Buyout of Botswana Ash

Prepared for Sponsors, 19 JUNE 2018

1
Botswana Ash Overview

2
Senior Management of Amalgamated Mines Buyout of Botswana - Ash

Edwin Puso Afitile Montwedi Mphathi

Chairman – Amalgamated Mines Chief Executive Officer, Amalgamated Mines

AMALGAMATED MINES is the entity that will acquire 50% of the

purchased shares and will be listed on the Botswana Stock Exchange
as an Investment Company focusing on Natural Resources.

3
Acquisition and Listing on the Botswana Stock Exchange Buyout of Botswana - Ash
1. Prepare offer
› Cabinet Memorandum (CM)
› Letters of Intent from Investors (LOI)

5. Initial Public Offering 2. Feedback from Cabinet

› Offer to public › Public Procurement & Asset
› Listing on the Botswana Stock Disposal Board (PPADB)
Exchange Main Board › Due diligence
› Trading of the Public Company
IPO
Timeline

4. Binding Offer 3. Final Due-Diligence

› Final Binding Offer › Investigations into contracts
› Private Placement › Review of historic Financials
› First earn-out payment › Interviews with Management

4
About Botswana Ash Buyout of Botswana - Ash
 Botswana Ash (Pty) Ltd. produces and markets soda ash, and fine  Synchem is not willing to allow Botash to grow by competing with
and coarse salt products to its customers in Southern Africa. Cerebos since Synchem has an equity stake in Cerebos
 The company’s soda ash is used in the production of glass,
inorganic or organic compounds, detergents, dyes, corn syrups,
and ethanol, as well as in textiles, non ferrous metallurgy, water
treatment, and mining sectors. Revenue by Country
 Its salt products are used to add flavor to food; to act as a carrier South Africa Zambia Zimbabwe Malawi Botswana
of essential trace elements; and for softening hard water, 4%

bleaching pulp to manufacture paper, and standardizing dyes 7%

batches in the textiles industry, as well as used as food

preservatives and deicers in snow belt areas. The company was
16%
founded in 1991 and is based in Gaborone, Botswana. 48%
 Botash is owned 50% each by Synchem (formally Chlor-Alkali)
and the government of the Republic of Botswana
 Soda ash is currently 71% of Revenue while Salt is 29% (2017 25%
FY)
 Approximately 450 employees Revenue by product 2017 FY
 Management
 Privation of the 50% Governments stake will make a huge Salt
difference since a private company is better positioned to 29%
optimize RoE subject to earnings volatility
 Currently Synchem, is not left alone to run the partnership
however there is lack of a proper growth strategy as this
asset is not the only one that Synchem focuses on. This
results in stagnation. Soda Ash
71%
5
Botswana Ash – In Pictures Buyout of Botswana - Ash

6
About Botswana Ash – South Africa Buyout of Botswana - Ash
 A BBBEE Level 4 company which started operations in 2013
 Operating agent for Botswana Ash (PTY) Ltd
 Botash SA is responsible for Sales, Marketing & Distribution of Soda Ash, Salt and Sodium Derivatives products into the
South African market.
 Dense Soda Ash in South Africa is mainly an imported product, with BOTASH SA having a market share of approximately
55% - 65%. Followed by TATA chemicals, Manucha and Mserve.
 Some of the clients include

7
Business Drivers Buyout of Botswana - Ash
• Cash on hand: Botash has approximately BWP 217 120 MM in hand. This can be used in R&D towards
diversifying products away from just Soda Ash and Salt and more into other by-products like Fertilisers.
• Free Cash-flow to Firm (FCFF) generation: subject to the main business drivers, there is strong
potential to continue increasing FCFF generation.
• Dividend yield: Botash has a total of paid BWP 240 MM in dividends over the past three years.
• (BWP 120 MM (2015 FY)
• BWP 40 MM (2016 FY)
• BWP 80 MM (2017 FY)
• Business and Investment thesis highly sensitive to:
• Revenue
• COGS as % Revenue
• CAPEX
• We will be listed on the Stock Exchange and have no plans of selling our stake. However, we assess the
investment on an IRR basis over a 5 year holding period.
• We are targeting a 20-25% IRR, that is a Money Multiple (MoM) of 3X after 5 years
• This is possible only if:
• Revenues can grow above best estimate per annum for the next 5 years
• COGS can be reduced to below best average over the next 5 years
• Capital Expenditure will be kept at 8% of revenue going forward
• Salt business is low margins so plan to scale by volumes

8
Buyout Strategy
 Our proposal is to buy 50% of the GRB shares owned by the
Government of the Republic of Botswana
 Healthy EBITDA margins at 12% (average last 3
years)
 Firm remains un-levered at 0.0x LTM Debt/EBITDA
Potential to enter the fertiliser production markets
 Deal to be 100% financed through equity
 Opportunities for debt are complicated by the 50%-50%
partnership structure
 Transaction could be completed at roughly 10X EBITDA
Buyout of Botswana - Ash
 A key component of this deal is the creation of the
Special Purpose Vehicle “Amalgamated Mines” the
Investment Company that will be listed on the
Botswana Stock Exchange (BSE)
 AM will house the 50% shares bought from the
government
 Accounting and reporting will be on the Equity
method and not full consolidation
 We will share with the other shareholder on issues
related to the following in order to achieve a
mandate of growth:
 Appointing 50% of the Botash Board
 Appointing 50% of Senior Management
 Playing an Active role in the hiring of
Employees
9
Growth Opportunities Buyout of Botswana - Ash
 The main opportunities to increase earnings are around optimizing;
Management, Increasing Revenue and Reducing costs
 Management
 Currently the role of the GRB shareholder in the mine is not
efficient given the inability to oversee the investments on a
daily basis Increase Revenue by
 A 50-50 stake will come with significant influence and a new 4% per annum
shareholder agreement that will make AM more involved
than the current GRB shareholder
 Increasing revenues Reduce COGS as
 New product lines. Project Arabica relating to fertiliser % of Revenue to
products.
 Enhanced local market and competition with Cerebos,
50%
something not possible under the current shareholder
structure
 Reducing costs
 Currently COGS % of Revenue is 59% average last three
years
 There is room to reduce this to 55% and increasing EBITDA Compete with Cerebos in
the retail sector

10
 Buyout of Botswana - Ash

Financial Highlights

11
Caution on Forward Looking Statements Buyout of Botswana - Ash
This presentation contains a number of forward-looking statements. Words such as “build,” “drive,” “invent,” “innovate,” “expand,” “optimize,” “invest,” “launch,” “grow,”
“execute,” “enable,” “continue,” “expect,” “opportunity,” “deliver,” “strengthen,” “leverage,” “will,” and variations of such words and similar expressions are intended to
identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding plans, savings, e-commerce
developments, investments, execution, sales, risk, growth, leverage, return of capital, innovation, anchor shareholders, cash flows, planning, credit rating, brands and
efficiencies. These forward-looking statements are not guarantees of future performance and are subject to a number of risks and uncertainties, many of which are
difficult to predict and beyond control. Important factors that affect business and operations and that may cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, operating in a highly competitive industry; changes in the retail landscape or the loss of key retail customers;
AMALGAMATED MINES's ability to maintain, extend and expand AMALGAMATED MINES's reputation and brand image; the impacts of AMALGAMATED MINES's
international operations; AMALGAMATED MINES's ability to leverage AMALGAMATED MINES's brand value; AMALGAMATED MINES's ability to predict, identify and
interpret changes in consumer preferences and demand; AMALGAMATED MINES's ability to drive revenue growth in AMALGAMATED MINES's key product
categories, increase AMALGAMATED MINES's market share, or add products; an impairment of the carrying value of goodwill or other indefinite-lived intangible
assets; volatility in commodity, energy and other input costs; changes in AMALGAMATED MINES's management team or other key personnel; AMALGAMATED
MINES's ability to realize the anticipated benefits from AMALGAMATED MINES's cost savings initiatives; changes in relationships with significant customers and
suppliers; the execution of AMALGAMATED MINES's international expansion strategy; tax law changes or interpretations; legal claims or other regulatory enforcement
actions; product recalls or product liability claims; unanticipated business disruptions; AMALGAMATED MINES's ability to complete or realize the benefits from
potential and completed acquisitions, alliances, divestitures or joint ventures; economic and political conditions in the United States and in various other nations in
which AMALGAMATED MINES operates; the volatility of capital markets; increased pension, labor and people-related expenses; volatility in the market value of all or a
portion of the derivatives AMALGAMATED MINES uses; exchange rate fluctuations; risks associated with information technology and systems, including service
interruptions, misappropriation of data or breaches of security; AMALGAMATED MINES's inability to protect intellectual property rights; impacts of natural events in the
locations in which AMALGAMATED MINES or its customers, suppliers or regulators operate; AMALGAMATED MINES's indebtedness and ability to pay such
indebtedness; AMALGAMATED MINES's ownership structure; the impact of future sales of AMALGAMATED MINES's common stock in the public markets;
AMALGAMATED MINES's ability to continue to pay a regular dividend; changes in laws and regulations; restatements of AMALGAMATED MINES's consolidated
financial statements; and other factors.

Market Data
This presentation includes market and industry data and forecasts that have been obtained from various sources as well as thi rd-party market research, publicly
available information and industry publications. While information is obtained from third-party sources believed to be reliable as of the date hereof, there can be no
assurance as to the accuracy or completeness of such included information. While AMALGAMATED MINES has taken reasonable steps to ensure that the information
is extracted accurately and in its proper context, it has not independently verified any of the data from third party sources or ascertained the underlying economic
assumptions relied upon therein. 12
What we are looking for in this Investment Buyout of Botswana - Ash
We are looking to answer the following questions:
1. How much cash are we going to make?

 This is the projected Unlevered Free Cash flow

2. When are we going to get back the cash?

 We assess this impact on an annual basis

3. How sure are we?

 We ran sensitivities to consider a wider funnel of outcomes

We express the answer to the above three questions in

terms of the Internal Rate of Return (IRR)
 We confirm that this analysis is more common for Leveraged
Buyout Transactions

13
Historical Performance Buyout of Botswana - Ash
Summary Income Statement – Last 3 years
Statement of Financial Position – 2017 FY
Historic EBITDA (Last 3 years)
On December 31, 2017 2017A
(in BWP thousands except per share amounts) Assets
Period Ending 2015FY 2016FY 2017 FY Current assets:
Cash and cash equivalents 217,120
Revenue 912,152 959,707 957,820 Trade receivables, net 152,065
Cost of goods sold (540,143) (562,779) (554,921) Total inventories 167,677
Taxation refundable 7,824
Gross profit 372,009 396,928 402,899
Total current assets 544,686
Operating expenses (275,167) (306,238) (366,833) Non-Current assets:
EBITDA 117,484 119,356 87,586 Property, plant, and equipment, net 364,824
Investments in subsidiaries 0
Total Non current assets 364,824
 2017 EBITDA reduced by the payment of Botswana Housing Corporation
Total assets 909,510
Loan of BWP 53 MM Liabilities
Summary Free Cash Flow (FCFF) – Last 3 years Current liabilities:
Short-term portion of deferred income 26
Trade payables 146,171
FFCF (Last 3 years) Accrued and Other payables 0
(in BWP thousands except per share amounts) Short term portion of operating lease 10,428
Period Ending 2015FY 2016FY 2017 FY Total current liabilities 156,625
Cash flows from operating activities Non-Current liabilities
Cashflows for the year 123,299 123,390 109,218 Deferred Income 534
Changes in operating working capital (38,713) (32,943) 10,861 Long term operating lease accruals 21,674
Cash flows from investing activities Provisions for site rehabilitation 51,100
Additions to property and equipment (CAPEX) (72,631) (66,897) (115,393) Deferred tax 22,090
Proceeds from disposal of PP&E (4,217) - 149 Total Non current liabilities 95,398
252,023
Cashflows from financing activities
Total liabilities
Shareholders' equity
Dividends (120,000) (40,000) (80,000)
Capital stock 131,500
Total change in cash and cash equivalents (112,262) (16,326) (75,315) Retained earnings 526,013
Cash at start of the year 265,500 153,238 292,435 FX reserve (26)
Cash at end of the year 153,238 136,912 217,120 Total shareholders' equity 657,487
Total liabilities and equity 909,510 14
Financial Highlights Botswana - Ash
Historical Performance
Highlights

 Revenue CAGR over the last 3 years at 2% 1,200

 Strong and stable operating results

 Unsteady CAPEX, 2017 due to fixing of the Boiler 1,000
912
960 958

 Rent paid for Land and Housing including operating lease

accruals is stable over the last 3 years 800

BWP MM
Revenue
600 Gross Profit
COGS vs Revenue EBITDA
397 403 FCFF
400 372

COST VS. REVENUES BY YEAR Costs Revenues

200
117 119
88
(1,657,843) 2,829,679 8 24 5
3 YEARS (2015 – 2017) -
2015A 2016A 2017A
(1,117,700) 1,917,527
2 YEARS (2016 – 2017)

(554,921) 957,820
1 YEAR (2017)

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Valuation Buyout of Botswana - Ash
Discounted Cash flows Projected UFCFF vs Dividends

 We currently value the company at BWP 1bn using best estimate 100,000
assumptions on a Discounted Cash Flow method 80,000
 This is versus a NAV of BWP 657 MM as indicated by the statement of

BWP MM
financial Position 60,000
UFCFF
 BWP 1 Bn equity value implies that we are getting in at 10X EBITDA 40,000 Dividends
 We are only raising 50% of the value of the Enterprise Value (EV) i.e
R500MM before transaction costs. 20,000

0
Projected Free Cash flow on Best Estimate Assumptions 2018E 2019E 2020E 2021E 2022E

FFCF (Last 3 years)

(in BWP thousands except per share amounts)
Period Ending 2015FY 2016FY 2017 FY 2018E 2019E 2020E 2021E 2022E
Cash flows from operating activities
Cashflows for the year 123,299 123,390 109,218 138,853 149,092 167,675 174,742 173,728
Changes in operating working capital (38,713) (32,943) 10,861 (3,005) (2,649) (2,688) (2,729) (2,770)
Cash flows from investing activities
Additions to property and equipment (CAPEX) (72,631) (66,897) (115,393) (77,775) (78,942) (80,126) (81,328) (82,548)
Proceeds from disposal of PP&E (4,217) - 149 - - - - -
Cashflows from financing activities
Dividends (120,000) (40,000) (80,000) (41,200) (42,436) (43,709) (45,020) (46,371)
Total change in cash and cash equivalents -112,262 -16,326 -75,315 16,723 24,916 41,002 45,515 41,889
Cash at start of the year 265,500 153,238 292,435 217,120 233,843 258,759 299,761 345,277
Cash at end of the year 153,238 136,912 217,120 233,843 258,759 299,761 345,277 387,166
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Valuation Buyout of Botswana - Ash
DCF assumptions – Inputs & Assumptions

Net Present Value Calulation 2018E 2019E 2020E 2021E 2022E

Risk Discount Rate 10%
Period 1 2 3 4 5
Discounted Cash Flow 52,658 55,663 63,645 61,837 54,803
Total Net Present Value 288,605
Perpetuity Method
Unlevered Free Cash Flow 88,260.4
Growth Rate 3%
Terminal Value 1,298,689
Net Present Value 806,384

DCF Entreprise Value

Perpetuity Method 1,094,989

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Returns Analysis Buyout of Botswana - Ash

Period Ending 2018E 2019E 2020E 2021E 2022E

Exit Multiple 10.0x

Enterprise value [(EBITDA + management fee) × EBITDA multiple] 1,570,561

Plus cash 387,166
Equity to common 1,957,727

Return to AM -1,000,000 41,200.0 42,436.0 43,709.1 45,020.4 1,957,727.1

IRR 17.3%
Return multiple 2.13

 We valued the company at BWP 1Bn using best estimate assumptions. This is to say that we are buying the
company as is without any major improvements.
 To determine the IRR we considered the what if Scenario of selling after 5 years at the same EBITDA multiple
that we bought the company at i.e 10X

18
Returns Analysis Buyout of Botswana - Ash
Sensitivity Analysis - 5-Year IRR to AM and Purchase Price vs. Exit Multiple

Exit Multiple:

17.3% 2.0 x 4.0 x 6.0 x 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x 18.0 x
$ (1,600,000) (12.4%) (6.2%) (1.3%) 2.7% 6.2% 9.2% 12.0% 14.5% 16.7%
$ (1,500,000) (11.1%) (4.9%) 0.0% 4.1% 7.6% 10.7% 13.5% 16.0% 18.3%
Purchase Price

$ (1,400,000) (9.8%) (3.5%) 1.5% 5.6% 9.2% 12.3% 15.1% 17.7% 20.0%
$ (1,300,000) (8.3%) (1.9%) 3.1% 7.3% 10.9% 14.1% 16.9% 19.5% 21.9%
$ (1,200,000) (6.7%) (0.2%) 4.9% 9.1% 12.8% 16.0% 18.9% 21.6% 24.0%
$ (1,100,000) (4.9%) 1.7% 6.9% 11.2% 14.9% 18.2% 21.1% 23.8% 26.3%
$ (1,000,000) (2.9%) 3.8% 9.1% 13.5% 17.3% 20.6% 23.6% 26.3% 28.8%
$ (900,000) (0.7%) 6.2% 11.6% 16.1% 19.9% 23.3% 26.4% 29.2% 31.7%
$ (800,000) 2.0% 9.0% 14.5% 19.1% 23.0% 26.5% 29.6% 32.5% 35.1%
$ (700,000) 5.1% 12.2% 17.9% 22.6% 26.6% 30.2% 33.4% 36.3% 39.0%

 This sensitivities are based on the Best Estimate assumptions or the BASE Scenario
 At our offer price of BWP 1 Bn, and assuming that we will exit at the same EBITDA multiple that we entered the business i.e
10X then our expected IRR is 17.3%. That is to say we are returning to investors 2X the money already invested.
 Even the lower exit multiple of 8X EBITDA delivers a decent IRR of 13.5% at the BWP 1 Bn price
 These sensitivities show that if the seller asks us to pay a premium of up to BWP 1.2 Bn, then our IRR will be 12.8% at the
10X EBITDA multiple
 Because we are buying a 50% stake and hence there will be no consolidation there will be no increases in goodwill,
intangible assets or mark-up on PP&E
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 Buyout of Botswana - Ash

Scenarios
These Scenarios are based on the three 3 variables we identified that define the Business being:
• Increase in Revenue
• Increase in Revenue and decrease in COGS % Revenue

20
 Scenarios Buyout of Botswana - Ash
We provide a step by step build-up of the scenarios to determine
the amount of upside that lies in the business.  The impact of higher growth in Revenue for both Salt
and Soda Ash increase the IRR to 21.3% (at a BWP
These scenarios assume that we acquire the 50% and through 1bn offer price and a 10X exit multiple) from 17.3%
“significant influence” exert some changes to improve the
business.  However, Operating margins; EBIT margins only
increase slightly.
• Scenario 1 – Higher Growth in Revenues
Operating Margins
Parameter Period Ending 2018E 2019E 2020E 2021E 2022E
Our significant influence is able 2018E 2019E
to help drive up 2020E 2021E
revenues 2022E
EBIT margins
Revenue growth (BASE) 1.5% 1.5% 1.5% 1.5% 1.5%
Revenue growth (Scenario1) 4.3% 3.3% 4.8% 2.8% 2.9% (BASE) 7.50% 7.20% 7.90% 7.10% 5.20%
EBIT margins
Exit Multiple:
(Scenario 1) 8.10% 8.10% 9.40% 8.90% 7.40%

21.3% 2.0 x 4.0 x 6.0 x 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x 18.0 x
$ (1,600,000) (10.0%) (3.3%) 1.9% 6.2% 9.9% 13.1% 16.0% 18.6% 21.0%
Purchase Price

$ (1,500,000) (8.7%) (2.0%) 3.3% 7.6% 11.4% 14.6% 17.6% 20.2% 22.7%
$ (1,400,000) (7.4%) (0.5%) 4.8% 9.2% 13.0% 16.3% 19.3% 22.0% 24.4%
$ (1,300,000) (5.9%) 1.1% 6.5% 10.9% 14.8% 18.1% 21.1% 23.9% 26.4%
$ (1,200,000) (4.2%) 2.8% 8.3% 12.8% 16.7% 20.1% 23.2% 26.0% 28.5%
$ (1,100,000) (2.4%) 4.8% 10.3% 14.9% 18.9% 22.4% 25.5% 28.3% 30.9%
$ (1,000,000) (0.4%) 6.9% 12.6% 17.3% 21.3% 24.8% 28.0% 30.9% 33.5%
$ (900,000) 2.0% 9.4% 15.2% 20.0% 24.1% 27.7% 30.9% 33.8% 36.5%
$ (800,000) 4.6% 12.2% 18.1% 23.0% 27.2% 30.9% 34.2% 37.2% 40.0%
$ (700,000) 7.8% 15.6% 21.6% 26.6% 30.9% 34.7% 38.1% 41.2% 44.0%

21
Scenarios Buyout of Botswana - Ash
• Scenario 2 – Higher growth in Revenues &  COGS is mainly made up of roughly BWP 300 MM of transport
costs using rail
decreases in COGS
 The impact of a higher increase in Revenue and decreases in
Our significant influence is able to help drive up revenues and
COGS % of Revenue significantly increases the IRR.
keep costs low
 At our offer price of BWP 1 Bn and an Exit multiple of 10X
EBITDA the IRR is roughly 27% meaning that if we were to sell
the company after 5 years we will make 3.15X of our initial
BWP 1bn offer price.

 This is also depicted in higher Operating margins; EBIT

margins. This is because the reducing COGS as a % Revenue
contributes more to the IRR than just increasing the Revenue.

Exit Multiple: Operating Margins

Period Ending 2018E 2019E 2020E 2021E 2022E
27.0% 2.0 x 4.0 x 6.0 x 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x 18.0 x
EBIT margins (BASE) 7.50% 7.20% 7.90% 7.10% 5.20%
$ (1,600,000) (5.1%) 1.6% 6.9% 11.3% 15.1% 18.4% 21.4% 24.1% 26.6%
Purchase Price

$ (1,500,000) (3.8%) 3.0% 8.4% 12.8% 16.6% 20.0% 23.0% 25.7% 28.3%
$ (1,400,000) (2.3%) 4.5% 9.9% 14.4% 18.3% 21.7% 24.8% 27.6% 30.1% EBIT margins (Scenario 2) 12% 12.1% 13.4% 12.9% 11.3%
$ (1,300,000) (0.8%) 6.2% 11.7% 16.2% 20.2% 23.6% 26.7% 29.5% 32.1%
$ (1,200,000) 1.0% 8.0% 13.6% 18.2% 22.2% 25.7% 28.9% 31.7% 34.4%
$ (1,100,000) 2.9% 10.1% 15.7% 20.4% 24.4% 28.0% 31.2% 34.1% 36.8%  This analysis shows that the IRR is more sensitive to COGS.
$ (1,000,000) 5.0% 12.3% 18.1% 22.9% 27.0% 30.6% 33.9% 36.8% 39.6%
$ (900,000) 7.4% 14.9% 20.8% 25.6% 29.8% 33.6% 36.9% 39.9% 42.7%
Therefore the company can do significantly better if
$ (800,000) 10.2% 17.9% 23.8% 28.8% 33.1% 36.9% 40.3% 43.4% 46.3% Management can focus on reducing COGS.
$ (700,000) 13.5% 21.3% 27.5% 32.6% 37.0% 40.9% 44.4% 47.6% 50.5%

22
Scenarios Buyout of Botswana - Ash

• Scenario 3 – The Downside case – declining Sales for 5  The impact of declining Sales is a reduction of the IRR
years to 10%.
 This 10% is equal to the discount rate used in our
In this Scenario we investigate the Downside scenario of Revenue calculations and also equal to the cost of equity
declining by 2% y-o-y for 5 tears (company has no debt).
Parameter 2018E 2019E 2020E 2021E 2022E
 Therefore we conclude that even in the worse case
Revenue growth (BASE) 1.5% 1.5% 1.5% 1.5% 1.5% Scenario, we will still be able to meet the
Revenue growth (Scenario3) -2% -2% -2% -2% -2%
shareholders expected return.
 This is a 1.60 return multiple
Exit Multiple:

 However, Operating margins; EBIT margins only

10.0% 2.0 x 4.0 x 6.0 x 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x 18.0 x
$ (1,600,000) (16.3%) (11.1%) (7.0%) (3.5%) (0.5%) 2.2% 4.7% 6.9% 9.0% increase slightly.
 The numbers work because the company
Purchase Price

$ (1,500,000) (15.1%) (9.9%) (5.7%) (2.2%) 0.9% 3.6% 6.1% 8.4% 10.4%
$ (1,400,000) (13.8%) (8.6%) (4.3%) (0.7%) 2.4% 5.2% 7.7% 9.9% 12.0%
$ (1,300,000) (12.4%) (7.1%) (2.8%) 0.9% 4.0% 6.8% 9.4% 11.7% 13.8% generates FCF even under pessimistic
$ (1,200,000) (10.9%) (5.4%) (1.1%) 2.6% 5.8% 8.7% 11.2% 13.6% 15.7% assumptions
$ (1,100,000) (9.1%) (3.6%) 0.8% 4.5% 7.8% 10.7% 13.3% 15.7% 17.9%
$ (1,000,000) (7.2%) (1.6%) 2.9% 6.7% 10.0% 13.0% 15.6% 18.1% 20.3%  It is necessary to investigate this Scenario during
$ (900,000) (5.0%) 0.7% 5.3% 9.2% 12.6% 15.6% 18.3% 20.8% 23.0% the Due diligence
$ (800,000) (2.5%) 3.4% 8.0% 12.0% 15.5% 18.5% 21.3% 23.8% 26.2%
$ (700,000) 0.5% 6.5% 11.3% 15.3% 18.9% 22.0% 24.9% 27.5% 29.9%

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Scenarios Buyout of Botswana - Ash
• Other Scenarios

It is also possible to consider the following Scenarios in order to understand items that can be an agenda for
Management focus

 Economies of Scale - the larger the scale of the business, the higher the EBITDA margin, as fixed cost
overheads are spread over larger number of units

 Reductions in Operating expenses e.g high transportation costs that the company has to grapple with.
Botash transports salt and soda ash products to its market throughout Africa using rail the costs of
transport are currently at around BWP 300 MM.

 Optimize the existing supply chain and design market strategies with logistics channels in mind

 Reductions in CAPEX.
 In perpetuity, we do not expect the company to increase the value of assets infinitely.
 The alternative scenario can be investigated by capping CAPEX to Depreciation or reducing the
CAPEX as a percentage of Revenue from 8%. This means that the company does not need to invest
money into PPE (CAPEX) above replacement (depreciation).
 We are of the view that Capital expenditures need to be considered in terms of Return on the
24
Invested Capital
 Buyout of Botswana - Ash

Accounting & Reporting

25
Accounting & Reporting Buyout of Botswana - Ash
• Principles of Accounting propose 3 methods for the way we will report on our Investment as a publicly
traded company on the Botswana Stock Exchange.

Equity Stake Accounting Method

Equity stake of <20% Cost

20% < Equity stake <= 50% Equity method

Equity > 50% Consolidation

• Since we hold a 50% stake we will be accounting using the Equity method.

26
Accounting & Reporting Buyout of Botswana - Ash
AMALGAMATED MINES - Consolidated Balance Sheets
 Example of Statement of Financial (in BWP thous ands except per s hare am ounts )

position On December 31 2018 2018A

Assets
Current assets:
Because of the limitations of conventional accounting, Cas h and cas h equivalents xxx
Trade receivables , net xxx
consolidated reported earnings on the equity method of Total inventories xxx
Taxation refundable xxx
accounting reveal relatively little about true economic Inves tm ents in BOTASH at fair Value 500,000
performance. Total current assets XXX
Non-Current assets:
Property, plant, and equipm ent, net XXX
Total Non current assets XXX
Therefore we will give you in our annual reports the full Total assets XXX
numbers and other information about BOTASH that Liabilities
Current liabilities:
really matter. In particular the: Short-term portion of deferred incom e xxx

 Statement of Income Trade payables

Accrued and Other payables
xxx
xxx
 Statement of cash flows Short term portion of operating leas e xxx
Total current liabilities XXX
 Statement of changes in equity Non-Current liabilities

 Statement of financial position Long term operating leas e accruals

Deferred tax
xxx
xxx
Total Non current liabilities XXX
Total liabilities XXX
Total
Shareholders'
liabilities equity
Capital s tock xxx
Retained earnings xxx
FX res erve xxx
Total shareholders' equity xxx
Total liabilities and equity XXX
27
Balance? (Y/N) XXX
Model

28
Summary of Assumptions Buyout of Botswana - Ash
PARAMS

Parameter 2018E 2019E 2020E 2021E 2022E

Revenue growth Scenario Revenue growth (BASE)
Revenue growth (BASE) 1.5% 1.5% 1.5% 1.5% 1.5%
COGS as a % of revenue (BASE) 59% 59% 59% 59% 59%
OpEx % Standalone Revenue (BASE) 13.0% 13.0% 12.0% 12.5% 14.0%
All-in effective tax rate (%) 21% 21% 21% 21% 21%
CAPEX % of sales 8% 8% 8% 8% 8%
Financing fee % 0.6% 0.6% 0.6% 0.6% 0.6%
Tax 22.0% 22.0% 22.0% 22.0% 22.0%
Inflation 3.0% 3.0% 3.0% 3.0% 3.0%
Minimum Cash balance 3000 3000 3000 3000 3000
Growth in Dividends 3% 3% 3% 3% 3%
Perpetuity growth rate 3% 3% 3% 3% 3%
Discount rate for the valuation 10% 10% 10% 10% 10%
Money market 3% 3% 3% 3% 3%

 Best estimate assumptions

 Modest increase in revenue
 SG&A worsens but stabilises
 Capex is cut immediately post BO to 8% of sales
 A better dividend policy with dividends increasing with inflation

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Appendix: Model Buyout of Botswana - Ash
Consolidated
Balance Sheets
On January 27 2013 2017PF 2018E 2019E 2020E 2021E 2022E
Assets
Current assets:
Cash and cash equivalents 217,120 233,843 258,759 299,761 345,277 387,166
Trade receivables, net 152,065 154,346 156,661 159,011 161,396 163,817
Total inventories 167,677 173,318 175,918 178,557 181,235 183,954
Taxation refundable 7,824 7,824 7,824 7,824 7,824 7,824
Total current assets 544,686 569,332 599,163 645,153 695,732 742,761
Non-Current assets:
Property, plant, and equipment, net 364,824 385,932 396,928 397,491 387,637 367,211
Total Non current assets 364,824 385,932 396,928 397,491 387,637 367,211
Total assets 909,510 955,263 996,091 1,042,644 1,083,370 1,109,972
Liabilities
Current liabilities:
Short-term portion of deferred income 26 26 26 26 26 26
Trade payables 146,171 151,089 153,355 155,655 157,990 160,360
Short term portion of operating lease 10,428 10,428 10,428 10,428 10,428 10,428
Total current liabilities 156,625 161,543 163,809 166,109 168,444 170,814
Non-Current liabilities
Deferred Income 534 534 534 534 534 534
Long term operating lease accruals 21,674 21,674 21,674 21,674 21,674 21,674
Provisions for site rehabilitation 51,100 51,100 51,100 51,100 51,100 51,100
Deferred tax 22,090 22,090 22,090 22,090 22,090 22,090
Total Non current liabilities 95,398 95,398 95,398 95,398 95,398 95,398
Total liabilities 252,023 256,941 259,207 261,507 263,842 266,212
Shareholders' equity
Capital stock 131,500 131,500 131,500 131,500 131,500 131,500
Retained earnings 526,013 566,999 605,710 650,113 688,653 713,036
FX reserve -26 -176 -326 -476 -626 -776
Total shareholders' equity 657,487 698,323 736,884 781,137 819,527 843,760
Total liabilities and equity 909,510 955,263 996,091 1,042,644 1,083,370 1,109,972 30
Appendix: Model Buyout of Botswana - Ash
Consolidated Statements of Cash Flows
(in BWP thousands except per share amounts) Actuals Estimates
16 months 2016
Period Ending 2016A 2015A Adjusted 2017A 2018E 2019E 2020E 2021E 2022E
Cash flows from operating activities
Net income 294,669 107,273 94,318 13,695 62,186 61,147 68,112 63,561 50,754
Depreciation 29,072 21,047 29,072 45,557 56,667 67,945 79,563 91,181 102,974
Other items, net -44,828 -5,021 49,966 20,000 20,000 20,000 20,000 20,000
Cashflows for the year 278,913 123,299 123,390 109,218 138,853 149,092 167,675 174,742 173,728
Changes in operating working capital(32,943) (38,713) (32,943) 10,861 (3,005) (2,649) (2,688) (2,729) (2,770)
Net changes in operating working capital
-32,943 -38,713 -32,943 10,861 -3,005 -2,649 -2,688 -2,729 -2,770
Total cash provided by (used for) operating
245,970activities
84,586 90,447 120,079 135,848 146,444 164,987 172,013 170,958

Cash flows from investing activities

Additions to property and equipment (CAPEX)
(66,897) (72,631) (66,897) (115,393) (77,775) (78,942) (80,126) (81,328) (82,548)
Proceeds from disposal of property, plant, and
0 equipment
(4,217) 0 149 0 0 0 0 0
Total cash provided by (used for) investing
(66,897)activities
(76,848) (66,897) (115,244) (77,775) (78,942) (80,126) (81,328) (82,548)

Cashflows from financing activities

Dividends (40,000) (120,000) (40,000) (80,000) (41,200) (42,436) (43,709) (45,020) (46,371)
Total cash provided by (used for) financing
(40,000)activities
(120,000) (40,000) (80,000) (41,200) (42,436) (43,709) (45,020) (46,371)
Effect of exchange rate on cash and cash 124
equivalents 0 124 (150.0) (150.0) (150.0) (150.0) (150.0) (150.0)
Total change in cash and cash equivalents139,197 -112,262 -16,326 -75,315 16,723 24,916 41,002 45,515 41,889
Cash at start of the year 153,238 265,500 153,238 292,435 217,120 233,843 258,759 299,761 345,277
Cash at end of the year 292,435 153,238 136,912 217,120 233,843 258,759 299,761 345,277 387,166
SUPPLEMENTAL DATA:
Cash flow before debt paydown 139,197 -112,262 -16,326 -75,315 16,723 24,916 41,002 45,515 41,889
Unlevered Free Cash Flow (UFCF) 179,197 7,738 23,674 4,685 57,923 67,352 84,711 90,536 88,260

31
Appendix: Model Buyout of Botswana - Ash
Consolidated Income Statements
(in BWP thousands except per share amounts) Estimates
16 months 2016
Period Ending 2016A 2015A (adjusted) 2017A 2018E 2019E 2020E 2021E 2022E
Revenue 1,279,609 912,152 959,707 957,820 972,187 986,770 1,001,572 1,016,595 1,031,844
Soda Ash 897,250 643,144 672,938 681,521 691,744 702,120 712,652 723,342 734,192
Salt 382,359 269,008 286,769 276,299 280,443 284,650 288,920 293,254 297,652
Y/Y revenue growth (%) 1.5% 1.5% 1.5% 1.5% 1.5%
Cost of goods sold (662,892) (540,143) (562,779) (554,921) (573,591) (582,194) (590,927) (599,791) (608,788)
Direct material costs (561,209) (486,517) (486,517) (342,317) (353,834) (359,141) (364,528) (369,996) (375,546)
Production overheads (101,683) (53,626) (76,262) (212,604) (219,757) (223,053) (226,399) (229,795) (233,242)
COGS as a % of revenue 51.8% 59.2% 58.6% 57.9% 59.0% 59.0% 59.0% 59.0% 59.0%
Gross profit 616,717 372,009 396,928 402,899 398,597 404,575.74 410,644 416,804 423,056
Gross profit margin (%) 48.2% 40.8% 41.4% 42.1% 41.0% 41.0% 41.0% 41.0% 41.0%
Operating expenses
Selling, general, and administrative (136,221) (124,100) (127,823) (114,405) (126,384) (128,280) (120,189) (127,074) (144,458)
SG&A as a % of revenue 11% 14% 13% 12% 13% 13.0% 12.0% 12.5% 14.0%
Non production overheads (237,887) (151,067) (178,415) (252,428) (201,291) (207,330) (213,549) (219,956) (226,555)
Y/Y change in production overheads 6.11% 0.75% 0.75% 0.75% 0.75% 0.75%
Total operating expenses (374,108) (275,167) (306,238) (366,833) (327,675) (335,610) (333,738) (347,030) (371,013)
Total OpEx % of revenue -29% -30% -32% -38% -34% -34% -33% -34% -36%
Other income
Foreign Exchange loss (3,460) (6,467) (6,467) (2,543) (6,467) (6,467) (6,467) (6,467) (6,467)
Other Income, net: 50,142.0 6,062.0 6,062 8,506.0 8,506.0 8,506.0 8,506.0 8,506.0 8,506.0
EBITDA 318,363 117,484 119,356 87,586 129,628 138,950 158,508 162,994 157,056
EBITDA margin (%) 24.9% 12.9% 12.4% 9.1% 13.3% 14.1% 15.8% 16.0% 15.2%
Depreciation (29,072) (21,047) (29,072) (45,557) (56,667) (67,945) (79,563) (91,181) (102,974)
Total depreciation and amortization (29,072) (21,047) (29,072) (45,557) (56,667) (67,945) (79,563) (91,181) (102,974)
EBIT 289,291 96,437 90,284 42,029 72,961 71,005 78,945 71,813 54,082
EBIT margin (%) 22.6% 10.6% 9.4% 4.4% 7.5% 7.2% 7.9% 7.1% 5.2%
Interest
Interest income 5,378 10,836 4,034 10,766 6,764 7,389 8,378 9,676 10,987
Net interest expense 5,378 10,836 4,034 10,766 6,764 7,389 8,378 9,676 10,987
EBT (PBT) 294,669 107,273 94,318 52,795 79,725 78,394 87,323 81,488 65,069
EBT margin (%) 23.0% 11.8% 9.8% 5.5% 8.2% 7.9% 8.7% 8.0% 6.3%
Income tax expense 0 0 0 (39,100) (17,540) (17,247) (19,211) (17,927) (14,315)
All-in effective tax rate (%) 0.0% 0.0% 0.0% 22.0% 22.0% 22.0% 22.0% 22.0% 22.0% 32
Net income (adjusted) 294,669 107,273.0 94,317.8 13,695 62,186 61,147 68,112 63,561 50,754
Future Opportunities Buyout of Botswana - Ash

As an Investment Company, there are many Opportunities we have identified in the

Natural resource space that could become future acquisitions. However, at this stage
we are concerned in optimizing returns on the Botash deal. We will release a strategy
about future acquisitions after 3 years of running BOTASH.

33