QUESTION 2 50 MARKS PlatMet Ltd (hereafter PlatMet) is based in Vancouver, British Columbia, Canada and Johannesburg, South Africa. PlatMet is listed on the JSE (Johannesburg Stock Exchange). The management team has a successful track record with more than 20 years of experience in exploration, mine discovery, mine construction and mine operations PlatMet was formed in 2000 and is focused on the development of platinum operations. It holds significant mineral rights in the Bushveld Igneous Complex of South Africa, host to over 70% of the world's platinum production. The Company is focused on moving its first, high-grade, near-surface Western Bushveld Joint Venture (WB.JV) Project 1 platinum deposit to production PlatMet is active in platinum exploration in South Africa and Canada. The current focus for exploration is the New Waterberg Joint Venture Project on the North Limb of the Bushveld Complex with JOGMEC (Japan Oil and Gas Mineral Exploration Corporation) a state owned company. Load shedding has led to many significant production delays. In order to mitigate this risk, Platet has purchased 10 generators from China. Due to the urgency of the purchase the procurement director did not request three quotes as per the PlatMet procurement policy. He contacted a family member who serves on the board of a generator manufacturing company in Beijing. They were able to negotiate a gratuity fee of R 50 000 for the production director should the deal be Secured with The current economic environment has resulted in many cost saving strategies when it comes to extracting the platinum from the ore. Platinum ore is obtained from shaft mining (underground mining) and the mineral is extracted by chemical processes. PlatMet has developed a ground breaking chemical process for the most cost effective extraction process to date. A recent forensic IT (Information technology) audit revealed that PlatMet has been victim to industrial espionage after a hacking incident. It appears that the target of the hacking was the new chemical process The PlatMet risk committee has not been focusing on purchasing forward cover in the form of FEC's (Forward Exchange Contracts) to mitigate the foreign exchange risk. It appears that this was a mere oversight YOU ARE REQUIRED TO: MARKS a) Identify and explain the business risks that Platmet faces as evident from the scenario above Please structure your answer in the tabular format below: (39) Risk Indicator Risk Explained (2) b) From the risks identified in section (a) above, indicate the biggest risk to Platmet in your opinion. Also explain why this is identified as the biggest risk. c) Draft an email to the PlatMet board of directors and explain the risk management recommendations as per the Code of Corporate Governance for South Africa King III. Precision & Interpretation Marks (5) Total marks (50) QUESTION 2 50 MARKS PlatMet Ltd (hereafter PlatMet) is based in Vancouver, British Columbia, Canada and Johannesburg, South Africa. PlatMet is listed on the JSE (Johannesburg Stock Exchange). The management team has a successful track record with more than 20 years of experience in exploration, mine discovery, mine construction and mine operations PlatMet was formed in 2000 and is focused on the development of platinum operations. It holds significant mineral rights in the Bushveld Igneous Complex of South Africa, host to over 70% of the world's platinum production. The Company is focused on moving its first, high-grade, near-surface Western Bushveld Joint Venture (WB.JV) Project 1 platinum deposit to production PlatMet is active in platinum exploration in South Africa and Canada. The current focus for exploration is the New Waterberg Joint Venture Project on the North Limb of the Bushveld Complex with JOGMEC (Japan Oil and Gas Mineral Exploration Corporation) a state owned company. Load shedding has led to many significant production delays. In order to mitigate this risk, Platet has purchased 10 generators from China. Due to the urgency of the purchase the procurement director did not request three quotes as per the PlatMet procurement policy. He contacted a family member who serves on the board of a generator manufacturing company in Beijing. They were able to negotiate a gratuity fee of R 50 000 for the production director should the deal be Secured with The current economic environment has resulted in many cost saving strategies when it comes to extracting the platinum from the ore. Platinum ore is obtained from shaft mining (underground mining) and the mineral is extracted by chemical processes. PlatMet has developed a ground breaking chemical process for the most cost effective extraction process to date. A recent forensic IT (Information technology) audit revealed that PlatMet has been victim to industrial espionage after a hacking incident. It appears that the target of the hacking was the new chemical process The PlatMet risk committee has not been focusing on purchasing forward cover in the form of FEC's (Forward Exchange Contracts) to mitigate the foreign exchange risk. It appears that this was a mere oversight YOU ARE REQUIRED TO: MARKS a) Identify and explain the business risks that Platmet faces as evident from the scenario above Please structure your answer in the tabular format below: (39) Risk Indicator Risk Explained (2) b) From the risks identified in section (a) above, indicate the biggest risk to Platmet in your opinion. Also explain why this is identified as the biggest risk. c) Draft an email to the PlatMet board of directors and explain the risk management recommendations as per the Code of Corporate Governance for South Africa King III. Precision & Interpretation Marks (5) Total marks (50)