EXXARO ACQUIRES TOTAL COAL SOUTH AFRICA PROPRIETARY LIMITED 1. INTRODUCTION

Similar documents
FINANCE DIRECTOR S 1H14 PRE-CLOSE MESSAGE. To our stakeholders

This message covers the expected operational performance of the Exxaro group for FYE17.

FINANCE DIRECTOR S. FYE 31 December 2016 Pre-close message

EXXARO RESOURCES LIMITED

UNWIND OF EXXARO S EXISTING BEE TRANSACTION, TERMS OF REPLACEMENT BEE TRANSACTION AND CAUTIONARY ANNOUNCEMENT

This update covers the expected operational performance of the Exxaro group for the six-month period ending 30 June 2016 (1H16).

FINANCE DIRECTOR S PRE-CLOSE MESSAGE

TRANSACTION CAPITAL LIMITED (Incorporated in the Republic of South Africa) (Registration No. 2002/031730/06) ISIN: ZAE JSE share code: TCP

BROAD-BASED BLACK ECONOMIC EMPOWERMENT TRANSACTION ( B-BBEE TRANSACTION ) AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

GLENCORE ANNOUNCES EXPRESSION OF INTEREST FOR OPTIMUM COAL HOLDINGS LIMITED

SA Fire House Limited (Incorporated in the Republic of South Africa) Registration number 1957/003350/06. ( SA Fire House )

ANNUAL RESULTS PRESENTATION For the year ended 31 December 2013

INTERIM FINANCIAL RESULTS

ANNUAL RESULTS PRESENTATION

ANNUAL FINANCIAL RESULTS PRESENTATION for the year ended 31 December 2015

1. INTRODUCTION 2. RATIONALE FOR THE PROPOSED TRANSACTION

ACQUISITION OF DAVITA TRADING (PROPRIETARY) LIMITED ( DAVITA ) BY TIGER BRANDS

AFGRI Limited (Incorporated in the Republic of South Africa) Registration Number: 1995/004030/06 JSE share code: AFR ISIN: ZAE ( AFGRI )

Exxaro year end results dec 2016

INTERIM RESULTS PRESENTATION. for the six-month period ended 30 June 2017

EXXARO MAKES ALL CASH TAKEOVER BID FOR AFRICAN IRON LIMITED

Group financial results presentation for the 12-month period ended 31 December 2009

REVIEWED INTERIM FINANCIAL RESULTS 2013

DETAILED TERMS ANNOUNCEMENT RELATING TO ALEXANDER FORBES PROPOSED 2

Safaricom is owned by the government of Kenya (35%), Vodafone Kenya (39.93%), public investors (25%) and Safaricom employees (0.07%).

SOUTH AFRICA ENERGY COAL TO BECOME A STAND-ALONE BUSINESS

SOUTH32 APPROVES KLIPSPRUIT LIFE EXTENSION PROJECT

GROUP FINANCIAL RESULTS FOR THE QUARTER AND YEAR ENDED MARCH

Shareholders are referred to the announcement below issued by Vodacom Group (Pty) Limited ( Vodacom ).

1. TSB Acquisition Introduction

POWERING BETTER LIVES

REVIEWED CONDENSED GROUP INTERIM FINANCIAL STATEMENTS AND UNREVIEWED PRODUCTION AND SALES VOLUMES INFORMATION

31 Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 2017

Key opportunities and challenges facing the South African Mining Industry

REVIEWED CONDENSED GROUP ANNUAL FINANCIAL RESULTS AND UNREVIEWED PHYSICAL INFORMATION for the year ended 31 December 2012

REVIEWED CONDENSED GROUP ANNUAL FINANCIAL STATEMENTS AND UNREVIEWED PRODUCTION AND SALES VOLUMES INFORMATION. for the year ended 31 December 2016

Overview Sipho Nkosi: Chief Executive Officer

1. INTRODUCTION Transaction Capital shareholders are advised that

AVENG LIMITED STRATEGIC ACTION PLAN EXECUTION AND TRADING STATEMENT. Salient features

ANNOUNCEMENT 12 MARCH 2012 REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2011

(Incorporated and registered in Australia and registered as an external company in the Republic of South Africa)

BUSINESS UPDATE, PRO FORMA GROUP INCOME STATEMENT AND TRADING STATEMENT

MONDI GROUP TO ACQUIRE 93.4% OF NORDENIA INTERNATIONAL AG

CHAPTER 17: SUBSIDIARIES

CHAPTER 2: THE YEAR IN BRIEF

PRELIMINARY UNAUDITED SUMMARISED CONSOLIDATED RESULTS for the year ended August 2017 MIRANDA PRELIMINARY RESULTS COMMENTARY FINANCIAL POSITION

29, 2018 ( ) (TSX, NYSE

ANGLOGOLD ASHANTI ANNOUNCES THE SALE OF VARIOUS ASSETS IN THE VAAL RIVER REGION INCLUDING THE MOAB KHOTSONG MINE TO HARMONY

01 August 2012 INTERIM RESULTS PRESENTATION

Presentation Annual General Meeting 29 October 2014

WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT RELATING TO SALES OF EXCESS ASSETS AS RELEASED ON 3 FEBRUARY 2016 AND RENEWED ON 15 MARCH 2016 AND 3 MAY 2016

MIRANDA MINERAL HOLDINGS LIMITED Schedule 11 announcement and shareholder update

Termination of the existing Adcock BEE transaction, implementation of a new BEE transaction and withdrawal of cautionary announcement

PRO FORMA FINANCIAL EFFECTS

The salient terms of the respective transactions, which transactions will be implemented consecutively, are set out below:

Following the implementation of the Acquisition, GPI s total interest in Mac Brothers will be 65.00%.

GRINDROD LIMITED UNAUDITED INTERIM RESULTS AND DIVIDEND ANNOUNCEMENT for the six months ended 30 June 2017

ACQUISITION OF VARIOUS PROPERTIES AND PRIVATE PLACEMENT

ANNOUNCEMENT 31 October 2013

1. INTRODUCTION. (the transaction ). Rafik Mohamed is currently the sole director of PRSM.

1.1 Further to the renewal of the cautionary announcement published on. 30 September 2015, shareholders are advised that Anchor is at an

ANGLO COAL. Investor Presentation August Investor Presentations August

AgriGroupe Holdings Proprietary Limited (Incorporated in the Republic of South Africa) (Registration number 2013/013161/07) ( AgriGroupe )

CONDENSED UNAUDITED INTERIM CONSOLIDATED RESULTS

REVISED LISTING PARTICULARS

MIX TELEMATICS ANNOUNCES FINANCIAL RESULTS FOR FIRST QUARTER OF FISCAL YEAR 2019

REVIEWED GROUP INTERIM RESULTS AND INTERIM DIVIDEND DECLARATION

The derivatives division recorded a 26% year-on-year decline in revenue. The division accounted for 11% of total revenue.

An overview of Adcorp s BBBEE Partners is set out below:

Niveus Investments Limited. Reg. no: 1996/005744/06. Incorporated in the Republic of South Africa. JSE share code: NIV. ISIN code: ZAE

PROPOSED ACQUISITION OF COAL INTERESTS FROM STRAITS RESOURCES LIMITED

Unaudited interim financial results for the six months ended 30 September 2017

ACTION REQUIRED BY ARCELORMITTAL SHAREHOLDERS

THE SOUTH AFRICAN NATIONAL ROADS AGENCY LIMITED

Rand Merchant Insurance Holdings Limited ( formerly Main Street 796 Limited)

VODACOM GROUP'S PROPOSED NEW BROAD-BASED BLACK ECONOMIC EMPOWERMENT OWNERSHIP TRANSACTION

THE SOUTH AFRICAN NATIONAL ROADS AGENCY LIMITED (Registration number 1998/009584/06)

ANNOUNCEMENT REGARDING THE INTRODUCTION OF A STRATEGIC EMPOWERMENT PARTNER TO ALEXANDER FORBES AFRICAN OPERATIONS AND WITHDRAWAL OF CAUTIONARY

IMPALA PLATINUM HOLDINGS LIMITED

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDED 30 JUNE 2018

Results Presentation for the year ended 30 June 2012

Assore Limited (Incorporated in the Republic of South Africa) (Registration number 1950/037394/06 Share code: ASR ISIN: ZAE ( Assore )

EXERCISE OF OPTION BY TRUSTCO AND THE RESULTANT ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF HUSO INVESTMENTS PROPRIETARY LIMITED

Energy. Business Plan Accountability Statement. Ministry Overview

Q Highlights: Fiscal 2019 guidance update:

Trading statement for the six months ended 31 December 2015

POSTING OF INTEGRATED REPORT AND NOTICE OF ANNUAL GENERAL MEETINGS OF MONDI LIMITED AND MONDI

1. INTRODUCTION 2. UPDATE ON THE AGROKOR ACQUISITION AND CIRCULAR

KUMBA IRON ORE LIMITED AUDITED PRELIMINARY SUMMARISED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014 AND FINAL CASH DIVIDEND DECLARATION

DETAILED TERMS OF PPC S TOP-UP BLACK ECONOMIC EMPOWERMENT TRANSACTION AND WITHDRAWAL OF CAUTIONARY

The Company s property and asset management functions are internally and directly managed by the Spear executive management team.

,490 17, ,420 11, ,540 13, , ,330 8, ,710 10, ,050 22,200

1. Introduction. 2. Notice of Scheme Meeting

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

PROPOSAL TO ACQUIRE WEPEX AND MAKGARAPA, DISPOSE OF IMBALIE BEAUTY S SUBSIDIARIES AND BUSINESSES AND CAUTIONARY ANNOUNCEMENT

DUBLIN 11 Central Hotel Chambers, Dame Court, Dublin 2, Ireland Telephone: +353 (0) Fax: +353 (0)

Acucap Properties Limited. Growthpoint Properties Limited. Approved as a REIT by the JSE. Approved as a REIT by the JSE

An alternative coal developer in 2012 & producer in 2013

Arrowhead Properties Limited ( Arrowhead )

Adapt IT unaudited condensed consolidated INTERIM GROUP RESULTS. for the six months ended 31 December

Transcription:

EXXARO RESOURCES LIMITED (Incorporated in the Republic of South Africa) (Registration number: 2000/011076/06) ISIN: ZAE000084992 JSE Share Code: EXX ADR Code: EXXAY ( Exxaro or the Company ) EXXARO ACQUIRES TOTAL COAL SOUTH AFRICA PROPRIETARY LIMITED 1. INTRODUCTION Shareholders are advised that, on Friday, 25 July 2014 ( Signature Date ), Exxaro entered into a binding sale and purchase agreement (the SPA ) with Total S.A. ( Total ), subject to certain conditions precedent as listed in paragraph 3 below, for the acquisition of 100% of the issued share capital of Total Coal South Africa Proprietary Limited ( TCSA ) and its related export marketing rights under primary Richards Bay Coal Terminal ( RBCT ) allocation ( the Acquisition ). The Acquisition constitutes a Category 2 acquisition for the Company in terms of Section 9 of the JSE Limited Listings Requirements ( Listings Requirements ). 2. THE ACQUISITION 2.1 Terms of the Acquisition In terms of the Acquisition, Exxaro will acquire 100% of the issued share capital of TCSA from Total as well as settle all outstanding loan claims of Total Finance S.A.S ( Total Finance ) against TCSA. Exxaro confirms that in terms of Section 9.16 of the Listings Requirements, after the completion of the Acquisition, TCSA will be a wholly-owned subsidiary of Exxaro and the Memoranda of Incorporation of TCSA and its subsidiaries will not frustrate Exxaro from compliance with its obligations in terms of the Listings Requirements. 2.2 Overview of TCSA TCSA is the fifth largest coal producer in South Africa and has a majority interest in two main operating complexes, Dorstfontein and Forzando, located in the Witbank coal basin in South Africa s Mpumalanga province. TCSA recorded combined sales of approximately 4.5 million tonnes per annum ( Mtpa ) in the year ended 31 December 2013. The majority of TCSA s production is export coal which is shipped via RBCT to international markets, mainly India and China. TCSA also sells its production into the South African domestic market. TCSA has a 74% direct shareholding in the Dorstfontein and Forzando mines. The remaining 26% of the Dorstfontein and Forzando mines are owned by Mmakau Mining Proprietary Limited ( Mmakau ). TCSA also owns a 49% interest in the Tumelo coal mine, with the remaining shareholding held by Mmakau, which is currently not in operation, and holds a 51% interest in the potential Eloff greenfields project, an undeveloped domestic thermal coal resource in Mpumalanga province. 2.3 Rationale for the Acquisition The Acquisition is closely aligned with Exxaro s long-term growth strategy and will provide Exxaro with a large-scale acquisition that will complement Exxaro s existing coal portfolio. The potential benefits of the Acquisition include:

Large-scale operating assets The Acquisition provides Exxaro with an opportunity to acquire a large-scale, operating coal business in South Africa which has an estimated remaining life of mine in excess of 20 years. TCSA has a remaining resource base estimated at 1 498Mt gross tonnes in-situ and 395Mt of run-of-mine resources. Furthermore, TCSA s operations are in close proximity to Exxaro s existing Witbank operations and Exxaro has a good understanding of geological and mining conditions in the region. Strong investment thesis for the Acquisition The Acquisition significantly increases the scale of Exxaro s coal portfolio and further entrenches Exxaro as one of the premier coal producers in South Africa. Exxaro sees its investment in coal assets as a core part of its diversified mining portfolio and believes that it will be able to leverage its extensive experience in coal mining to unlock additional value from the existing TCSA operations and the Eloff greenfields project. Access to primary RBCT entitlement Exxaro is currently the fourth largest exporter of coal from South Africa and the Acquisition will provide it with access up to an additional 4.09Mtpa of primary phase 1 3 RBCT entitlement. Exxaro currently leases entitlement from other operators in the industry in order to meet its export requirements. The Acquisition will allow Exxaro to utilise Exxaro controlled entitlement to meet its export requirements in future. Optimisation of Exxaro s existing portfolio Exxaro believes that the Acquisition will allow it to optimise production at its existing operations through the reconfiguration of production in order to maximise the value of its portfolio. Access to additional allocation could enable Exxaro to reconfigure and expedite its development plans for current brownfields and greenfields projects in the Waterberg region by either increasing the scale of existing operations or changing planned projects to multiproduct mines. Furthermore, the development of infrastructure in the Waterberg region has been designated a priority in the South African National Development Plan. It is anticipated that coal from the Waterberg can be used to replace the rapidly diminishing thermal coal being supplied to Eskom from existing Mpumalanga coal mines. Development of the Waterberg region coal assets has historically been limited due to, among others, the lack of expansion of rail capacity supplied by Transnet Freight Rail. Exxaro currently owns the only operating coal mine in the Waterberg region, Grootegeluk, and has various other potential greenfields projects that it plans to develop in the region, including its large-scale Thabametsi project. Having access to additional primary RBCT export allocation will facilitate Exxaro s commitment to the development of these projects, potentially as multi-product mines. 2.4 The Purchase Consideration The terms of the Acquisition provide that all risk and reward inherent in TCSA will transfer to Exxaro from 1 January 2014. Exxaro has agreed a total purchase consideration, as at the Signature Date, of US$472 million ( the Purchase Consideration ). As explained below, the Purchase Consideration may vary between Signature Date and the closing of the Acquisition ( Closing Date ). The Purchase Consideration comprises two components: Purchase consideration for the acquisition of the TCSA shares Exxaro has agreed to pay US$386.5 million for the Acquisition of 100% of the issued share capital of TCSA ( the Equity Consideration ). A purchase price adjustment has been included, whereby the Equity Consideration will be increased by 3% per annum from 1 January 2015 until Closing Date of the Acquisition. The Equity Consideration will further be

reduced for certain leakage payments that may be paid by TCSA to any member of the Total group between Signature Date and Closing Date. Loan Consideration In terms of the Acquisition, Exxaro has also agreed to settle the outstanding loan claims of Total Finance against TCSA ( Loan Consideration ), as at Closing Date. The outstanding balance of the Loan Consideration as at the Signature Date was US$85.5 million, however this amount may vary to the extent that Total Finance extends further draws to TCSA prior to Closing Date. 2.5 Transaction funding Exxaro anticipates financing the Purchase Consideration using its existing corporate debt facilities, which have been reserved for the Acquisition. Exxaro is required to provide a US$-based guarantee for the Purchase Consideration. 2.6 Expected benefits Exxaro is delighted with its success regarding the Acquisition and for the growth opportunities it will provide for Exxaro as well as the contribution to the South African economy in terms of continuing employment and foreign earnings. The consolidation of ownership of coal assets within South Africa is a welcome opportunity. 2.7 Unaudited pro forma financial effects of the Acquisition The table below sets out the unaudited pro forma financial effects of the Acquisition on earnings per share ( EPS ), headline earnings per share ( HEPS ), diluted EPS and diluted HEPS based on the audited results of the Company for the year ended 31 December 2013 as well as the net asset value ( NAV ) and net tangible asset value ( NTAV ) per share as at 31 December 2013. The unaudited pro forma financial effects are the responsibility of the directors and have been prepared for illustrative purposes only, to provide information on how the Acquisition may impact shareholders of Exxaro on the relevant reporting date. Because of its nature, the unaudited pro forma financial effects may not give a fair reflection of the Company s financial position, changes in equity, results of operations or cash flows after implementation of the Acquisition or of the Company s future earnings. Unaudited Pro forma financial effects of the Acquisition: Before the Acquisition (cents) 1 After the Acquisition 2,3 Change (%) (cents) EPS 1,751 1,670 (4.63) Diluted EPS 1,746 1,666 (4.58) HEPS 1,463 1,382 (5.54) Diluted HEPS 1,459 1,378 (5.55) NAV per share 10,129 10,060 (0.68) TNAV per share 9,800 9,302 (5.08) Number of shares in issue (million) 358 358 0.00 Weighted average number of shares in issue 355 355 0.00 (million) Fully diluted weighted average number of shares in issue (million) 356 356 0.00 Notes:

1. Extracted from the published audited results of the Company for the year ended 31 December 2013. 2. Adjustments to EPS and HEPS have been made assuming: 2.1. the Acquisition was effective on 1 January 2013; 2.2. an attributable net loss of TCSA of R55 million for the year ended 31 December 2013; 2.3. the Purchase Consideration was financed using Exxaro s Rand (ZAR) based corporate debt facilities, incurring interest at an average interest rate of 7.8% and assuming a ZAR/US$ exchange rate of R10.70/US$; and 2.4. a company tax rate of 28%. 3. Adjustments to NAV and TNAV per share have been made assuming: 3.1. the Acquisition was effective on 31 December 2013; 3.2. a net asset value of R2.4 billion and a tangible net asset value of R2.3 billion of TCSA as at 31 December 2013; and 3.3. the Purchase Consideration was financed using Exxaro s ZAR based corporate debt facilities and assuming a ZAR/US$ exchange rate of R10.70/US$. 3. CONDITIONS PRECEDENT AND REGULATORY APPROVALS The implementation of the Acquisition is subject to the fulfilment of the following conditions precedent: the Competition Authorities conditionally or unconditionally approving the implementation of the Acquisition, provided that to the extent that the Competition Authorities conditionally approve the implementation of the Acquisition, then such conditions must be satisfactory to Exxaro (acting reasonably); consent by the Minister of Mineral Resources of South Africa for the Acquisition being granted in terms of Section 11 of the Mineral and Petroleum Resources Development Act 28 of 2002; approval of the Acquisition by the Financial Surveillance Department of the South African Reserve Bank or any commercial bank in South Africa authorised by the South African Reserve Bank to deal in foreign exchange; the board of directors of RBCT approving the change of control in TCSA from Total to Exxaro. In terms of the SPA all conditions precedent need to be fulfilled before the drop dead date ( Drop Dead Date ), being six months post the Signature Date. The Drop Dead Date can be extended once, by either party unilaterally to a date no later than six months post the Drop Dead Date, and once, after the aforementioned extension, by Total unilaterally to a date no later than six months after the date of the prior extension. Furthermore, the Acquisition is subject to no material adverse change in respect of TCSA or its operations having occurred between the Signature Date and Closing Date. Exxaro will continue to work with TCSA, relevant authorities and affected stakeholders to fulfil the conditions precedent in order for the Acquisition to be effective within the shortest time possible. 4. BALANCING ENERGY REQUIREMENTS AND CLIMATE RISK Exxaro is conscious of the impact of its coal mining activities on the climate through its carbon dioxide equivalent emissions (CO 2 e). The Acquisition will increase the resources in the ground as well the future mining production, contributing further to the Company s emissions profile, in the absence of carbon management efforts. However, Exxaro has been an active participant of the Carbon Disclosure Project, an international, not-for-profit organisation providing the only global system for companies and

cities to measure, disclose, manage and share vital environmental information. For the past two years, Exxaro has been placed amongst the top ten global leaders of the carbon performance leadership index (CPLI), which assesses how companies incorporate emissions reductions into their strategies and meet their emissions reduction targets, as well as the associated carbon disclosure leadership index (CDLI), which measures transparency and data management of greenhouse gas emissions. Therefore the Acquisition will be incorporated into the Company s carbon management strategy and continue along this performance. Further, Exxaro has invested in the renewable energy sector through its 50/50 JV in Cennergi Proprietary Limited, which is developing two wind energy projects to generate 239MW of electricity for the South African electricity grid. South Africa has embarked on an intensive diversified energy development programme in order to support economic growth and social development. Coal will remain a primary energy input in this development, but renewables are expected to increase substantially in the national energy portfolio. Exxaro is well positioned to contribute to both South Africa s economic and social development and is committed to responsible and accountable development through its environmental stewardship. 5. CONFERENCE CALL DETAILS A tele-conference call regarding the details of this announcement will be held on Monday, 28 July 2014, at 16h00 Republic of South Africa Time (GMT+2:00): the live call is open to the public via telephone and also via an audio webcast available on http://www.exxaro.com/ Dial-in telephone numbers: Republic of South Africa toll-free: 0800 200 648 Johannesburg: 011 535 3600 or 010 201 6800 Cape Town: 021 819 0900 Australia toll-free: 1 800 350 100 United Kingdom toll-free: 0808 162 4061 United States of America and Canada toll-free: 1 855 481 5362 Conference ID: Exxaro Tele-conference Webcast Conference Call Replay: available via the Internet and telephone beginning on 29 July 2014, at 08h00 RSA Time (GMT+2:00): until 04 August 2014. Internet Replay: www.exxaro.com Play-back telephone numbers: Republic of South Africa: 011 305 2030 Australia toll-free: 1 800 091 250 United Kingdom toll-free: 0 808 234 6771 United States of America and Canada toll-free: 1 855 481 5363 Other countries: +27 11 305 2030 Playback Code: 32075# Editor s note: Exxaro is one of the largest South African based diversified resources companies, with interests in the coal, titanium dioxide and iron ore commodities. www.exxaro.com Enquiries: Wim de Klerk Finance Director Tel: + 27 12 307 4848 Mobile: +27 82 652 5145 Email: wim.deklerk@exxaro.com Pretoria 28 July 2014 Merchant bank and transaction sponsor RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Legal adviser Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc.) Sponsor Deutsche Securities (SA) Proprietary Limited