1 | KATHU SOLAR PARK PROJECT

Kathu Solar Park is a 100 MW greenfield Concentrated Solar Power (CSP) project with parabolic trough technology and equipped with a molten salt storage system that allows 4.5 hours of thermal energy storage. It is situated in the Northern Cape Province, 600 km South-West of the national capital Pretoria.Kathu Solar Park was awarded preferred bidder in the third round of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) led by the Department of Energy (DOE). The project has a 20-year Power Purchase Agreement (PPA) with Eskom, South Africa’s state owned power utility.

The consortium, which is led by ENGIE (48.5%) includes a group of South African investors comprising SOIC-cdt, Investec, Lereko Metier, and the Public Investment Corporation. The total investment cost of the project is funded by a mix of debt and equity. The debt is funded by a club of South African banks namely, Rand Merchant Bank, Nedbank Capital, ABSA Capital, Investec, and the Development Bank of South Africa. SIOC-cdt is acquired a 12.5% equity interest.

A total of 1, 270 jobs was created during the construction phase. The concentrated solar park is expected to be operational in August 2018. It is estimated that the Kathu Solar Park will save six million tonnes of CO2 over 20 years and will further promote local economic development through, amongst other things, a local community trust for the benefit of communities in the John Taolo Gaetsewe District Municipality situated in the Northern Cape and sourcing of other services from local entrepreneurs.

The rationale behind this investment, other than envisaged returns, is that the solution will alleviate the electricity provision challenges faced by the John Taolo Gaetsewe District Municipality and Gamgara District Municipality. In addition, beneficiary communities in the aforementioned district municipalities will benefit from the jobs and skills transfer that Kathu Solar Park will create.

2 | URBAN HOTEL KATHU

When InvestCo was presented with a proposal to invest in Urban Hotel Kathu in 2012, we realised that, through our investment company, we had an opportunity to fulfill both our social and investment mandate. InvestCo acquired a 51% stake in Urban Hotel Kathu in 2012 for a consideration of R 13m through a combination of equity and debt allocated as R 5m and R 8m respectively.

Through this investment, InvestCo was looking for more than investment returns in dividends. The organisation was interested in the social impact the investment promised. The investment promised job opportunities for the Sishen labour force and contribution to the local economy. Urban Hotels Kathu has created 19 employment opportunities to date and currently outsources some of the laundry service to a local laundromat.

2015 was a challenging year for the hotel because of low commodity prices which affected global markets. The hotel experienced declining occupancy rates as it operates from a town dominated by iron ore. As a result, InvestCo increased its equity interest in the hotel to 58% in 2016. This has enabled InvestCo, through its investment company, to influence the strategic direction of the hotel in line with its reviewed mandate. The increase in shareholding enabled the introduction of a new hotel management company to manage the hotel operations from July 2016.

InvestCo is of the view that the growth and sustainability of the hotel is of significant importance in improving the economic conditions of the Northern Cape. With this in mind, the hotel is reviewing how it can improve its contribution to the market and reduce its reliance on patrons conducting mining business in the area, especially because the Northern Cape is becoming a haven for renewable energy projects.

We would like to thank all those who have played a role in positioning the hotel to where it is today, more so to those who occupy our hotel frequently. We are welcoming you in making Urban Hotel Kathu, your home away from home.