NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN OR INTO CANADA OR JAPAN OR AUSTRALIA This document is intended
solely to provide certain information on Iscor Limited (Iscor) and
Kumba Resources Limited (Kumba) and does not constitute a
recommendation regarding the purchase or sale of the ordinary
shares of Iscor and Kumba. Shareholders should seek advice from an
independent financial adviser as to the suitability of any action
for the individual concerned. This document does not constitute an
offer or invitation to purchase any securities or a solicitation to
vote in favour of the proposed transactions referred to herein. Any
shareholder action required in connection with the proposed
transactions is set out in the Iscor Limited circular, and any
decision made by shareholders should be made only after
consultation with appropriate legal, tax, business, investment,
financial and accounting advisers. This document includes unaudited
pro-forma financial information prepared under South African GAAP.
The analyses and calculations reflected in this document do not
purport to be appraisals of the assets, stock or businesses of
Iscor or Kumba. Certain statements in this document, those
regarding synergies, debt, costs, dividends, earnings, returns,
divestments, reserves and growth are or may be forward looking
statements that are subject to risks and uncertainties associated
with the assets, businesses and subsidiaries of Iscor and Kumba as
well as the proposed operations of Iscor and Kumba following the
proposed transactions. Actual results may differ materially from
the statements made depending on a variety of factors, including
successful implementation of the transactions. No representation or
warranty, express or implied, is made or given by or on behalf of
Iscor and/or Kumba or any of their respective directors, officers,
employees or advisers or any other person as to the accuracy or
completeness of the information or opinions set out in this
presentation and no responsibility or liability is accepted by any
of them for any such information or opinions. D I S C L A I M E R
Slide 2 U N B U N D L I N G P R E S E N T A T I O N N O V E M B E R
2 0 0 1 Slide 3 3 H A N S S M I T H C H A I R M A N I S C O R L I M
I T E D Slide 4 4 Seven-year restructuring programme in three
phases now complete Iscors own initiatives Full scale
re-engineering Business restructuring Now the unbundling Platform
for further value release S T R A T E G I C R A T I O N A L E Slide
5 5 U N B U N D L I N G O F I S C O R Creation of two focused
independent entities (Iscor and Kumba) Proven track records of
international competitiveness Excellent executive and management
teams in place Strong government and IDC support Free to pursue
growth strategies locally and internationally Slide 6 6 U N B U N D
L I N G T I M E T A B L E Proxies from Iscor shareholders19
November 2001 Iscor general meeting21 November 2001 Kumba listing26
November 2001 Slide 7 A F R I C A S D O M I N A N T S T E E L P R O
D U C E R N O V E M B E R 2 0 0 1 Slide 8 8 L O U I S V A N N I E K
E R K C H I E F E X E C U T I V E O F F I C E R I S C O R L I M I T
E D Slide 9 9 S T R U C T U R E P O S T U N B U N D L I N G * Iscor
has undivided share in Sishens iron ore rights entitling it to 6.25
Mtpa for life of mine OtherFlat ProductsLong Products 66% 28%6%
Revenue Vanderbijlpark Saldanha Newcastle Vereeniging Suprachem
Other * ISCOR Slide 10 10 O V E R V I E W O F O P E R A T I O N S
Flat Products Vanderbijlpark 2.7 Mtpa final product Saldanha 0.9
Mtpa final product Long Product Newcastle 1.4 Mtpa final product
Vereeniging 0.3 Mtpa final product ISCOR TOTAL 5.3 Mtpa final
product Iron ore supply 6.25 Mtpa iron ore from Sishen 2 Mtpa iron
ore from Thabazimbi Vereeniging Johannesburg Newcastle Sishen
Vanderbijlpark Thabazimbi Saldanha Cape Town Durban * Based on
2000/01 actual sales South Africa Slide 11 11 S T R A T E G Y
Industry consolidation Market optimisation Continuous improvement
Saldanha Steel value release Market optimisation Restructuring of
RSA steel industry Global partner Operational excellence Slide 12
12 VanderbijlparkNewcastle 2001Improvement2001Improvement Cash
cost- HRC - Billet $/t 185*24% 141*44% Position on cost curve CRU
rank8 th* 4 th* HeadcountEmployees8 70048%3 40046%
Through-yield%824%871% On time delivery%85124%9115% Prime
output%8811%98 - O P E R A T I O N A L E X C E L L E N C E
Improvements since re-engineering commenced in 1994 * Source : CRU
1999 & 2000 reports Slide 13 13 O P E R A T I O N A L E X C E L
L E N C E (L O W C O S T P R O D U C E R) Low input costsCost curve
Power1 st quartile Coal2 nd quartile Iron ore1 st quartile Labour1
st quartile Modernised plant and processes High efficiency levels
70% Rand based cost Slide 14 14 O P E R A T I O N A L E X C E L L E
N C E (C O S T R E D U C T I O N P O T E N T I A L) Iron ore
procurement benefit Further re-engineering savings Impact of
depreciating currency Improvement on cost curve expected Slide 15
15 O P E R A T I O N A L E X C E L L E N C E (S A L D A N H A T U R
N A R O U N D) Real terms at exchange rate of R9.00/$ Including
$12/t HRC iron ore benefit Jun 02Jun 03Dec 03 Cash in on Corex
refractory repair Break-through Stabilise/plant availability 0.95
Mtpa Continuous improvement $204/t $9/t 1.1Mtpa $190/t $13/t 1.3
Mtpa $180/t $18/t Ramp-up Cash cost Price premium Slide 16 16 Iscor
management responsibility from January 2001 Re-engineering
credentials Fast track programme in place Project ahead of schedule
Synergies flow from integration O P E R A T I O N A L E X C E L L E
N C E (S A L D A N H A T U R N A R O U N D C H A L L E N G E) Slide
17 17 Cost for IDCs 50% 20 million post-unbundling Iscor shares 10
million Kumba shares Less: IDC R250 million cash contribution Value
Synergy benefits State-of-the-art plant Low cost producer Premium
price product High potential payback Ungeared balance sheet O P E R
A T I O N A L E X C E L L E N C E (S A L D A N H A I N T E G R A T
I O N) Challenge achieving turnaround and synergies Slide 18 18 M A
R K E T O P T I M I S A T I O N (D O M E S T I C / E X P O R T S A
L E S M I X) 51% of sales volume exported Domestic pricing at
import parity Significant historic domestic/export margin
differential Historic average domestic volume growth multiplier:
> 2x GDP growth above 2% Economic policy medicine has set base
for sustained domestic economic growth Potential for greater % high
margin domestic sales Slide 19 19 M A R K E T O P T I M I S A T I O
N (C A P T U R I N G R A N D W E A K N E S S) Domestic sales priced
at import parity Effectively total sales at $ related prices Only
30% of total input costs $ denominated Significant leverage from
Rand weakness Slide 20 20 M A R K E T O P T I M I S A T I O N (S T
E E L P R I C E C Y C L E) 150 200 250 300 350 400 450 $/t HRC net
FOB Durban CRU MBR Mid cycle (CRU, MBR, WSD 10 yr. av.) 215 Price
expected to recover from current low Slide 21 21 Products 35% 6% 3%
1% 6% 2% 6% 12% 7% 2% 13% M A R K E T O P T I M I S A T I O N (E X
P O R T M A R K E T S) 51% of sales volume exported Good spread of
Products Destinations Current duties USA hot rolled - 15.6% EU hot
rolled - 5.2% Recent cases in favour of Iscor USA - wire rod Canada
- cold rolled Destinations for Q3 2001 38% 9% 12% 13% 19% 9% 5%
Slide 22 22 I N D U S T R Y C O N S O L I D A T I O N (R A T I O N
A L I S I N G S A S T E E L I N D U S T R Y) Flat Products
production Long Products production Potential synergies Replacement
capital > R1 billion Costs/revenue > R300 mpa 67% 25% 8% 92%
52% 41% 11% 15% 12% 15% 6% Slide 23 23 I N D U S T R Y C O N S O L
I D A T I O N (I N T R O D U C I N G G L O B A L P A R T N E R)
Access to Technology Markets Skills and training Assistance in
driving costs down further Discussions with potential partners
continuing Slide 24 24 M A L C O L M M A C D O N A L D C H I E F F
I N A N C I A L O F F I C E R I S C O R L I M I T E D Slide 25 25 P
R O F I T R E C O R D Adjusted for Sishen iron ore supply Operating
profit excluding Saldanha (LHS) Iscor HRC FOB price (RHS) Operating
profit including 100% Saldanha (LHS) 965 574 275 763 (157) 288 827
(268) 239 -300 -100 100 300 500 700 900
1994/951995/961996/971997/981998/991999/002000/01 0 50 100 150 200
250 300 350 $/t HRC Rm 1 000 Slide 26 26 Iron ore procurement
Vanderbijlpark further re-engineering Saldanha turnaround Sales mix
shift from export to domestic Price cycle recovery Exchange rate P
R O F I T L E V E R A G E P O T E N T I A L Slide 27 27 R I G H T S
I S S U E R A T I O N A L E Retention of iron ore ownership in
Iscor a condition to unbundle Optimise shareholder value - Kumba
market rating higher than Iscor Kumba value maintained by
transferring debt from Kumba to Iscor Higher debt in Iscor not
bankable, hence R1.67 billion rights issue Fully underwritten
Shareholders avoid dilution by following rights Slide 28 28 F I N A
N C I A L S T R U C T U R E Pro-forma as at 30 June 2001 Including
rights issue Shareholders equity (Rm)9 972 Net debt (Rm)1 811
Debt/equity ratio (%)18 EBITDA interest cover (times)3.3 Slide 29
29 L O U I S V A N N I E K E R K C H I E F E X E C U T I V E O F F
I C E R I S C O R L I M I T E D Slide 30 30 I N V E S T M E N T C A
S E Low cost producer Iron ore ownership Naturally protected
domestic market Significant potential earnings leverage from
Recovery in steel prices R/$ weakness Switch from export to
domestic sales Saldanha turnaround and synergies Further
efficiencies at other plants Benefits from potential consolidation
of South African steel industry Slide 31 31 H A N S S M I T H C H A
I R M A N I S C O R L I M I T E D Slide 32 32 C O N C L U S I O N
Declared 1994 strategy successfully implemented Creation of two
independent focused internationally competitive entities Value
release through unbundling Competent and motivated management teams
in place Immediate opportunities for future earnings growth
