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WSL - Wescoal - Acquisition Of Additional Coal Reserves And Withdrawal Of

Release Date: 03/06/2008 08:55:02      Code(s): WSL
WSL - Wescoal - Acquisition Of Additional Coal Reserves And Withdrawal Of       
              Cautionary Announcement                                           
Wescoal Holdings Limited                                                        
(Incorporated in the Republic of South Africa)                                  
(Registration number 2005/006913/06)                                            
(JSE code: WSL & ISIN: ZAE000069639)                                            
("Wescoal" or "the group")                                                      
1.   INTRODUCTION                                                               
Shareholders are referred to the cautionary announcement dated 20 May 2008.     
Wescoal Mining (Pty) Limited, a wholly owned subsidiary of Wescoal has subject  
to the conditions precedent below, purchased for R60, a 60% shareholding in     
NewCo, a company to be formed for the purpose of transferring the initial new   
order prospecting rights ("NOPR") granted by the department of Mineral & Energy 
extending over certain farms as detailed in paragraph 3 below, from Proudafrique
Trading 147 (Pty) Limited ("Proudafrique") from Johannes Cornelius van der      
Westhuizen and Christie Deon Noble ("the vendors") ("the acquisition").         
Proudafrique has purchased the remaining 40% shareholding in Newco.             
2.   RATIONALE FOR THE ACQUISITION                                              
Wescoal is involved in the coal washing and coal trading business, with coal    
being sourced from mines and other suppliers.                                   
The acquisition is in line with Wescoal`s stated objective of expanding into the
fast growing coal mining industry to derive benefit from the high inland and    
export pricing structures. By becoming a primary producer of coal product,      
Wescoal can enter new markets such as export, Eskom and the cement industry.    
3.   DESCRIPTION OF THE ACQUISITION                                             
NewCo shall be involved in prospecting, mining and beneficiating coal as well   
marketing coal. The areas covered in the acquisition are as follows:            
-    Certain portion of the farm Elandspruit 291 JS district of Middleburg -    
    with a prospecting area of 2 946 hectares.                                  
-    Certain portions of the farm Keerom 374 JS district of Middleburg - with a 
    prospecting area of 6 828 hectares.                                         
-    Certain portions of the farm Veblyden 387 IS district of Standerton - with 
    a prospecting area of 2 266 hectares.                                       
-    Certain portions of the farm Siverbank 611 IR district of Standerton - with
    a prospecting area of 3 925 hectares.                                       
4.   TERMS AND CONDITIONS OF THE ACQUISITION                                    
On 27 May 2008 Wescoal concluded an agreement for the purchase of the           
acquisition, subject to conditions precedent, with effect from the day following
the conditions precedent being fulfilled ("effective date").                    
In the event of NewCo beneficiating any coal pursuant to any coal reserve       
introduced to NewCo by Proudafrique, a royalty fee is payable to Proudafrique   
determined as follows:                                                          
-    R4.00 per tonne of saleable low-grade coal actually mined pursuant to any  
    new order mining right granted by the Department of Mineral & Energy        
    ("NOMR"), which coal has a value of less than 24.50 CV;                     
-    R6.00 per tonne of saleable coal actually mined pursuant to any NOMR, which
    coal has a value of 24.50 CV to less than 26.00 CV; and                     
-    R8.00 per tonne of any grade of coal actually mined pursuant to any NOMR,  
    which coal has a value of 26.00 CV or higher and coal with metallurgical    
qualities of any CV value.                                                  
In addition, NewCo undertakes to pay Proudafrique the sum of R1.00 per tonne for
50% of the proven mineral reserve at any site that NewCo holds a NOMR on        
completion of a geological report or competent persons report. This payment will
be deducted from any royalty fee payable to Proudafrique as per above.          
5.   CONDITIONS PRECEDENT TO THE ACQUISITION                                    
The acquisition is subject to the fulfilment of the following conditions        
-    Proudafrique undertakes to cede and transfer to NewCo the initial NOPR`s;  
-    Proudafrique undertakes to apply for such cession and transfer of the      
    initial NOPR`s in accordance with the provisions of Section 11 of the       
    Mineral and Petroleum Resources Development Act 28 of 2002 ;                
-    Proudafrique appoints NewCo as its mining and prospecting agent for the    
    initial NOPR; and                                                           
-    Proudafrique undertakes to apply for any future NOPR or NOMR in the name of
    NewCo and not Proudafrique.                                                 
6.   PRO FORMA FINANCIAL EFFECTS                                                
No financial effects are disclosed as the value of the transaction is based on  
future prospecting rights, whose value cannot be determined at present.         
7.   WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                                      
Caution is no longer required to be exercised by shareholders when dealing in   
their securities.                                                               
8.   FURTHER ANNOUNCEMENT                                                       
Shareholders will be notified once the acquisition has become unconditional.    
02 June 2008                                                                    
Designated adviser              Exchange Sponsors                               
Attorneys                       Kim Warren, Rambau & Associates                 
Date: 03/06/2008 08:55:02 Supplied by www.sharenet.co.za                     
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