Independent auditor's assurance report on the selected sustainability information in Exxaro Resources Limited's Supplementary report

To the directors of Exxaro Resources Limited

We have undertaken an assurance engagement in respect of the selected sustainability information, as described below, and presented in the 2018 Supplementary Report of Exxaro Resources Limited (the company, Exxaro or you) for the year ended 31 December 2018 (the Report). This engagement was conducted by a multidisciplinary team including health, safety, social, environmental and assurance specialists with relevant experience in sustainability reporting.

Subject matter

We have been engaged to provide a reasonable assurance opinion and a limited assurance conclusion on the selected sustainability information listed below and set out in the table on Key performance indicator. The selected sustainability information described below has been prepared in accordance with the company's reporting criteria that accompanies the sustainability information on the relevant pages of the report (the accompanying reporting criteria).

Reasonable assurance

Selected sustainability information	Unit of measurement	Boundary
Number of lost-time injuries	Number	Exxaro group
Lost-time injury frequency rate (LTIFR)	Rate	Exxaro group
Scope 2 carbon emissions	Kt CO2e	Exxaro group
Mining charter: Preferential procurement	Rand and %	Exxaro group

Limited assurance

Selected sustainability information	Unit of measurement	Boundary
Occupational health incident frequency rate (OHIFR)	Rate	Exxaro group
Number of accepted occupational health cases	Number	Exxaro group
Scope 1 carbon emissions	Kt CO2e	Exxaro group
Scope 3 carbon emissions	Kt CO2e	Exxaro group
Carbon intensity	Kt CO2e/total tonnes mined	Exxaro group
Number of level 2 and 3 environmental incidents	Number	Exxaro group
Mining charter: Employment equity (top, senior, middle and junior management)	%	Exxaro group
Mining charter: Black women in management (top, senior, middle and junior management)	%	Exxaro group

We refer to this information as the "selected sustainability information for reasonable assurance" and "selected sustainability information for limited assurance", respectively, and collectively as the "selected sustainability information".

Your responsibilities

The directors are responsible for the selection, preparation and presentation of the selected sustainability information in accordance with the accompanying reporting criteria as set out on Safety and health of the report (the reporting criteria).

This responsibility includes:

• The identification of stakeholders and stakeholder requirements, material issues, commitments with respect to sustainability performance
• The design, implementation and maintenance of internal control relevant to the preparation of the report that is free from material misstatement, whether due to fraud or error.

The directors are also responsible for determining the appropriateness of the measurement and reporting criteria in view of the intended users of the selected sustainability information and for ensuring that those criteria are publicly available to the report users.

Inherent limitations

Non-financial performance information is subject to more inherent limitations than financial information, given the characteristics of the subject matter and the methods used for determining, calculating, sampling and estimating such information. The absence of a significant body of established practices on which to draw allows for the selection of different but acceptable measurement techniques which can result in materially different measurements and can impact comparability. Qualitative interpretations of relevance, materiality and the accuracy of data are subject to individual assumptions and judgements. The precision of different measurement techniques may also vary. Furthermore, the nature and methods used to determine such information, as well as the measurement criteria and the precision thereof, may change over time.

In particular, where the information relies on carbon, energy and other emission conversion factors derived by independent third parties, or internal laboratory results, our assurance work will not include examination of the derivation of those factors and other third party or laboratory information.

Our independence and quality control

We have complied with the independence and other ethical requirements of the Code of Professional Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors (IRBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Part A and B).

The firm applies the International Standard on Quality Control 1, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Our responsibility

Our responsibility is to express either a reasonable assurance opinion or limited assurance conclusion on the selected sustainability information as set out in the subject matter paragraph, based on the procedures we have performed and the evidence we have obtained. We conducted our assurance engagement in accordance with the International Standard on Assurance Engagements 3000 (Revised), Assurance Engagements other than Audits or Reviews of Historical Financial Information (ISAE 3000 Revised), and, in respect of greenhouse gas emissions, International Standard on Assurance Engagements 3410, Assurance Engagements on Greenhouse Gas Statements (ISAE 3410) issued by the International Auditing and Assurance Standards Board. These standards require that we plan and perform our engagement to obtain the appropriate level of assurance about whether the selected sustainability information are free from material misstatement.

The procedures performed in a limited assurance engagement vary in nature and timing, and are less in extent than for a reasonable assurance engagement. As a result the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement.

(a) Reasonable assurance

A reasonable assurance engagement in accordance with ISAE 3000 (Revised), and ISAE 3410, involves performing procedures to obtain evidence about the measurement of the selected sustainability information and related disclosures in the report. The nature, timing and extent of procedures selected depend on the auditor's professional judgement, including the assessment of the risks of material misstatement of the selected sustainability information, whether due to fraud or error.

In making those risk assessments we have considered internal control relevant to the company's preparation of the selected sustainability information. A reasonable assurance engagement also includes:

• Evaluating the appropriateness of quantification methods, reporting policies and internal guidelines used and the reasonableness of estimates made by the company
• Assessing the suitability in the circumstances of the company's use of the applicable reporting criteria as a basis for preparing the selected sustainability information
• Evaluating the overall presentation of the selected sustainability performance information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our reasonable assurance opinion.

(b) Limited assurance

A limited assurance engagement undertaken in accordance with ISAE 3000 (Revised), and ISAE 3410, involves assessing the suitability in the circumstances of the company's use of its reporting criteria as the basis of preparation for the selected sustainability information, assessing the risks of material misstatement of the selected sustainability information whether due to fraud or error, responding to the assessed risks as necessary in the circumstances, and evaluating the overall presentation of the selected sustainability information. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks. Accordingly, for the selected sustainability information where limited assurance was obtained, we do not express a reasonable assurance opinion about whether the company's selected sustainability information have been prepared, in all material respects, in accordance with the accompanying reporting criteria.

The procedures we performed were based on our professional judgement and included enquiries, observation of processes followed, inspection of documents, analytical procedures, evaluating the appropriateness of quantification methods and reporting policies, and agreeing or reconciling with underlying records.

Given the circumstances of the engagement, in performing the procedures listed above we:

• Interviewed management and senior executives to obtain an understanding of the internal control environment, risk assessment process and information systems relevant to the sustainability reporting process
• Inspected documentation to corroborate the statements of management and senior executives in our interviews
• Tested the processes and systems to generate, collate, aggregate, monitor and report the selected sustainability information
• Performed a controls walkthrough of identified key controls
• Inspected supporting documentation on a sample basis and performed analytical procedures to evaluate the data generation and reporting processes against the reporting criteria
• Evaluated the reasonableness and appropriateness of significant estimates and judgements made by the directors in the preparation of the selected sustainability information
• Evaluated whether the selected sustainability information presented in the report are consistent with our overall knowledge and experience of sustainability management and performance at the company.

Reasonable assurance opinion and limited assurance conclusion

(a) Reasonable assurance opinion

In our opinion and subject to the inherent limitations outlined elsewhere in this report, the selected sustainability information set out in the subject matter paragraph above for the year ended 31 December 2018 are prepared, in all material respects, in accordance with the reporting criteria.

(b) Limited assurance conclusion

Based on the procedures we have performed and the evidence we have obtained, and subject to the inherent limitations outlined elsewhere in this report, nothing has come to our attention that causes us to believe that the selected sustainability information as set out the subject matter paragraph above for the year ended 31 December 2018 are not prepared, in all material respects, in accordance with the reporting criteria.

Other matter(s)

Our report includes the provision of limited assurance on the total number of black women in management. We were previously not required to provide assurance on this selected sustainability information. The 2018 assurance scope also includes employment equity management which was previously assured in 2014.

The maintenance and integrity of Exxaro's website is the responsibility of Exxaro's directors. Our procedures did not involve consideration of these matters and, accordingly we accept no responsibility for any changes to either the information in the report or our independent assurance report that may have occurred since the initial date of presentation on Exxaro's website.

Restriction of liability

Our work has been undertaken to enable us to express a reasonable assurance opinion and a limited assurance conclusion on the selected sustainability information to the directors of the company in accordance with the terms of our engagement, and for no other purpose. We do not accept or assume liability to any party other than the company, for our work, for this report, or for the conclusion we have reached.

PricewaterhouseCoopers Inc.

Director: Jayne Mammatt

Registered auditor

Johannesburg

15 April 2019

Independent Auditor's Assurance Report on the Selected Sustainability Information in Exxaro Resources Limited's Supplementary Report (Continued)

Key performance indicator	Level of assurance	2014	2015	2016	2017	2018
Fatalities	Reasonable	1	#	#	#	#
Fatality frequency rate (FFR) - employees and contractors	Reasonable		0	0	#	#
Lost-time injuries (LTIs) - employees and contractors	Reasonable	36	#	#	21	23
Lost-time injury frequency rate (LTIFR) - employees and contractors	Reasonable	0.19	0.17	0.09	0.12	0.12
Occupational health incident frequency rate (OHIFR) - reported cases - employees and contractors	Limited		0.36	0.35# 0.42#	0.33	0.33
Number of reported (and accepted) cases of pneumoconiosis	Limited	Reported = 12 Accepted = 2	#	#	Accepted = 6	Accepted = 7
Number of reported (and accepted) cases of occupational tuberculosis	Limited	Reported = 20 Accepted = 5	#	#	Accepted = 16	Accepted = 5
Number of reported (and accepted) cases of noise-induced hearing loss	Limited	Reported = 16 Accepted = 2	#	#	Accepted = 0	Accepted = 0
Total number of accepted occupational health cases	Limited	#	#	#	22	12
Total diesel used (gigajoules (GJ))	Reasonable	2 103 148	#	#	#	#
Total electricity used (GJ)	Reasonable	2 135 581	#	#	#	#
Electricity efficiency (kWh/kilotonnes)	Reasonable	4.2	3.72	12.86	#	#
Direct CO2 emissions from own operations (scope 1)	Limited	229 762	235 179	271 657	324 925	315 412
Indirect CO2 emissions from electricity (scope 2)	Reasonable	557 624	521 905	500 990	539 040	552 057
Other indirect emissions (scope 3)	Limited	74 768 143	73 846 816	71 651 102	76 461 529	72 927 947*
Carbon intensity (ktCO2e/TTM)	Limited	#	#	#	5.4	5.3
Total year-on-year change in scope 1 and scope 2 emissions	Reasonable	3.5	#	#	#	#
Number of level 2 and 3 environmental incidents	Limited	Level 2 = 3 Level 3 = 0	Level 2 = 18 Level 3 = 0	Level 2 = 5 Level 3 = 0	Level 2 = 1 Level 3 = 0	Level 2 = 7 Level 3 = 0
Procurement from BEE entities (R value and % of total procurement)	Reasonable		#	#
Capital		1 545 247 148 57%	#	#	2 406 201 660 69%	3 437 752 286 74%
Services		2 641 029 589 71%	#	#	2 805 143 977 78%	5 062 122 748 81%
Consumable goods		3 091 454 4987 5%	#	#	3 393 823 544 79%	3 308 430 695 76%
Employment equity	Limited		#	#	#
Top management		67%	#	#	#	67%
Senior management		42%	#	#	#	47%
Middle management		57%	#	#	#	65%
Junior management		73%	#	#	#	74%
Core and critical skills		98%	#	#	#	#
Black women in management (top, senior, middle, junior)		#	#	#	#	17%
Total potable water (municipal and Eskom) and metered potable water (Grootegeluk only) (m3)	Limited	2 304 686	2 194 398	#	#	#
Hazardous waste to landfill (tonnes)	Limited	1 542	1 814	#	#	#

#	Not assured
*	The 2018 scope 3 data excludes upstream transmission and distribution and is therefore not comparable to 2017.