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Exx - Exxaro Resources Limited - Reviewed Group Interim Financial Results And

Release Date: 12/08/2010 07:05:04      Code(s): EXX
EXX - Exxaro Resources Limited - Reviewed group interim financial results and   
unaudited physical information for the six-month period ended 30 June 2010      
Exxaro Resources Limited                                                        
Registration number: 2000/011076/06                                             
JSE share code: EXX                                                             
ISIN: ZAE000084992                                                              
ADR code: EXXAY                                                                 
("Exxaro" or "the company" or "the group")                                      
Reviewed group interim financial results and unaudited physical information for 
the six-month period ended 30 June 2010                                         
-Decrease in LTIFR to 0,26                                                      
-Revenue increased by 10% to R7,9 billion                                       
-Net operating profit up 43% to R1,4 billion                                    
-Headline earnings per share up 68% to 683 cents per share                      
-Interim dividend of 200 cents per share covered 3,5 times by attributable      
earnings                                                                        
Condensed group income statement                                                
                                          6 months   6 months   12 months       
                                         ended      ended      ended            
30 June    30 June    31 Dec           
                                         2010       2009       2009             
                                         Reviewed   Reviewed   Audited          
                                         Rm         Rm         Rm               
Revenue                                    7 852      7 111      15 009         
Operating expenses                         (6 489)    (6 158)    (14 705)       
Net operating profit (note 2)              1 363      953        304            
Net financing costs (note 4)               (239)      (242)      (415)          
Share of income from investments and       1 636      886        1 900          
equity-accounted investments                                                    
Profit before tax                          2 760      1 597      1 789          
Income tax expense                         (386)      (214)      (766)          
Profit for the period                      2 374      1 383      1 023          
Profit attributable to:                                                         
Owners of the parent                       2 408      1 390      1 023          
Non-controlling interests                  (34)       (7)                       
Profit for the period                      2 374      1 383      1 023          
Condensed group statement of comprehensive income                               
                                          6 months   6 months   12 months       
                                         ended      ended      ended            
30 June    30 June    31 Dec           
                                         2010       2009       2009             
                                         Reviewed   Reviewed   Audited          
                                         Rm         Rm         Rm               
Profit for the period                      2 374      1 383      1 023          
Other comprehensive income (restated):                                          
Exchange differences on translating        (49)       (183)      (35)           
foreign operations                                                              
Cash flow hedges                           288        (110)      (474)          
Share of comprehensive income of           30         (48)       (34)           
associates                                                                      
Income tax relating to components of other (100)      78         142            
comprehensive income                                                            
Net gain/(loss) recognised in other        169        (263)      (401)          
comprehensive income                                                            
Total comprehensive income for the period  2 543      1 120      622            
Total comprehensive income attributable                                         
to:                                                                             
Owners of the parent                       2 590      1 186      759            
Non-controlling interests                  (47)       (66)       (137)          
Total comprehensive income for the period  2 543      1 120      622            
Ordinary shares (million)                                                       
- in issue                                 358        356        357            
- weighted average number of shares        346        345        345            
- diluted weighted average number of       361        361        358            
shares                                                                          
Attributable earnings per share (cents)                                         
- basic                                    696        403        297            
- diluted                                  667        385        286            
Reconciliation of headline earnings                                             
                                   Gross     Tax     Non-          Net          
                                  Rm        Rm      controlling   Rm            
interests                     
                                                  Rm                            
6 months ended 30 June 2010                                                     
(reviewed)                                                                      
Profit attributable to owners of                                    2 408       
the parent                                                                      
Adjusted for:                                                                   
- IAS 16: Impairment of property,   5         (1)                   4           
plant and equipment                                                             
- IAS 16: Gains or losses on        (53)      4                     (49)        
disposal of property, plant and                                                 
equipment                                                                       
Headline earnings                   (48)      3                     2 363       
6 months ended 30 June 2009                                                     
(reviewed)                                                                      
Profit attributable to owners of                                    1 390       
the parent                                                                      
Adjusted for:                                                                   
- IAS 16: Gains or losses on        18                (6)           12          
disposal of property, plant and                                                 
equipment                                                                       
- IAS 28: Share of associates` IAS  (4)               1             (3)         
16: Gains or losses on disposal of                                              
property, plant and equipment                                                   
Headline earnings                   14                (5)           1 399       
Year ended 31 December 2009                                                     
(audited)                                                                       
Profit attributable to owners of                                    1 023       
the parent                                                                      
Adjusted for:                                                                   
- IAS 16: Impairment of property,   1 435                           1 435       
plant and equipment                                                             
- IAS 16: Gains or losses on        88        (24)    (2)           62          
disposal of property, plant and                                                 
equipment                                                                       
- IAS 28: Share of associates` IAS  (8)       2                     (6)         
16: Gains or losses on disposal of                                              
property, plant and equipment                                                   
Headline earnings                   1 515     (22)    (2)           2 514       
                                             6 months  6 months   12 months     
ended     ended      ended           
                                           30 June   30 June    31 Dec          
                                           2010      2009       2009            
                                           Reviewed  Reviewed   Audited         
Headline earnings per share (cents)                                             
- basic                                       683       406        729          
- diluted                                     655       388        702          
Condensed group statement of financial position                                 
At 30 June   At 30 June   At 31 Dec      
                                      2010         2009         2009            
                                      Reviewed     Reviewed     Audited         
                                      Rm           Rm           Rm              
ASSETS                                                                          
Non-current assets                                                              
Property, plant and equipment           12 285       12 727       11 869        
Biological assets                       41           35           41            
Intangible assets                       78           90           87            
Investments in unlisted associates and  3 009        1 544        1 966         
joint ventures (note 5)                                                         
Deferred tax                            681          1 106        629           
Other financial assets (note 5)         1 339        1 457        1 217         
                                       17 433       16 959       15 809         
Current assets                                                                  
Inventories                             3 119        2 915        3 133         
Trade and other receivables             3 175        2 799        3 121         
Current tax receivable                  71           40           57            
Cash and cash equivalents               1 843        2 713        1 023         
                                       8 208        8 467        7 334          
Non-current assets classified as held   80           85           86            
for sale                                                                        
Total assets                            25 721       25 511       23 229        
EQUITY AND LIABILITIES                                                          
Capital and reserves                                                            
Equity attributable to owners of the    15 215       13 575       12 908        
parent                                                                          
Non-controlling interests               (46)         69           1             
Total equity                            15 169       13 644       12 909        
Non-current liabilities                                                         
Interest-bearing borrowings             4 210        4 918        4 347         
Non-current provisions                  2 011        1 842        1 853         
Financial liabilities                                33           75            
Deferred tax                            1 252        1 437        995           
                                       7 473        8 230        7 270          
Current liabilities                                                             
Trade and other payables                2 338        3 244        2 510         
Interest-bearing borrowings             507          250          407           
Current tax payable                     149          76           57            
Current provisions                      27           20           27            
3 021        3 590        3 001          
Non-current liabilities classified as   58           47           49            
held for sale                                                                   
Total equity and liabilities            25 721       25 511       23 229        
Net debt (note 6)                       2 874        2 455        3 731         
Net asset value per share (cents)       4 250        3 814        3 616         
Capital expenditure                                                             
- incurred                              1 042        686          1 982         
- contracted                            1 773        393          3 550         
- authorised but not contracted         737          1 933        1 420         
- share of associates` and joint        419          584          456           
ventures` contracted capital                                                    
commitments not included above                                                  
                                                                                
Capital expenditure contracted relating 200          568          18            
to captive mines Tshikondeni, Arnot and                                         
Matla, which will be financed by                                                
ArcelorMittal SA Limited and Eskom,                                             
respectively                                                                    
Contingent liabilities (note 7)         851          633          717           
Contingent assets (note 8)              58           293          158           
Operating lease commitments             98           97           92            
Operating sublease rentals receivables  8                         4             
Condensed group statement of cash flows                                         
6 months     6 months    12 months       
                                      ended        ended       ended            
                                      30 June      30 June     31 Dec           
                                      2010         2009        2009             
Reviewed     Reviewed    Audited          
                                      Rm           Rm          Rm               
Cash retained from operations           1 930        832         2 117          
- net financing costs                   (164)        (192)       (381)          
- tax paid                              (189)        (488)       (892)          
- dividends paid                        (352)        (700)       (1 050)        
Cash flows from investing activities                                            
- capital expenditure                   (1 042)      (686)       (1 982)        
- proceeds from disposal of property,   57           4           11             
plant and equipment                                                             
- increase in investments               (59)         (50)        (8)            
- increase in joint venture                                      (1 082)        
- dividends from investments and equity-638          1 124       1 754          
accounted investments                                                           
- other                                 39           (123)       (107)          
Net cash inflow/(outflow)               858          (279)       (1 620)        
Net cash flow from financing activities                                         
- shares issued                         16           20          43             
- increase in non-controlling                        8           10             
interests` loans                                                                
- net borrowings (repaid)/raised        (54)         1 195       821            
Net increase/(decrease) in cash and     820          944         (746)          
cash equivalents                                                                
Cash and cash equivalents at beginning  1 023        1 769       1 769          
of period                                                                       
Cash and cash equivalents end of period 1 843        2 713       1 023          
Group statement of changes in equity                                            
                                          Other components of equity            
Share    Share    Foreign       Financial   Equity-     
                       capital  premium  currency      instruments settled      
                       Rm       Rm       translations  revaluation Rm           
                                       Rm            Rm                         
Balance at 31 December   4        2 094    964           145         1 081      
2008 (audited)                                                                  
Total comprehensive                        (196)         (8)                    
income (restated)                                                               
Issue of share                    21                                            
capital(1)                                                                      
Share-based payments                                                 72         
movements                                                                       
Non-controlling                                                                 
interests additional                                                            
contributions                                                                   
Dividends paid                                                                  
Balance at 30 June 2009  4        2 115    768           137         1 153      
(reviewed)                                                                      
Total comprehensive                        34            (134)                  
income (restated)                                                               
Issue of share                    22                                            
capital(1)                                                                      
Share-based payments                                                 88         
movements                                                                       
Non-controlling                                                                 
interests additional                                                            
contributions                                                                   
Dividends paid                                                                  
Balance at 31 December   4        2 137    802           3           1 241      
2009 (audited)                                                                  
Total comprehensive                        (19)          188                    
income (restated)                                                               
Issue of share                    16                                            
capital(1)                                                                      
Share-based payments                                                 53         
movements                                                                       
Dividends paid(2)                                                               
Balance at 30 June 2010  4        2 153    783           191         1 294      
(reviewed)                                                                      
Dividend paid per share  200                                                    
(cents) in respect of                                                           
the previous financial                                                          
year                                                                            
                                                                                
Dividend paid per share  200                                                    
(cents) in respect of                                                           
this interim period                                                             
(1)?Issued to the Kumba Resources Management Share Trust due to options         
exercised.                                                                      
(2)?The STC on these dividends amounted to Rnil after taking into               
account STC credits.                                                            
Group statement of changes in equity (continued)                                

                            Retained   Attributable   Non-         Total        
                           income     to owners of   controlling  equity        
                           Rm         the parent     interests    Rm            
Rm             Rm                          
Balance at 31 December 2008  8 708      12 996         128          13 124      
(audited)                                                                       
Total comprehensive income   1 390      1 186          (66)         1 120       
(restated)                                                                      
Issue of share capital(1)               21                          21          
Share-based payments                    72                          72          
movements                                                                       
Non-controlling interests                              7            7           
additional contributions                                                        
Dividends paid               (700)      (700)                       (700)       
Balance at 30 June 2009      9 398      13 575         69           13 644      
(reviewed)                                                                      
Total comprehensive income   (327)      (427)          (71)         (498)       
(restated)                                                                      
Issue of share capital(1)               22                          22          
Share-based payments                    88                          88          
movements                                                                       
Non-controlling interests                              3            3           
additional contributions                                                        
Dividends paid               (350)      (350)                       (350)       
Balance at 31 December 2009  8 721      12 908         1            12 909      
(audited)                                                                       
Total comprehensive income   2 421      2 590          (47)         2 543       
(restated)                                                                      
Issue of share capital(1)               16                          16          
Share-based payments                    53                          53          
movements                                                                       
Dividends paid(2)            (352)      (352)                       (352)       
Balance at 30 June 2010      10 790     15 215         (46)         15 169      
(reviewed)                                                                      
(1)?Issued to the Kumba Resources Management Share Trust due to options         
exercised.                                                                      
(2)?The STC on these dividends amounted to Rnil after taking into               
account STC credits.                                                            
Notes to the reviewed financial statements                                      
1.   Basis of preparation                                                       
    This condensed interim report complies with International                   
   Accounting Standard 34, Interim Financial Reporting, the AC 500              
   standards as issued by the Accounting Practices Board or its                 
successor and Schedule 4 Part iv of the South African Companies              
   Act. The group financial statements have been prepared on the                
   historical cost basis excluding financial instruments and                    
   biological assets, which are fair valued, and conform to                     
International Financial Reporting Standards. The accounting                  
   policies adopted are consistent with those applied in the annual             
   financial statements for the year ended 31 December 2009.                    
   The disclosure of share-based payments movements has previously              
been disclosed as other comprehensive income; it is now disclosed            
   directly in the statement of changes in equity; the disclosure has           
   been applied to the prior period and year.                                   
                                                                                
During 2010 the following accounting pronouncements became                   
   effective:                                                                   
   Amended IFRS 1 First-time Adoption of International Financial                
   Reporting, Amended IFRS 2 Share-based Payments, Revised IFRS 3               
Business Combinations, Amended IFRS 5 Non-current Assets Held for            
   Sale and Discontinued Operations, Amended IFRS 8 Operating                   
   Segments, Amended IAS 1 Presentation of Financial Statements,                
   Amended IAS 7 Statement of Cash Flows, Amended IAS 17 Leases,                
Revised IAS 27 Consolidated and Separate Financial Statements,               
   Revised IAS 28 Investments in Associates, Revised IAS 31 Interests           
   in Joint Ventures, Amended IAS 36 Impairment of Assets, Amended IAS          
   38 Intangible Assets, Amended IAS 39 Financial Instruments:                  
Recognition and Measurement, Amended IFRIC 9 Reassessment of                 
   Embedded Derivatives, IFRIC 17 Distributions of Non-cash Assets to           
   Owners, IFRIC 18 Transfers of Assets from Customers. These                   
   pronouncements had no material impact on the accounting of                   
transactions or the disclosure thereof. The application of IFRS 3,           
   together with IAS 27, IAS 28 and IAS 31 will have a significant              
   impact on the accounting and disclosure of business combinations             
   and the accounting for the carrying value of investments on partial          
disposals of investments for such transactions in the future.                
                                         6 months   6 months     12 months      
                                       ended      ended        ended            
                                       30 June    30 June      31 Dec           
2010       2009         2009             
                                       Reviewed   Reviewed     Audited          
                                       Rm         Rm           Rm               
2.   Net operating profit is arrived at                                         
after including:                                                             
    Depreciation, and amortisation of    (657)      (531)        (1 136)        
   intangible assets                                                            
    Net realised foreign currency        5          (434)        (576)          
exchange gains/(losses)                                                      
    Net unrealised foreign exchange      43         (76)         (45)           
   gains/(losses)                                                               
    Derivative instruments held for      115        335          379            
trading: gains                                                               
    Fair value adjustment on financial   6          11           26             
   instruments: gains                                                           
    Impairment charges (note 3)          (5)                     (1 435)        
Net surplus/(deficit) on disposal    53         (22)         (88)           
   of property, plant and equipment                                             
3.   Impairment charges                                                         
    Impairment of property, plant and    (5)                     (1 435)        
equipment                                                                    
    Total impairments before and after   (5)                     (1 435)        
   tax                                                                          
4.   Net financing costs                                                        
Interest expense and loan costs      184        245          460            
    Finance leases                       33         33           66             
    Interest income                      (53)       (86)         (145)          
    Net interest expense                 164        192          381            
Interest adjustment on non-current   75         50           34             
   provisions                                                                   
    Net financing cost as per income     239        242          415            
   statement                                                                    
5.   Investments                                                                
    Unlisted investments in associates                                          
    - directors` valuation               20 137     14 001       14 165         
    Unlisted investments included in                                            
other financial assets                                                       
    - directors` valuation               423        413          408            
6.   Net debt                                                                   
    Net debt is calculated as being interest-bearing borrowings less            
cash and cash equivalents.                                                   
7.   Contingent liabilities                                                     
    Include guarantees in the normal course of business from which              
   it is anticipated that no material liabilities will arise. This              
includes guarantees to banks and other institutions. The                     
   increase in 2010 is mainly due to Exxaro`s share of guarantees               
   issued by associates to the Department of Mineral Resources in               
   respect of rehabilitation and decommissioning obligations.                   
8.   Contingent assets                                                          
    A surrender fee of R58 million in exchange for the exclusive                
   right to prospect, explore, investigate and mine for coal                    
   within a designated area in central Queensland and Moranbah                  
conditional on the grant of a mining lease, is disclosed as a                
   contingent asset.                                                            
9.   Related party transactions                                                 
    The company and its subsidiaries, in the ordinary course of                 
business, entered into various sale and purchase transactions                
   with associates and joint ventures. These transactions were                  
   subject to terms that are no less favourable than those                      
   arranged with third parties.                                                 
10.  JSE Limited Listings Requirements                                          
    The interim results announcement has been prepared in                       
   accordance with the Listings Requirements of the JSE Limited.                
11.  Corporate governance                                                       
Sound corporate governance processes are being applied at                   
   Exxaro. They are regularly reviewed and adapted to accommodate               
   internal corporate developments and to reflect national and                  
   international best practice. Exxaro endorses the principles of               
the King Code of Governance Principles for South Africa 2009                 
   ("King III Code"). The board of Exxaro is considering the                    
   implications and effect of the King III Code and will report on              
   the implementation and application thereof in its annual                     
financial statements for the year ending 31 December 2011.                   
12.  Mineral Resources and Mineral Reserves                                     
    The group`s Mineral Resources and Ore Reserves are under review             
   to provide updated estimations for 2010, however no material                 
changes to the Mineral Resources and Ore Reserves disclosed in               
   the Exxaro annual report for the year ended 31 December 2009                 
   are expected other than depletion due to continued mining                    
   activities.                                                                  
13.  Events after the reporting period                                          
    On 10 July 2010, Furnace 2 at Namakwa Sands was shut down as a              
   precautionary measure after a hot spot was detected. After                   
   extensive investigations it was decided to continue with the                 
start-up of the furnace on 24 July 2010, with a reline planned               
   for February 2011. If there is any indication of safety                      
   concerns, the furnace will be taken out of service and prepared              
   for an earlier reline.                                                       
Kumba Iron Ore Limited announced that it has reached an interim              
   pricing agreement on 21 July 2010 in respect to the supply of                
   iron ore to ArcelorMittal South Africa Limited from its                      
   subsidiary Sishen Iron Ore Company (Pty) Limited (SIOC). The                 
duration of the interim agreement will be retrospective to 1                 
   March 2010, and will endure until 31 July 2011. The difference               
   between the revenue recognised and amounts outstanding under                 
   the interim agreement for the period ended 30 June 2010                      
amounted to R398 million of which R79.5 million is attributable              
   to Exxaro. Upon completion of the necessary documentation, the               
   R398 million will be recognised as revenue by SIOC within the                
   second half of 2010 and Exxaro will account for its                          
proportionate after-tax portion as income from equity-accounted              
   investments.                                                                 
   The directors are not aware of any other matter or circumstance              
   arising after the reporting period up to the date of this                    
report not otherwise dealt with in this report.                              
14.  Auditors` review                                                           
    The interim results have been reviewed by the company`s                     
   auditors, Deloitte & Touche. Their unmodified review opinion is              
available for inspection at the company`s registered office.                 
Comments                                                                        
OPERATING RESULTS                                                               
Comments are based on a comparison of the group`s reviewed financial results and
unaudited physical information for the six-month periods ended 30 June 2010 and 
2009 respectively. The earnings reported for the six-month period to 30 June    
2010 includes results from the Mafube joint venture (Mafube) for the full period
under review while the comparative period to 30 June 2009 only includes Mafube  
from the effective date of acquisition of 1 June 2009 i.e. one month.           
The coal business reported a 16% increase in net operating profit to R1 199     
million as lower export volumes at higher international selling prices were     
offset by higher local sales volumes but at lower prices. All the mineral sands 
businesses reported a net operating profit as generally higher sales volumes at 
higher prices supported by disciplined cost management underpinned the results. 
The base metals business remained profitable on the back of higher average zinc 
prices and higher demand.                                                       
Group revenue increased by 10% to R7 852 million while net operating profit     
increased by R410 million to R1 363 million as the group benefited from the     
global economic recovery.                                                       
Revenue was recorded at a significantly stronger average exchange rate of R7,81 
to the US dollar compared with R9,40 in the comparative period in 2009.         
EARNINGS                                                                        
Attributable earnings, inclusive of Exxaro`s 20% interest in the post-tax       
profits of Sishen Iron Ore Company (Pty) Limited (SIOC) amounting to R1 624     
million, increased by 73% from R1 390 million to R2 408 million or 696 cents per
share.                                                                          
Headline earnings were R2 363 million or 683 cents per share. This represents a 
68% increase on the comparative 2009 earnings of R1 399 million at 406 cents per
share.                                                                          
CASH FLOW                                                                       
Cash retained from operations was R1 930 million from which taxation payments of
R189 million, the final dividend for the 2009 financial year of R352 million and
capital expenditure payments of R1 042 million were made. A total of R681       
million of the capital expenditure was invested in new capacity while R361      
million was for sustaining and environmental purposes.                          
After accounting for R638 million of dividends received from associate          
companies, a net cash inflow of R858 million was recorded and contributed to the
significant reduction in net debt in the six months to 30 June 2010.            
Net debt of R3 731 million at 31 December 2009 decreased to R2 874 million at 30
June 2010 at a debt to equity ratio of 19%.                                     
Subsequent to the interim reporting date, Exxaro will pay the interim dividend  
of R716 million and received a dividend of R1 173 million from SIOC.            
SAFETY AND SUSTAINABLE DEVELOPMENT                                              
Safety and health of all employees continues to be a priority at Exxaro which is
reflected in the adoption of the "Safety Always All The Way" campaign.          
Regrettably, one fatality was reported at Tshikondeni on 10 March 2010. The lost
time injury frequency rate (LTIFR) per 200 000 man-hours worked is 0,26, an     
improvement from 0,30 recorded at 30 June 2009 and 0,33 at 31 December 2009.    
Following on the CEO Safety Summit that was held on 30 April 2010, the Exxaro   
Safety Improvement Plan (ESIP) is being rolled out at all business units        
focusing on the training of visible felt leadership change champions,           
communication of Exxaro zero tolerance safety rules, rolling out of the safety  
training matrix, safety communication guidelines and mini Hazard Identification 
and Risk Assessments (HIRA).                                                    
HIV testing and counselling continue to be an important focus for the group.    
Since the beginning of 2009, 66% of employees have undergone HIV prevalence     
testing against a target of 70%. The prevalence rate in the group is estimated  
at about 12% with 43% of HIV positive employees already voluntarily enrolled    
onto the HIV management programme.                                              
Fourteen business units are now ISO 14001 and OHSAS 18001 certified with the    
remaining three business units having programmes in place to be certified during
2010.                                                                           
REPORTED SEGMENT RESULTS                                                        
Reported segments are based on the group`s different products and operations as 
well as the physical location of these operations and associated products.      
                                        Reviewed   Reviewed    Audited          
                                       6 months   6 months    12 months         
                                       ended      ended       ended             
30 June    30 June     31 Dec            
                                       2010       2009        2009              
                                       Rm         Rm          Rm                
                                                                                
Revenue                                                                         
Coal                                     4 730      4 797       9 731           
Tied operations                          1 320      1 276       2 681           
Commercial operations                    3 410      3 521       7 050           
Mineral Sands                            2 130      1 550       3 508           
KZN Sands                                535        273         705             
Namakwa Sands                            893        644         1 468           
Australia Sands                          702        633         1 334           
Base Metals                              895        674         1 582           
Rosh Pinah                               283        206         566             
Zincor                                   851        630         1 413           
Intra-segmental                          (239)      (162)       (397)           
Other                                    97         90          188             
Total revenue                            7 852      7 111       15 009          
Segment net operating profit/(loss)                                             
Coal                                     1 199      1 032       1 905           
Tied operations                          97         71          75              
Commercial operations                    1 102      961         1 830           
Mineral Sands                            148        (67)        (1 559)         
KZN Sands(1)                             61         (110)       (1 447)         
Namakwa Sands                            33         24          (110)           
Australia Sands                          54         19          (2)             
Base Metals                              12         9           (8)             
Rosh Pinah                               48         35          105             
Zincor                                   (18)       3           (47)            
Intra-segmental and other                (18)       (29)        (66)            
Other                                    4          (21)        (34)            
Total                                    1 363      953         304             
(1) Includes a R1 435 million impairment of the carrying value of               
assets in the 12-month period ended 31 December 2009.                           
Unaudited physical information (`000 tonnes)                                    
                                       6 months    6 months    12 months        
ended       ended       ended             
                                      30 June     30 June     31 Dec            
                                      2010        2009        2009              
Coal                                                                            
Production                                                                      
- Power station coal                    18 269      18 583      36 562          
* Tied operations(1)                    8 365       8 704       16 486          
* Commercial operations                 9 904       9 879       20 076          
- Coking coal                           1 187       922         2 020           
* Tied operations                       124         129         268             
* Commercial operations                 1 063       793         1 752           
- Other coal                            3 518       3 061       6 638           
- Char                                  49                      38              
- Coal buy-ins                          464         430         759             
Total                                   23 487      22 996      46 017          
Sales                                                                           
- Eskom coal                            18 379      18 494      36 299          
* Tied operations                       8 356       8 700       16 473          
* Commercial operations                 10 023      9 794       19 826          
- Other domestic coal                   2 447       1 920       4 587           
* Tied operations                       117         130         259             
* Commercial operations                 2 330       1 790       4 328           
- Coal export                           1 842       2 389       4 715           
- Char                                  52                      31              
Total                                   22 720      22 803      45 632          
Mineral Sands(2)                                                                
Production                                                                      
- Ilmenite                              367         424         819             
- Zircon                                94          97          185             
- Rutile                                28          33          62              
- Synthetic Rutile                      51          54          109             
- Pig iron (LMPI)                       81          95          181             
- Scrap iron                            8           7           15              
- Slag tapped                           141         171         331             
- Chloride slag                         84          104         201             
- Sulphate slag                         16          19          44              
- Leucoxene                             7           7           14              
- Pigment                               25          25          53              
Total                                   902         1 036       2 014           
Sales                                                                           
- Zircon                                124         47          146             
- Rutile                                35          19          51              
- Synthetic Rutile                      23          24          50              
- Pig iron (LMPI)                       107         64          138             
- Scrap iron                            1           4           6               
- Chloride slag                         98          67          144             
- Sulphate slag                         7           14          44              
- Leucoxene                             7           1           15              
- Pigment                               24          23          54              
Total                                   426         263         648             
Base metals                                                                     
Production                                                                      
- Zinc concentrate                      60          53          108             
* Rosh Pinah                            52          47          94              
* Black Mountain                        8           6           14              
- Zinc metal                            54          54          116             
* Zincor                                43          44          87              
* Chifeng(3)                            11          10          29              
- Lead concentrate                      17          20          38              
* Rosh Pinah                            9           12          20              
* Black Mountain                        8           8           18              
Zinc metal sales                        59          58          122             
- Domestic                              46          44          93              
- Export                                13          14          29              
Lead concentrate sales                                                          
- Export                                7           6           19              
(1) Tied operations refer to mines that supply their entire production          
to either Eskom or ArcelorMittal SA Limited (ArcelorMittal) in terms of         
contractual agreements.                                                         
(2) Includes Exxaro Sands Australia`s 50% interest in the Tiwest joint          
venture.                                                                        
(3) Exxaro`s effective interest in the Chifeng refinery is disclosed.           
OPERATIONS                                                                      
Coal                                                                            
Total production was marginally higher than the previous year as lower power    
station coal production was more than offset by higher coking coal and steam    
coal production.                                                                
Power station coal production at the Eskom tied mines was 339kt lower than the  
corresponding period as lower production at Arnot, due to geological conditions 
and technical challenges, was offset by higher production at Matla.             
Power station coal production at the commercial mines was marginally higher as  
lower demand at Grootegeluk and North Block Complex (NBC) mines was offset by   
higher production at Leeuwpan after the crush and screen plant commissioning    
during 2010 as well as the first full six-month`s contribution from Mafube.     
Coking Coal production was 29% or 265kt higher as increased demand, mainly from 
ArcelorMittal, led to higher production at Grootegeluk.                         
Steam Coal production was 15% higher at 3 518kt as the inclusion of production  
from Mafube was complemented by higher production from Grootegeluk and Leeuwpan 
due to higher demand.                                                           
Sales volumes to Eskom were in line with the previous year however domestic     
sales of metallurgical coal were higher due to higher demand from ArcelorMittal.
This increased demand was met by re-directing sales destined for the export     
market from Grootegeluk as a result of low availability of trains.              
Exxaro Coal`s strategy to increase export volumes was hampered by lower         
availability of trains, compounded by the Transnet Freight Rail strike during   
the period.                                                                     
Revenue is in line with the previous year, however, at a different sales mix    
with lower export sales volumes at higher international prices offset by higher 
domestic sales volumes at lower realised prices.                                
Net operating income for the six months ended 30 June 2010 increased by 16% to  
R1 199 million at an improved operating margin of 25% resulting from the        
different sales mix yet reduced somewhat by a stronger average realised local   
currency as well as increased costs. The increased costs were most notably      
operating costs from the full six months inclusion of the results of the Mafube 
joint venture, higher depreciation charges, higher contractor cost at Leeuwpan  
mine for the removal of overburden, and higher than inflation increases in      
electricity, diesel and labour cost.                                            
Mineral Sands                                                                   
Lower heavy minerals concentrate production was reported due to anticipated     
lower grades from the KZN Sands Hillendale mine. Slag tapped, low manganese pig 
iron production as well as chloride and sulphate slag production was also lower 
as a result of ancillary equipment failure at KZN Sands affecting both furnaces,
while Furnace 1 at Namakwa Sands was idled for longer than the comparative      
period in 2009, further compounded by the planned Furnace 2 reline in the       
current period.                                                                 
Lower grades at the Hillendale mine led to lower overall zircon and rutile      
production despite being partially offset by higher overall Zircon recoveries at
Namakwa Sands and higher production at the Australian operations based on higher
grades and increased overall utilisation of the dredge mine.                    
Synthetic rutile (SR) production decreased as a result of non-recurring         
maintenance related issues. The SR plant at Chandala in Australia will be shut  
for 38 days in the fourth quarter of 2010 for planned maintenance.              
The 40kt pigment expansion at the Kwinana pigment plant in Australia was        
successfully commissioned in late June with progressively ramped up production  
anticipated from July 2010 onwards. Pigment production was in line with the     
corresponding period notwithstanding an 11 day shut to complete all the tie-ins 
for the expansion.                                                              
Despite the lower production volumes and a stronger Rand and Australian dollar  
compared with the US dollar, revenue was R580 million higher at R2 130 million  
as higher demand was satisfied from stockpiles at more favourable prices. Demand
for both chloride and sulphate feedstock was strong as pigment producers raised 
output to meet the growth in consumption. The zircon market was positive as     
strong demand and tight supply supported an upward trend in prices. Demand and  
pricing for pig iron were also favourable due to the recovery in the global     
steel and foundry sectors.                                                      
Based on the higher revenue, net operating profit of R148 million was reported; 
a pleasing turnaround from the R67 million loss in the corresponding period in  
2009. Included in the recorded net operating profit is the final R98 million    
insurance proceeds received relating to the Furnace 2 water ingress incident at 
KZN Sands in February 2008, the benefits of disciplined cost management and cost
improvement initiatives, as well as favourable hedging to mitigate the relative 
strength of the Australian dollar.                                              
Base Metals                                                                     
Zinc concentrate production at a higher grade at the Rosh Pinah mine in Namibia 
increased by 5kt over the equivalent period in 2009. Production of zinc metal at
the Zincor refinery of 43kt was however 965 tonnes lower and can be attributed  
to downtime on the acid plant, throughput limitations on the purification       
circuit and disruption of the incoming water supply.                            
Domestic zinc metal sales were 4% higher at 46kt and were realised at a higher  
average price of USD2 157 per tonne.                                            
Revenue for the six months to 30 June 2010 increased by 32% as a result of the  
higher average realised zinc price and increased volumes sold.                  
A total of 60% of Rosh Pinah`s projected zinc and lead concentrate sales were   
hedged during 2008 for the period July 2008 to December 2011 at forward prices  
ranging from USD2 215 to USD1 887 per tonne for zinc and USD2 385 to USD1 771   
per tonne for lead.                                                             
The higher revenue and cost saving initiatives contributed to the recording of a
net operating profit despite the impact of higher than inflation increases in   
electricity and maintenance expenses.                                           
Production at the Chifeng refinery was 3% higher compared to the equivalent     
period in 2009. Equity accounted income was however only R2 million.            
Production of zinc concentrate at Black Mountain Mining (Pty) Limited (Black    
Mountain) was 33% higher at 8kt compared to the equivalent period in 2009. The  
26% equity interest in Black Mountain delivered R9 million in equity income;    
some 40% less than the previous corresponding period due to lower sales volumes 
and a higher tax charge.                                                        
Other, including Industrial Minerals                                            
As announced on 5 May 2010, the Glen Douglas dolomite mine was sold for R35     
million to Afrimat Limited. Completion of the disposal now awaits the fulfilment
of a number of suspensive conditions which are expected to be met in the second 
half of 2010.                                                                   
CAPITAL EXPENDITURE AND PROJECT PIPELINE                                        
Although the economic downturn necessitated a review of the company`s capital   
expenditure and project pipeline in 2009, cognisance is being taken of the      
recovery in the global economy resulting in a renewed focus on carbon,          
reductants, ferrous and energy projects in line with the group`s approved       
commodity strategy.                                                             
Coal                                                                            
Construction of the R9,5 billion brownfields expansion at the Grootegeluk mine  
to supply Eskom`s Medupi power station with 14,6Mtpa of power station coal for  
40 years has commenced and is progressing well to supply the first coal to Eskom
during the second quarter in 2012, aligned with the start-up of the power       
station. The bulk of the front end detailed engineering design has been         
completed and orders for long lead capital items have been placed.              
Exxaro and Eskom signed a revised agreement on 26 March 2010 and the R4,5       
billion bridge loan facility has been secured with a consortium of local and    
international financial institutions.                                           
A pre-feasibility study on the Thabametsi Project, a potential greenfields mine 
adjacent to the Grootegeluk mine, with the capability of supplying the market   
with power station and metallurgical coal, has now been completed. The          
implementation and development of this project is planned to coincide with      
Eskom`s future developments in the Waterberg together with the Department of    
Energy`s formalisation and establishment of an appropriate enabling environment 
governed by the National Integrated Resource Plan to allow for new generation   
capacity in terms of Eskom`s multi-site base load Independent Power Producer    
programme. The scope of the bankable feasibility for the Thabametsi study will  
only be finalised after the details of the new generation capacity are          
determined, whereupon the required technical studies will commence.             
Exxaro entered into a prospecting joint venture agreement with Sasol Mining to  
investigate the commercial viability of the development of a new coal mine in   
the Waterberg to supply Sasol`s potential new 80 000 barrels per day inland coal
to liquids facility (Project Mafutha).  The study is in an extended pre-        
feasibility stage and a decision to proceed to a bankable feasibility study is  
expected by mid 2011. The mining of the 170 000 tonne bulk sample for           
gasification testing at the Sasol Synfuels Secunda plant commenced in August    
2009 and was completed during the second quarter of 2010. It is envisaged that  
the gasification tests will be completed by the end of 2010.                    
An integrated infrastructure plan is being implemented for the Waterberg coal   
fields together with the relevant stakeholders. Focus areas include key enablers
such as the supply of raw water to the area, rail, road and housing.            
Exxaro`s application for a mining right at its Belfast project has been accepted
by the Department of Mineral Resources (DMR) and now awaits the record of       
decision on the awarding of the mining right from the DMR. The specialist       
environmental studies for Belfast as required by National Environmental         
Management Act and National Water Act are in process and will be submitted to   
the relevant authorities during the fourth quarter of 2010. The project is in a 
pre-feasibility stage; depending on the outcome, start-up is anticipated in     
2014.                                                                           
The Sintel Char plant at Grootegeluk mine for the production of reductants for  
the ferroalloy industry has been fully commissioned with all four retorts in    
operation. The plant is expected to reach its overall design capacity in the    
last quarter of 2010. Exxaro is also currently evaluating the phase 2 expansion 
to the facility to produce another 140ktpa of char as well as a study to produce
market coke from semi-soft coking coal at Grootegeluk. These studies are        
expected to be concluded in the first half of 2011.                             
Results from exploration activities of the hard coking coal resource on the     
Moranbah South properties in the Bowen Basin of Queensland Australia remain     
encouraging. Due to the high value entrenched in the potential long wall        
operation, it was decided to revise the current bord and pillar study and       
evaluate a combination of bord and pillar and a long wall operation. The concept
study was completed in January 2010, and the pre-feasibility study commenced    
during the second quarter of 2010. Moranbah South, which is a 50% joint venture 
with Anglo American Metallurgical Coal, has the potential to produce premium    
quality hard coking coal.                                                       
Energy                                                                          
The development of Exxaro`s energy portfolio and the formation of a separate    
company to house Exxaro`s energy interests is progressing. In parallel a process
to secure an equity funding partner is underway with targeted investors.        
A desktop study report for a solar power station has been completed. The pre-   
feasibility study is expected to be finalised by end August 2010.               
A desktop study report has been completed for a wind project on the West coast. 
An 80m mast has been installed at Brand se Baai during March 2010. In addition  
to this a memorandum of understanding was signed between Exxaro, Watt Energy,   
the Tsitsikamma Community and other Danish parties to develop a 40MW wind farm  
in the Tsitsikamma district. The project is currently in a desktop study phase. 
Installation of an 80m mast is planned for the last quarter of 2010.            
Development of the first five-spot test for the Coal Bed Methane project in     
Botswana, with the aim of testing for economic gas flow is progressing well. The
drilling has been completed and fracturing is in process. The five-spot test    
work should be completed by September 2010 after which the wells will be        
operated until economic gas flow has been attained.                             
Mineral Sands                                                                   
As a result of the improved fundamentals of the mineral sands industry a        
bankable feasibility study will be undertaken on the Fairbreeze project at KZN  
Sands. Depending on the outcome of the study and according to the current       
project schedule, construction could commence by mid 2011 with commissioning    
scheduled for the second half of 2013.                                          
Ferrous                                                                         
The final evaluation of the Turkey iron ore project concluded that it did not   
meet Exxaro`s investment criteria with respect to size. The subsequent          
divestment of its 76% share in the project JV is expected to be finalised during
2010.                                                                           
Investigation into other opportunities continues as part of the group`s entry   
strategy into the iron ore market. These include major iron ore projects as well
as the leveraging of unique beneficiation technology.                           
Exxaro has secured a technology partner to participate in the commercialisation 
of its AlloyStreamTM technology to produce high carbon ferromanganese. The      
technology will allow for the processing of raw materials that were previously  
difficult to utilise in conventional processes. Agreements are in the process of
being finalised and commissioning of a large demonstration facility is planned  
for 2012.                                                                       
Base Metals                                                                     
Activities are currently focused on optimisation of assets in order to extract  
maximum value for all stakeholders during the envisaged divestment, planned for 
2011.                                                                           
CONVERSION OF MINING RIGHTS                                                     
Engagement with the relevant stakeholders continues in order to process the     
registration of new order mining rights granted as well as the converted old    
order mining rights of the former Kumba Resources Limited. Approval of the      
conversion of the old order mining rights of the former Eyesizwe Coal (Pty)     
Limited submitted to the DMR in 2008 is also still awaited.                     
CHANGES TO THE BOARD                                                            
Consequent to the election of Dr Len Konar as chairman of the board with effect 
from 23 February 2010, Mr Jeff van Rooyen was appointed as chairman of the      
audit, risk and compliance committee.                                           
OUTLOOK                                                                         
Coal export volumes should increase when compared with the first half of 2010   
due to the anticipated commissioning of Richards Bay Coal Terminal Phase V,     
subject to availability of rail capacity. International demand for hard coking  
coal is set to remain strong and should support an increase in semi-soft coking 
coal prices.                                                                    
The current shortage of pigment should lead to an increase in prices while      
demand for mineral sands products is generally anticipated to further improve.  
The downside however remains the relative strength of the Australian dollar and 
the Rand to the US dollar for the Australian and South African operations.      
Continued strength in the zircon market is expected to prevail thus supporting  
current price trends.                                                           
High zinc concentrate and metal stock levels are expected to result in downwards
pressure and a lower average realised zinc price in the second half of 2010. The
logistical challenge to transport concentrate from Rosh Pinah to Zincor is      
expected to remain in the second half.                                          
The equity accounted contribution from SIOC should be positively impacted by    
anticipated higher prices and continued strong demand.                          
On the back of the current economic recovery, earnings in the second half of    
2010 should increase however renewed fears of a slower than expected recovery   
could impact negatively on the outlook. The relative strength of the local and  
Australian currencies could further impact on the results for the second half of
2010 as well.                                                                   
The financial information on which the outlook statement is based has not been  
reviewed nor reported on by the group`s auditors.                               
INTERIM DIVIDEND                                                                
The board of directors have declared an interim cash dividend number 15 of 200  
cents per share in respect of the 2010 interim period. The dividend has been    
declared in South African currency and is payable to shareholders recorded in   
the register of the company at close of business on Friday, 1 October 2010.     
In compliance with the requirements of Strate, the electronic and custody system
used by the JSE, the following dates are applicable:                            
Last date to trade cum dividend         Thursday, 23 September 2010             
Shares trade ex dividend                Monday, 27 September 2010               
Record date                             Friday, 1 October 2010                  
Payment date                            Monday, 4 October 2010                  
Share certificates may not be dematerialised or rematerialised during the period
Monday, 27 September 2010 and Friday, 1 October 2010, both days inclusive.      
On Monday, 4 October 2010 the cash dividend will be electronically transferred  
to the bank accounts of all certificated shareholders where this facility is    
available. Where electronic fund transfer is not available or desired, cheques  
dated 4 October 2010 will be posted on that date. Shareholders who have         
dematerialised their share certificates will have their accounts at their CSDP  
or broker credited on Monday, 4 October 2010.                                   
On behalf of the board                                                          
Len Konar Sipho Nkosi    Wim de Klerk                                           
Chairman  Chief Executive Officer  Financial Director                           
11 August 2010                                                                  
REGISTERED OFFICE                                                               
Exxaro Resources Limited                                                        
Roger Dyason Road                                                               
Pretoria West, 0183                                                             
Telephone +27 12 307 5000                                                       
Fax +27 12 323 3400                                                             
TRANSFER SECRETARIES                                                            
Computershare Investor Services (Pty) Limited                                   
Ground Floor, 70 Marshall Street                                                
Johannesburg, 2001                                                              
PO Box 61051, Marshalltown, 2107                                                
DIRECTORS                                                                       
Dr D Konar (Chairman), SA Nkosi (Chief Executive Officer), WA de Klerk          
(Financial Director), JJ Geldenhuys, CI Griffith, U Khumalo, N Langeni, VZ      
Mntambo, RP Mohring, NL Sowazi, J van Rooyen, D Zihlangu                        
COMPANY SECRETARY                                                               
MS Viljoen                                                                      
INVESTOR RELATIONS                                                              
RA de Beer +27 12 307 4189                                                      
If you have any queries regarding your shareholding in Exxaro Resources Limited,
please contact the Transfer Secretaries at +27 11 370 5000.                     
This report is available at: www.exxaro.com                                     
Pretoria                                                                        
12 August 2010                                                                  
Sponsor                                                                         
Deutsche Securities SA (Pty) Limited                                            
Date: 12/08/2010 07:05:02 Supplied by www.sharenet.co.za                     
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