPENDIX 2

04 OUR

PERFORMANCE

05 OUR IMPACT 06 GOVERNANCE 07  RESOURCES AND

RESERVES

08 GROUP

INFORMATION

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#### CORPORATE INFORMATION

#### SHAREHOLDER DIARY

Financial year end 31December 2022

Annual general meeting 31 May 2023

Reports

Integrated Annual Report for the year ended 31December 2022 26 April 2023

Announcement of interim results for the six months ending 30 June 2023 August 2023

THUNGELA RESOURCES LIMITED

(incorporated in the Republic of South Africa)

Registration number: 2021/303811/06

JSE share code: TGA

LSE share code: TGA

ISIN: ZAE000296554

Ta x  N o: 91119172 5 9

(‘Thungela’ or ‘the Group’ or ‘the Company’)

REGISTERED OFFICE

25 Bath Avenue

Rosebank

Johannesburg

2196

South Africa

Tel: +27 11 638 9300

POSTAL ADDRESS

PO Box 1521

Saxonwold

2132

DIRECTORS

Executive

July Ndlovu (CEO)

Gideon Frederick (Deon) Smith (CFO)

Independent non-executive

Sango Siviwe Ntsaluba (chairman)

Kholeka Winifred Mzondeki

Thero Micarios Lesego Setiloane

Benjamin Monaheng (Ben) Kodisang

Seamus Gerard French (Irish)

1

Yoza Noluyolo Jekwa (appointed 12 August 2022)

1

Seamus G French resigned from Anglo American on 31December2021 and is independent

from 1 January 2022.

PREPARED UNDER THE SUPERVISION OF

Gideon Frederick (Deon) Smith CA(SA)

GROUP COMPANY SECRETARY

Francois Klem

INVESTOR RELATIONS

Ryan Africa

Email: ryan.africa@thungela.com

MEDIA CONTACTS

Tarryn Genis

Email: tarryn.genis@thungela.com

SA TRANSFER SECRETARIES

Computershare Investor Services Proprietary Limited

Rosebank Towers

15 Biermann Avenue

Rosebank, 2196 Johannesburg

Private Bag X9000

Saxonwold, 2132

Tel: +27 11 370 5000

UK TRANSFER SECRETARIES

Computershare Investor Services (Jersey) Limited

Queensway House

Hilgrove Street, St Helier

Jersey, Channel Islands

SPONSOR

Rand Merchant Bank

(a division of FirstRand Bank Limited)

Tel: +27 11 282 8000

Email: sponsorteam@rmb.co.za

UK FINANCIAL ADVISER AND CORPORATE BROKER

Liberum Capital Limited

Tel: +44 20 3100 2000

If you have any queries regarding your shareholding in Thungela

Resources Limited, please contact the transfer secretaries on:

+27113705000

Disclaimer

All images utilised in this document have been used with the permission of the subjects in the images or their legal guardian, and with the understanding

that these images could be published widely, including on the internet, and may be seen throughout the world by people with access to the internet.

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www.thungela.com