EXX - Exxaro Announces Outcome Of Current Business Review And Trading Statement Release Date: 01/12/2009 15:00:02 Code(s): EXX
EXX - Exxaro Announces Outcome Of Current Business Review And Trading Statement
EXXARO RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2000/011076/06)
JSE share code: EXX
ISIN code: ZAE000084992
ADR code: EXXAY
EXXARO ANNOUNCES OUTCOME OF CURRENT BUSINESS REVIEW AND TRADING STATEMENT
Diversified resources group Exxaro Resources Limited (Exxaro) announced today
that it has completed a review of its existing business, commodity portfolio and
The review was undertaken against the background of the current economic climate
and the need to align existing resources and cost structures with a prioritised
commodity strategy best positioned to release optimal value for all
Exxaro and its subsidiaries ("the Group") plan to reconfigure the Group`s zinc
assets with a view to ultimately divest from them in a manner that takes into
consideration an optimal timetable allowing for maximum value release for all
stakeholders. The current portfolio of zinc assets includes the Zincor refinery
in Springs, Gauteng, a 50,04% interest in the Rosh Pinah zinc and lead mine in
Namibia, a 26% interest in Black Mountain Mining (Pty) Ltd which owns the Black
Mountain zinc and lead mine and the Gamsberg zinc project in the Northern Cape,
and an effective 22% interest in the Chifeng zinc smelter in China.
The zinc assets account for some 2% of the Group`s net assets and 10% of revenue
respectively. The Group has put in place a programme to effect the above and
will accordingly provide regular updates.
As a result of the impact on the Group brought about by the current economic
climate, commitments to large capital projects as well as the current medium-
term outlook of the mineral sands industry, the Group has decided not to proceed
with the planned development of the Fairbreeze mineral sands mine in KwaZulu-
Natal. The Group will accordingly plan for the closure of the KZN Sands
operations during the next five years while in parallel investigating feedstock
alternatives and the continuation of the business should market conditions
This decision not to develop the Fairbreeze mine will necessitate a review of
the carrying value of the KZN Sands operation as at 31 December 2009 which will
in all probability result in a significant impairment of the carrying value of
the asset by up to R1 500 million. This in turn will have a negative impact on
attributable and headline earnings per share for the year ending 31 December
2009 which at this stage cannot be quantified with reasonable certainty.
Headline earnings will also be impacted by the reversal of previously raised
deferred tax assets which cannot be added back in the calculation of headline
earnings per share.
The Group`s business strategy remains to focus on achieving operational
excellence as a diversified resources business, to streamline management and
cost structures, maximise cash flow and ensure availability of sustaining and
"We have undertaken a thorough review and prioritisation of our capital
expenditure and project pipeline to optimally position the Group in the current
economic climate," said Sipho Nkosi, Exxaro`s chief executive officer.
The Group will intensify its growth efforts on its carbon-related project
pipeline which includes major projects in the Waterberg such as the Grootegeluk
mine brownfields expansion to supply Eskom`s new Medupi power station, the
Thabametsi greenfields development as well as the Moranbah South joint venture
with Anglo Coal in Australia. The Group also intends exploring opportunities in
the ferrous, energy and reductants markets.
"The latest measures provide a balance between our commodity and project
portfolios and our longer-term growth aspirations. Our ongoing review of the
business with particular emphasis on cost and balance sheet structures will
ensure that we remain optimally positioned to meet all stakeholder
expectations," said Nkosi.
The information in the above statement has not been reviewed nor reported on by
Exxaro`s external auditors.
Exxaro is one of the largest South African-based diversified resources groups,
with interests in the coal, mineral sands, base metals, industrial minerals and
iron ore commodities.
Wim de Klerk
Tel: + 27 (0) 12 307 4848
Mobile: +27 (0) 82 652 5145
1 December 2009
Deutsche Securities (SA) (Proprietary) Limited
Date: 01/12/2009 15:00:01 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department .
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.