The business

Petmin is a South African based, JSE and AIM listed minerals, mining and processing company which services the metallurgical and industrial sectors. It currently has two operations, consisting of silica and anthracite mining. Paladin acquired an additional 10,6 million shares in Petmin at R2,83 per share during the year under review.

Performance

Petmin sold its investment in Springlake Holdings (Pty) Ltd ("Springlake") during the 2010 financial year which contributed towards the decline in revenue and earnings per share. On a like for like basis, Petmin had a fair financial performance with headline earnings per share increasing by 5% to 19.1 cents, and net cash flow from operating activities up 43 % to R321 million. The earnings growth was driven by the strong performance at Somkhele, which delivered 78% of the Group’s profit before tax, and an operating profit margin improvement from 22.1% to 30.6%. The disposal of the low margin business at Springlake was an important strategic step in streamlining the business and helping management to focus on core business and future growth. Since June 2010, earnings have been maintained, despite a stronger rand and higher strip ratios at Somkhele. The Group's conservative marketing and sales strategy of locking in long term supply agreements and protecting the balance sheet assisted Petmin to survive and thrive during difficult times. During these difficult times Petmin continued to grow earnings and remained cash positive with virtually no gearing.

Prospects

With the operations at full production and an anticipated strong Rand, Petmin is well on track to achieve another good financial year for the period ending 30 June 2011. With organic expansion at Somkhele on track to double the plant capacity and Life of Mine and an exciting pipeline of prospective iron ore projects in place, Petmin remains well positioned for growth with low gearing and significant cash resources. Petmin will continue to actively evaluate new opportunities which meet its stated highly focused commodity and geographic diversification growth strategy in order to maximize shareholder wealth in the short to medium term.

Financial Highlights

Year ended June	2008	2009	2010
Revenue (Rm)	666,9	788,6	489,4
Operating profit (Rm)	117,8	173,9	149,5
Operating margin (%)	17,7	22,1	30,6
Headline earnings (Rm)	77,2	120,7	107,7
Diluted headline earnings per share (cents)	15,3	22,0	19,1
Diluted growth in headline earnings per share (%)	188,7	43,8	(13,2)