Ferrovanta Mining Services — Business Model and Service Offering

The business model and the service offering across the contract-mining value chain — load-and-haul, drill-and-blast, materials handling and integrated mine operations — and the revenue and contracting model.

Ferrovanta Mining Services Business PlanSection 5 › Business Model and Service Offering

Section 5 · Business Plan

Business Model and Service Offering

The business model and the service offering across the contract-mining value chain — load-and-haul, drill-and-blast, materials handling and integrated mine operations — and the revenue and contracting model.

5.1 Revenue Model

Ferrovanta’s revenue is generated through long-term, contractually
committed mining services agreements with mineral title holders. The
principal commercial mechanisms are (i) volume-based pricing (Rand per
tonne or Rand per bank cubic metre of material moved), (ii)
availability-based pricing (Rand per fleet-hour with availability
guarantees), and (iii) lump-sum pricing for defined-scope works such as
bulk earthworks or rehabilitation. The Company’s preference is
volume-based pricing with built-in fuel escalation, foreign-exchange
pass-through (where contracts are denominated in USD), and a
minimum-volume floor to protect against client production
curtailments.

Revenue Stream Pricing Basis Y1 Share Y5 Share
Production Mining (Drill, Blast, Load, Haul) ZAR per tonne / per BCM, with fuel escalation 75% 70%
Crushing & Screening ZAR per tonne processed, throughput-linked 8% 10%
Bulk Earthworks & Infrastructure Schedule of rates or lump-sum 12% 10%
Rehabilitation ZAR per hectare or scope-based 3% 5%
Plant Hire & Leasing Wet or dry hire rates per hour or per month 2% 5%

5.2 Contract Structure

Contract terms have been carefully designed to balance commercial
competitiveness against the protection of investor capital. The
Company’s contracting standard is anchored in five non-negotiable
provisions and a series of negotiable commercial terms that allow
flexibility for client-specific structuring.

Non-Negotiable Provisions

  • Minimum contract duration of 36 months for any
    contract involving deployed Ferrovanta-owned fleet, with strong economic
    preference for 5-to-7 year contracts.
  • Fuel escalation clauses tied to a transparent
    index (typically Sasol commercial diesel posted prices or Brent crude
    with conversion mechanism).
  • Minimum volume guarantees or take-or-pay floors
    covering at least 70% of nameplate production capacity over the contract
    life.
  • Foreign-exchange pass-through for cross-border
    contracts to insulate Rand-denominated cost base from local-currency
    revenue.
  • Termination-for-convenience compensation
    covering mobilisation cost recovery, fleet redeployment, and unrecovered
    capital.

Negotiable Commercial Terms

  • Performance bonuses/penalties tied to
    availability, productivity, and safety KPIs.
  • Indexed labour cost escalation to CPI or a
    sector-specific benchmark (typically Bargaining Council
    settlements).
  • Volume sharing mechanisms where production
    volumes meaningfully exceed budgeted forecasts.

5.3 Customer Segments

Ferrovanta’s target customer base is segmented into three primary
groups, with differentiated commercial and operational approaches:

Segment Typical Client Contract Profile Target Share
Tier 1 Majors Anglo American, Glencore, Sibanye-Stillwater, Exxaro 5-7 year, large-scale, ZAR 1bn+ 55%
Tier 2 Mid-Cap Producers Tharisa, Afrimat, Wescoal, Thungela, Black Mountain 3-5 year, ZAR 200-800m 30%
Tier 3 Junior / Specialist Lithium juniors, manganese juniors, single-mine operators 2-3 year, ZAR 50-200m 15%

5.4 Unit Economics

Ferrovanta’s unit economics have been modelled from first principles,
anchored on benchmarked productivity rates for the principal fleet
classes. The illustrative unit economics for a representative open-cast
coal contract are set out below; these underpin the consolidated
financial projections in Section 14.

Illustrative Coal Contract Unit Economics Value Unit
Contracted volume per annum 12.0 Mt
Strip ratio (BCM waste : tonne ore) 5.5 x
Total BCM moved per annum 66.0 Mm³ BCM
Revenue rate per BCM (blended) 32.50 ZAR/BCM
Annual contract revenue 2,145 ZAR m
Direct operating cost per BCM 21.80 ZAR/BCM
Gross profit per BCM 10.70 ZAR/BCM
Contract gross margin 33% %
EBITDA per BCM (after allocated overhead) 8.20 ZAR/BCM
Contract EBITDA margin 25% %
Fleet required (excavator/truck pairs) 8 pairs
Fleet capex required 780 ZAR m

5.5 Cost Structure

The cost base of a contract mining business is dominated by four
major categories: fuel and lubricants, labour, maintenance and parts,
and financing costs. Together these typically represent 75-85% of total
operating cost. Ferrovanta is targeting structural cost-base improvement
from Year 1 through Year 5 as scale procurement, route-optimisation, and
fleet maturity each deliver measurable savings.

Figure 5.1
Figure 5.1 — Operating Cost Structure: Year 1 vs Year 5 (% of Revenue)

5.6 Key Partnerships

  • OEM Partners: Caterpillar Africa, Komatsu Mining
    Corp., Liebherr, Volvo CE, Bell Equipment, Sandvik — for fleet supply,
    after-sales support, and parts.
  • Energy Partners: Sasol, BP Southern Africa,
    Engen — for bulk diesel supply contracts with volume-discount
    pricing.
  • Banking Partners: Targeting Standard Bank,
    FirstRand RMB, Absa, Investec, Nedbank, Africa Finance Corporation
    (AFC), and the Industrial Development Corporation (IDC) for the senior
    debt and mezzanine layers.
  • DFI Partners: Development Bank of Southern
    Africa (DBSA), International Finance Corporation (IFC), African
    Development Bank (AfDB) — for long-tenor capital aligned with our
    continental expansion.
  • Insurance: Marsh, Aon, Old Mutual Insure — for
    plant, liability, and contract performance bonds.

Confidential — this business plan is provided to prospective investors and lenders for evaluation purposes only and may not be reproduced or distributed without the written consent of Ferrovanta Mining Services (Pty) Ltd.