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Exx - Exxaro Resources Limited - Exxaro Cash Offer To Territory Resources

Release Date: 23/05/2011 07:10:17      Code(s): EXX
EXX - Exxaro Resources Limited - Exxaro cash offer to territory Resources       
Limited ("Territory") shareholders of A$0.46 per share                          
Exxaro Resources Limited                                                        
(Incorporated in the Republic of South Africa)                                  
(Registration number 2000/011076/06)                                            
Share code: EXX      ISIN: ZAE000084992                                         
("Exxaro")                                                                      
EXXARO CASH OFFER TO TERRITORY RESOURCES LIMITED ("TERRITORY") SHAREHOLDERS OF  
A$0.46 PER SHARE                                                                
The attention of shareholders is drawn to the joint announcement released by    
Exxaro and Territory (ASX:TTY) on the Australian Securities Exchange (the       
"Joint Announcement") that the parties have executed a Bid Implementation       
Agreement under which Exxaro is offering all Territory shareholders A$0.46      
cash per share, subject to certain conditions (the "Offer").  The details of    
the Offer are contained in the Joint Announcement and attached hereafter for    
ease of reference.  The acquisition by Exxaro, as a result of the Offer, would  
fall below the threshold for a Category 2 transaction as defined in terms of    
the JSE Limited Listings Requirements, and accordingly this announcement is     
voluntary.                                                                      
Territory has an iron ore operation in the Northern Territory, Australia.  It   
has an operating mine at Frances Creek and is well positioned near existing     
rail and port infrastructure through the port of Darwin, which is in close      
proximity to China. The current mine produces approximately 1.6Mt per annum of  
lump and fine direct shipping ore. Territory also owns rights to iron ore       
tenements in the vicinity of Frances Creek. For further information on the      
company, visit www.territoryresources.com.au.                                   
The Offer is consistent with Exxaro`s stated objective of expanding into the    
iron ore sector.  Exxaro believes the fundamentals of iron ore are positive in  
the medium to long term and has in house expertise and experience in mining     
bulk ore commodities.  Exxaro has been actively pursuing opportunities to       
increase its exposure in iron ore and believes this operation in Australia, a   
jurisdiction in which Exxaro has considerable operational experience, provides  
an attractive platform for further growth in the commodity.                     
Mr Sipho Nkosi, the CEO of Exxaro, said "Territory`s assets provide an          
excellent match to Exxaro`s stated objective of gaining operational exposure    
in iron ore.  Territory represents a reasonably sized opportunity, which will   
allow Exxaro to leverage its bulk commodity and iron ore beneficiation          
expertise.  At the same time the Offer allows Territory shareholders the        
opportunity to realise an attractive cash price at a considerable premium to    
the market value."                                                              
23 May 2011                                                                     
Merchant bank and advisor to Exxaro                                             
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Greenhill Caliburn                                                              
Legal advisors                                                                  
Lavan Legal                                                                     
Bennet & Co                                                                     
Transaction sponsor                                                             
RAND MERCHANT BANK (A division of FirstRand Bank Limited)                       
Sponsor to Exxaro                                                               
Deutsche Securities (SA) (Proprietary) Limited                                  
For more information, stakeholders are invited to take part in an Exxaro        
teleconference taking place today (23 May 2011) at 10h00 SA time.               
To access the teleconference, dial one of the following numbers:                
South Africa - Johannesburg:  011 535 3600 / 011 581 2002                       
South Africa - Cape Town:     021 819 0900                                      
South Africa (Toll-Free):     0 800 200 648                                     
Australia (Toll-Free):        1 800 350 100                                     
UK (Toll-Free):               0 800 917 7042                                    
Other Countries (Intl Toll):  +27 11 535 3600                                   
A playback will be available for 72 hours. Dial one of the following numbers    
using Code 17763#                                                               
South Africa (Telkom):        011 305 2030                                      
Australia (Toll-Free):        1 800 091 250                                     
UK (Toll-Free):               0 808 234 6771                                    
Other Countries (Intl Toll):  +27 11 305 2030                                   
ANNOUNCEMENT                                                                    
23 MAY 2011                                                                     
TERRITORY RESOURCES LTD RECOMMENDS A$0.46 CASH PER SHARE TAKEOVER OFFER BY      
EXXARO RESOURCES LTD                                                            
* * *                                                                           
HIGHLIGHTS                                                                      
-    Exxaro to make takeover offer for Territory at A$0.46 cash per share       
-    In the absence of a Superior Proposal, the Offer is recommended by a       
    majority of the Territory Board                                             
-    Offer price represents 64% premium to Territory`s last closing share       
    price of A$0.28 per share                                                   
-    Total equity value of Offer is A$123 million                               
-    Territory`s 11.2% shareholder DCM has executed a pre-bid agreement with    
Exxaro                                                                          
-    Territory has ceased discussions with Noble in relation to the non-        
    binding proposal announced on 10 May 2011                                   
Territory Resources Ltd (ASX: TTY) ("Territory") and Exxaro Resources Ltd       
("Exxaro"), a South African-based mining group listed on the Johannesburg       
Stock Exchange, have executed a Bid Implementation Agreement ("BIA") under      
which Exxaro will offer to acquire up to 100% of the fully paid ordinary        
shares in Territory by way of an off-market takeover bid (the "Offer"). The     
Offer follows Exxaro completing due diligence on Territory.                     
In the absence of a Superior Proposal, the Offer is recommended by a majority   
of the Territory Board. Furthermore and in the absence of a Superior Proposal,  
each recommending Territory Director has agreed to accept the Offer with        
respect to all shares owned or controlled by them.                              
On 22 May 2011, Exxaro also entered into a pre-bid acceptance agreement with    
DCM DECOmetal ("DCM") in relation to its 11.2% holding in Territory. As a       
result of this transaction, Exxaro has a relevant interest in Territory of      
11.2%.                                                                          
Exxaro has also agreed to provide, via FirstRand Bank Limited (acting through   
its Rand Merchant Bank ("RMB") division), financing support to Territory up to  
US$36 million in certain circumstances (the "Facility").                        
The Offer                                                                       
The Offer price is A$0.46 cash per Territory share ("Offer Price") and values   
Territory at approximately A$123 million (on a fully diluted basis - see note   
1 below). Exxaro intends to fund the Offer consideration from internal funding  
sources.                                                                        
Territory and Exxaro believe the Offer provides a very attractive opportunity   
for Territory shareholders to realise their investment in Territory at a        
significant premium to recent share trading levels, with the Offer Price        
representing a premium of:                                                      
-    64% to Territory`s last closing share price prior to this announcement of  
    A$0.28 per share;                                                           
-    69% to the volume weighted average price of Territory shares since it      
released a market update on 19 April 2011; and                              
-    58% to the volume weighted average price of Territory shares since it      
    announced it had signed a non-binding term sheet in respect of a            
    conversion of debt to equity with Noble Group Limited ("Noble") on 10 May   
2011 ("Noble Proposal").                                                    
The cash Offer also provides certainty of value for Territory shares and an     
opportunity for shareholders to realise their investment in Territory shares    
for cash.                                                                       
Note : Based on 268.5m fully diluted shares on issue (265,121,141 ordinary      
shares on issue, 2,406,458 performance rights on issue and 933,770 performance  
rights which the Territory Board had resolved to issue prior to the Exxaro      
approach but are not yet issued).                                               
Following the execution of the BIA, the Territory Board has ceased discussions  
with Noble and will not be progressing the Noble Proposal.                      
Territory believes that Exxaro`s Offer is a more attractive proposition for     
Territory shareholders than the Noble Proposal, in particular because Exxaro`s  
Offer provides a liquidity event whereby all shareholders are being given the   
opportunity to receive cash at a significant premium to the prevailing market   
price, thereby enabling them to capture immediate and certain value.            
Importantly, Territory has been able to agree binding documents with Exxaro     
which include financing arrangements that will ensure Territory has the         
required capital to meet its short term funding needs if the existing Noble     
facilities are withdrawn or scaled back.                                        
Comment                                                                         
Commenting on the Offer, the Managing Director of Territory, Mr Andy Haslam,    
said "The Territory Board of Directors has carefully considered the offer by    
Exxaro and the majority of the Board supports and recommends the offer as       
being in the best interests of Territory and our shareholders, subject to       
there being no Superior Proposal."                                              
Mr Sipho Nkosi, the CEO of Exxaro, said "Territory`s assets provide an          
excellent match to Exxaro`s stated objective of gaining operational exposure    
in iron ore.  Territory represents a reasonably sized opportunity which will    
allow Exxaro to leverage its bulk commodity and iron ore beneficiation          
expertise.  At the same time the Offer allows Territory shareholders the        
opportunity to realise an attractive cash price at a considerable premium to    
the market value."                                                              
Substantial Shareholder Support                                                 
DCM DECOmetal ("DCM"), which currently owns 11.2% of Territory`s shares, is     
supportive of the Offer and has executed a pre-bid agreement with Exxaro        
whereby it will accept into the Offer within 2 days of it opening.              
Furthermore, under this agreement Exxaro has been given voting discretion in    
relation to DCM`s shareholding in Territory.                                    
Exclusivity Arrangements and Offer Conditions                                   
As part of the BIA executed between the parties, Territory and Exxaro have      
agreed customary exclusivity arrangements including "no shop" and "no talk"     
clauses. The BIA also provides Exxaro with notification and matching rights,    
such that Territory must provide immediate notification of any competing        
proposal to Exxaro and allow Exxaro a period of time to table a counter-offer.  
A break fee of approximately A$1.557 million (excluding GST) may also be        
payable by Territory under certain circumstances.                               
The Offer is conditional upon the satisfaction of certain conditions,           
including a 60% minimum acceptance condition, no material adverse change in     
relation to Territory and no prescribed occurrences in relation to Territory.   
The Offer is also conditional upon Territory entering into an agreement in      
relation to the termination of its outstanding loan arrangements with Swan      
Gold Limited under which Territory is entitled to receive at least A$6.7        
million in cash.                                                                
A summary of the key terms of the BIA, including the conditions of the Offer,   
is attached to this announcement as Appendix A.                                 
Financing Support up to US$36 million                                           
RMB (guaranteed by Exxaro) has entered into financing arrangements under which  
Exxaro (through RMB) has agreed to provide Territory with a Facility for up to  
US$36 million in certain circumstances. The Facility is subject to a Facility   
Agreement entered into by Territory and RMB on 22 May 2011. The period of       
facility availability is conditional on a number of factors including whether   
the Territory Board changes its recommendation in relation to the Offer due to  
a Superior Proposal and whether Exxaro is issued an option to subscribe for up  
to 15% of Territory`s issued share capital at a subscription price of A$0.46    
per share. A summary of the key terms of the Facility Agreement is attached to  
this announcement as Appendix B.                                                
Timetable                                                                       
Exxaro will finalise and mail out its Bidder`s Statement around early June      
2011. This document will outline the full details of the Offer and              
instructions about how to accept the Offer. Territory will finalise and mail    
out its Target`s Statement shortly thereafter. Territory shareholders should    
carefully consider these documents before deciding whether to accept into the   
Offer.                                                                          
Advisers                                                                        
Territory is being advised by Azure Capital as financial adviser and Freehills  
as legal adviser. Exxaro is being advised by Greenhill Caliburn Pty Limited     
and RMB Corporate Finance as financial advisers and Bennett & Co and Lavan      
Legal as legal advisers.                                                        
Ends                                                                            
About Territory                                                                 
Territory Resources Ltd is a Perth, Western Australia-based resources company   
focused the development and operation of bulk commodity operations such as its  
100%-owned Frances Creek Iron Ore Mine, located in the Northern Territory.      
About Exxaro                                                                    
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. Further information can be found about Exxaro at      
www.exxaro.com.                                                                 
Contacts                                                                        
Territory                                                                       
Nicholas Read                                                                   
Read Corporate                                                                  
T: +61 8 9388 1474                                                              
M: 0419 929 046                                                                 
Geoff Rasmussen                                                                 
Azure Capital Limited                                                           
T: +61 8 6263 0888                                                              
Exxaro                                                                          
Riaan Koppeschaar                                                               
Corporate Finance & Treasury                                                    
Exxaro Resources                                                                
T:+ 27 12 307 4145                                                              
M :+27 836091047                                                                
Ernst Venter                                                                    
Executive GM Business Growth                                                    
Exxaro Resources                                                                
T:+27 12 307 4322                                                               
M:+27 83 6091313                                                                
Richard Phillips / Jonathan Farrer                                              
Greenhill Caliburn Pty Ltd                                                      
+61 3 9935 6806 / +61 3 9935 6809                                               
Carel Vosloo / Nicola Harris                                                    
Rand Merchant Bank                                                              
+27 11 282 4143 / +27 11 282 1258                                               
Appendix A - Summary of Key Terms of Bid Implementation Agreement               
Exxaro and Territory entered into a Bid Implementation Agreement on 22 May      
2011 under which Exxaro and Territory have agreed to co-operate with each       
other in relation to the Bid. A summary of the terms of the Bid Implementation  
Agreement is set out below.  This summary is not exhaustive and does not        
constitute a definitive statement of the rights and liabilities of each of      
Exxaro and Territory under the Bid Implementation Agreement.                    
Under the Bid Implementation Agreement:                                         
1    The Bid and recommendation                                                 
1.1  Exxaro has agreed to make the Offer to all Territory Shareholders in       
respect of all of their Territory Shares.                                   
1.2  Territory represented and warrants to Exxaro that a majority of the        
    Territory Board  will recommend that, in the absence of a Superior          
    Proposal, Territory Shareholders accept the Offer.                          
1.3  Territory will procure the members of the majority of the Territory Board  
    who recommend the bid to accept the Offer in relation to any Territory      
    Share held by them, in the absence of a Superior Proposal.                  
2    Facilitating the Bid                                                       
2.1  For purposes of item 6 of section 633(1) of the Corporations Act,          
    Territory agrees that Exxaro may despatch offers under the Bid to           
    Territory Shareholders on the day on which the Bidder`s Statement as        
    lodged with ASIC is served on Territory or within 28 days after that day.   
2.2  In the absence of a Superior Proposal, Territory and a majority of its     
    directors will support the Bid and participate in efforts reasonably        
    required by Exxaro to promote the merits of the Bid, but only to the        
    extent that the majority of the Territory Board or the relevant director    
considers they may do so without breaching their duties as a director of    
    Territory.                                                                  
2.3  Territory agrees to use its reasonable endeavours to ensure satisfaction   
    of the Bid Conditions.                                                      
2.4  Within 5 Business Days of the Offer becoming unconditional, Exxaro must    
    make a private treaty offer to acquire all of the Territory Options         
    (outstanding as at that date) from each holder of Territory Options. If     
    accepted, the acquisition must be completed within 21 days of receipt of    
the acceptance.                                                             
2.5  Subject to any agreement between the parties, Territory must procure that  
    the Territory Board will:                                                   
2.5.1     take all actions necessary to ensure the nominees of Exxaro (Exxaro   
Nominees) are lawfully appointed as directors of Territory and that non     
    Exxaro Nominees resign such that the Exxaro Nominees represent:             
    (a)  three out of six directors of the Territory Board if Exxaro acquires   
         a Relevant Interest in excess of 50% of the Territory Shares and the   
Bid has become or is declared free from all Bid Conditions; and        
    (b)       a majority of the Territory Board once Exxaro has paid for        
         those acceptances of the Bid which resulted in it acquiring a          
         Relevant Interest of 50% of the Territory Shares; and                  
2.5.4     as soon as practicable after Exxaro acquires a Relevant Interest in   
    90% of the Territory Shares and the Bid has become or is declared free      
    from all Bid Conditions, ensure that all except one of the directors on     
    the Territory Board, other than the Exxaro Nominees, resign (provided the   
proper board is constituted at all times) and the continuing director       
    resigns upon Territory being delisted,                                      
    provided that Exxaro procures that the Exxaro Nominees do not participate   
    in decisions of Territory in relation to the Bid until after the end of     
the Offer Period.                                                           
2.6  Exxaro currently wishes to continue the employment of the existing non-    
    director employees of Territory on terms no less favourable than their      
    existing terms of employment.                                               
2.7  In the event that Exxaro obtains control (as defined in section 50AA of    
    the Corporations Act) of Territory under or as a consequence of the Bid,    
    Exxaro will not take any action, for a period of 6 months from the date     
    that Exxaro obtains control of Territory, to:                               
2.7.1     terminate the existing employment agreement of any Territory          
    employee as at the Announcement Date (except as permitted for cause under   
    the terms of employment for such employee);                                 
2.7.2     make any position held by an employee of Territory as at the          
Announcement Date redundant; or                                             
2.7.3     reduce or adversely vary the terms and conditions of employment of    
    any employee as at the Announcement Date (except in respect of the job      
    title of such employee).                                                    
4    Compensation amount                                                        
4.1  Territory undertakes to pay Exxaro a compensating amount of A$1,557,050    
    plus the amount of any GST payable, if:                                     
4.1.2     Territory accepts or enters into or offers to accept or enter into,   
any agreement, arrangement or understanding regarding a Competing           
    Proposal, or declares an intention to do any of these things;               
4.1.3     a majority of the Territory Board does not recommend the Bid or       
    withdraws, qualifies or adversely modifies an earlier recommendation or     
approves or recommends or makes an announcement in support of a Competing   
    Proposal or announces an intention to do any of these acts;                 
4.1.4     before the date that is 6 months after the Offer Period ends, a       
    person (other than Exxaro or an Associate of Exxaro) and that person`s      
Associates increases its Relevant Interest to more than 40% of Territory    
    Shares pursuant to a Competing Proposal that was announced (or such         
    intention was announced) before the end of the Offer Period;                
4.1.5     Territory or any of its directors does (or omits to do) anything      
(whether or not it may be permitted by the terms of this document) which    
    results in:                                                                 
(a)  any of the Bid Conditions not being satisfied or becoming incapable of     
    being satisfied and Exxaro does not declare the Bid  free of the breached   
condition (which Exxaro is under no obligation to do); or                   
(b)  a Territory Prescribed Occurrence occurring other than with the consent    
    of Exxaro; or                                                               
4.1.6     Territory breaches certain provisions of the Bid Implementation       
Agreement.                                                                  
4.2  Following receipt by Exxaro of the compensation amount, Exxaro will not    
    have any other claim under the Bid Implementation Agreement in respect of   
    the matter that gave rise to such payment.                                  
5    Exclusivity                                                                
5.1  From the date of the Bid Implementation Agreement until the earlier of     
    the close of the Bid or termination of the Bid Implementation Agreement     
    (the Bid Exclusivity Period), Territory must not except with the prior      
written consent of Exxaro, directly or indirectly solicit or invite any     
    Competing Proposal or initiate or encourage discussions with any third      
    party which may reasonably be expected to lead to a Competing Proposal or   
    with a view to obtaining any expressions of interest, offer or proposal     
from any person in relation to a Competing Proposal.                        
5.2  During the Bid Exclusivity Period, Territory must not, and must ensure     
    that its Representatives do not, except with prior written consent of       
    Exxaro:                                                                     
5.2.1     participate in any negotiations in relation to a Competing Proposal   
    or which may reasonably be expected to lead to a Competing Proposal;        
5.2.2     enter into any relevant agreement in connection with a Competing      
    Proposal;                                                                   
5.2.3     provide any information to a third party for the purposes of          
    enabling that party to make or consider making a Competing Proposal or in   
    circumstances where the provision of information may reasonably be          
    expected to lead to a Competing Proposal;                                   
5.2.4     communicate any intention to do the things in paragraph 5.2.1 -       
5.2.3;                                                                          
    save where the Territory Board, acting in good faith, determines that any   
    Competing Proposal may reasonably be expected to lead to a Superior         
Proposal and that failing to respond to the Competing Proposal would be     
    likely to constitute a breach of the Territory Board`s fiduciary or         
    statutory duties.                                                           
5.3  Territory warrants that, as at the date of the Bid Implementation          
Agreement, it has ceased any existing discussions or negotiations with      
    any party in relation to any  Competing Proposal.                           
5.4  During the Bid Exclusivity Period, Territory must promptly notify Exxaro   
    in writing of and approach in relation to a Competing Proposal which        
notice must include reasonable details of the applicable matter             
    (including the identity of the third person and, if applicable, all         
    material terms of the Competing Proposal) save where the Territory Board,   
    acting in good faith, after having obtained written advice from its legal   
advisers, determines that providing such details would be likely to         
    constitute a breach of the Territory Board`s fiduciary or statutory         
    duties.                                                                     
5.5  If, during the Bid Exclusivity Period, the Territory Board has determined  
that a Competing Proposal may reasonably be expected to lead to a           
    Superior Proposal, the following provisions apply:                          
5.5.1     Territory must promptly give Exxaro notice in writing of that fact    
    and that notice must provide all material details of the Superior           
Proposal, including details of the proposed acquirer and any other          
    material details;                                                           
5.5.2     if Territory gives Exxaro such a notice, Territory agrees that it     
    will not, until the end of 4 Business Days following the receipt of that    
notice by Exxaro, enter into any legally binding agreement, whether         
    conditional or not, with respect to the Superior Proposal;                  
5.5.3     if Territory gives Exxaro a notice, Exxaro will have the right, but   
    not the obligation, at any time until the end of 4 Business Days            
following receipt of the notice to:                                         
(a)  offer to amend the terms of the Bid; or                                    
(b)  propose any other transaction,                                             
    (each a Counterproposal), and if Exxaro does so, the Territory Board must   
promptly review the Counterproposal in good faith and do what the           
    Territory Board considers is required to comply with its fiduciary or       
    statutory duties, to determine whether the Counterproposal is equal to or   
    more favourable to Territory Shareholders than the Superior Proposal;       
5.5.4     if the Territory Board determines, in good faith and in order to      
    satisfy what the Territory Board considers to be its fiduciary or           
    statutory duties, that the Counterproposal is equal to or more favourable   
    to Territory Shareholders than the Superior Proposal, then:                 
(a)  if the Counterproposal contemplates an amendment to the Bid, the parties   
    must enter into a document amending the Bid Implementation Agreement to     
    reflect the Counterproposal;                                                
(b)  if the Counterproposal contemplates any other transaction, Territory must  
make an announcement as soon as reasonably practicable recommending the     
    Counterproposal, in the absence of a more favourable proposal, and the      
    parties must pursue the implementation of the Counterproposal in good       
    faith;                                                                      
(c)  each material successive modification of any Competing Proposal in         
    relation to a Superior Proposal made during the Bid Exclusivity Period      
    will be deemed to constitute a new proposal and the provisions of this      
    clause will apply to each such new proposal; and                            
(d)  the terms of the Bid Implementation Agreement apply to any                 
    Counterproposal as if such proposal constitutes the Bid.                    
5.6            The exclusivity obligations apply to a "Competing Proposal",     
         being a proposal that would, if completed, result in:                  
5.6.1     any person other than Exxaro acquiring an interest in all or part of  
         the assets of Territory, increasing its relevant interest in           
         Territory above 20% (or if already above 20%, increasing its           
         relevant interest, other than subject to the ability to `creep`        
under the Corporations Act), or otherwise acquiring control (as        
         defined in the Corporations Act) of Territory; or                      
5.6.2     Territory and another person or persons operating under a dual        
         listed company or similar structure.                                   
7         Termination                                                           
7.1            Either party to the Bid Implementation Agreement may terminate   
         that agreement:                                                        
7.1.1     if the other party is in material breach of this document and that    
breach is not remedied by that other party within 10 Business Days;    
7.1.2     if a court or other Public Authority issues a final and non-          
         appealable order or ruling or takes an action which permanently        
         restrains or prohibits the Offer; or                                   
7.1.3     if the Bid lapses for any reason including non-satisfaction of a      
         condition of the Bid.                                                  
7.2  Exxaro may terminate the Bid Implementation Agreement if:                  
7.2.1     Territory is in breach of the exclusivity obligations outlined        
above;                                                                 
7.2.2     the majority of the Territory Board changes its recommendation in     
         relation to the Bid following or as a result of the Board              
         determining that it has received a Superior Proposal;                  
7.2.3     a majority of the Territory Board does not recommend the Bid be       
         accepted by Territory Shareholders or, having recommended the Bid,     
         changes, qualifies or adversely modifies its recommendation in         
         relation to the Bid;                                                   
7.2.4     a Territory Prescribed Occurrence occurs; or                          
7.2.5     a Territory Material Adverse Change occurs; or                        
7.2.6     there is an Event of Default under the Facility Agreement.            
Bid Conditions                                                                  
The Offer will be subject to the following conditions:                          
1         Minimum acceptance condition                                          
         During, or at the end of, the Offer Period the number of Territory     
         Shares in which Exxaro and its associates together have Relevant       
Interests is at least 60% of all the Territory Shares (on a fully      
         diluted basis).                                                        
2         No material adverse change to Territory                               
    -    During the Condition Period, no matter, event, change, condition,      
circumstance or thing occurs, is discovered by Exxaro or becomes       
         public (in any such case, individually or when aggregated with all     
         such matters, events, changes, conditions, circumstances and things    
         and whether or not becoming public) which would result in or would     
reasonably be likely to result in:.                                    
2.1.1     the value of consolidated net assets of Territory being reduced by    
         at least A$5.8 million;                                                
2.1.2     the future consolidated net profit after tax of Territory in any      
year reducing by at least A$5.0 million;                               
2.1.3     Territory being unable to carry on its business in substantially the  
         same manner as at the date of this agreement;                          
2.1.4     any creditor demanding payment of a debt of A$1.0 million or more     
other than as contemplated in clause 2.1.8; or                         
2.1.5     a combined 35% decrease in the AUD effective price for 58% Fe fines   
         CFR China (based on Bloomberg codes TSIPIO58 for iron ore price and    
         AUDUSD Curncy for AUD:USD exchange rate at 1700 hrs Australian         
Western Standard Time each Business Day) from the level on the date    
         of the Bid Implementation Agreement for 5 consecutive Business Days,   
         including without limitation:                                          
2.1.6     any person accelerating or adversely modifying the performance of     
any obligations of Territory or any of its subsidiaries under any      
         material agreements, contracts or other legal arrangements,            
         but does not include any change:                                       
2.1.7     occurring as a result of any matter, event or circumstance required   
by this document, the Bid or the transactions contemplated by them;    
2.1.8     occurring as a consequence of Noble calling in any outstanding debt   
         owed to it by Territory;                                               
2.1.9     occurring as a result of any matter, condition, circumstance or       
thing fully and fairly disclosed in the Territory Due Diligence        
         Material or in an announcement made to ASX or a document lodged with   
         ASIC before the date of the Bid Implementation Agreement;              
2.1.10    approved in writing by Exxaro; or                                     
2.1.11    in respect of clauses 2.1.1 and 2.1.2 only, occurring as a result of  
         spot iron ore prices or foreign exchange movements.                    
    -    During the Condition Period, the S&P/ASX 200 Index not falling more    
         than 15% below the closing level on the date of the Bid                
Implementation Agreement (or where the Bid Implementation Agreement    
         is signed on a day that is not a trading day on ASX, the closing       
         level on the trading day immediately following the date of the Bid     
         Implementation Agreement) and staying below that level for 3           
consecutive Trading Days.                                              
3    No prescribed occurrences                                                  
    None of the following events happens during the Condition Period:           
-    Territory converts all or any of its shares into a larger or smaller       
number of shares;                                                           
-    Territory or a subsidiary of Territory resolves to reduce its share        
    capital in any way;                                                         
-    Territory or a subsidiary of Territory:                                    
3.3.1     enters into a buy-back agreement; or                                  
3.3.2     resolves to approve the terms of a buy-back agreement under section   
    257C(1) or 257D(1) of the Corporations Act;                                 
-    Territory or a subsidiary of Territory issues shares (other than on        
exercise of Territory Options or on vesting of Territory Performance        
    Rights), or grants an option over its shares, or agrees to make such an     
    issue or grant such an option (other than the issue of the 933,770          
    Territory Performance Rights the Board has previously resolved to issue);   
-    Territory or a subsidiary of Territory issues, or agrees to issue,         
    convertible notes;                                                          
-    Territory or a subsidiary of Territory disposes, or agrees to dispose, of  
    the whole, or a substantial part, of its business or property;              
-    Territory or a subsidiary of Territory charges, or agrees to charge, the   
    whole, or a substantial part, of its business or property;                  
-    Territory or a subsidiary of Territory resolves to be wound up;            
-    a liquidator or provisional liquidator of Territory or of a subsidiary of  
Territory is appointed;                                                     
-    a court makes an order for the winding up of Territory or of a subsidiary  
    of Territory;                                                               
-    an administrator of Territory, or of a subsidiary of Territory, is         
appointed under section 436A, 436B or 436C of the Corporations Act;         
-    Territory or a subsidiary executes a deed of company arrangement;          
-    a receiver, or a receiver and manager, is appointed in relation to the     
    whole, or a substantial part, of the property of Territory or of a          
subsidiary of Territory;                                                    
-    Territory pays, declares, distributes or incurs a liability to make or     
    pay a dividend, bonus or other share of its profits, income, capital or     
    assets by way of dividend or other form of distribution;                    
-    Territory makes any change to its constitution or convenes a meeting to    
    consider a resolution to change a constitution of Territory or a            
    subsidiary of Territory;                                                    
-    Territory or a subsidiary of Territory ceases, or threatens to cease to,   
carry on the business conducted as at the date of this agreement;           
-    Territory or a subsidiary of Territory (other than a dormant, non-         
    operating entity) being deregistered as a company or being otherwise        
    dissolved;                                                                  
-    any disposal of shares or securities by Territory or a subsidiary of       
    Territory in relation to a subsidiary of Territory other than to another    
    subsidiary of Territory;                                                    
-    an action taken by a Public Authority in consequence of, or in connection  
with, the Bid, which restrains or prohibits the making of the Bid or the    
    completion of any transaction contemplated by the Bidder`s Statement or     
    requires the divestiture by Exxaro of any Territory Shares, or the          
    divestiture of any assets by Territory or by any subsidiary of Territory    
or by any company within the Exxaro Group;                                  
-    Territory, or any subsidiary of Territory:                                 
    3.20.1    acquires, offers to acquire or agrees to acquire one or more      
    companies or assets (or an interest in one or more companies or assets)     
for an amount in aggregate greater than A$1.0 million or makes an           
    announcement about such an acquisition;                                     
3.20.1    disposes, offers to dispose or agrees to dispose of, or creates, or   
    offers to create an equity interest in one or more companies or assets      
(or an interest in one or more companies or assets) for an amount in        
    aggregate greater than A$1.0 million or makes an announcement about such    
    a disposal;                                                                 
3.20.3    enters into, offers to enter into or announces that it proposes to    
enter into any joint venture or partnership or dual listed company          
    structure, or makes an announcement about such a commitment; or             
3.20.4    incurs or commits to, or grants to another person a right the         
    exercise of which would involve Territory or any subsidiary of Territory    
incurring or committing to any capital expenditure or liability for one     
    or more related items of greater than A$1.0 million or makes an             
    announcement about such a commitment,                                       
-    Exxaro becomes aware that any document filed by or on behalf of Territory  
with ASX or ASIC contains a statement which is incorrect or misleading in   
    any material particular or from which there is a material omission (in      
    such circumstance, materiality being determined by reference to the         
    business and assets of Territory taken as a whole); or                      
-    Territory, or its subsidiary, releases, discharges or modifies any         
    substantial obligation to it of any person, firm or corporation or agrees   
    to do so;                                                                   
-    Territory appoints any additional director to its board of directors       
whether to fill a casual vacancy or otherwise;                              
-    Territory, or a subsidiary of Territory, enters or agrees to enter into    
    any contract of service or varies or agrees to vary any existing contract   
    of service with any director or manager, or pays or agrees to pay any       
retirement benefit or allowance to any director, manager or other           
    employee, or makes or agrees to make any substantial change in the basis    
    or amount of remuneration of any director, manager or other employee        
    (except as required by law or provided under any superannuation,            
provident or retirement scheme as in effect on the date of this agreement   
    and except relating to the Territory Board exercising its discretion to     
    allow any Territory Performance Rights to vest where permitted by their     
    terms);                                                                     
-    Territory has threatened or commenced against it any material claims or    
    proceedings in any court or tribunal; or                                    
-    Territory or a subsidiary of Territory directly or indirectly              
    authorising, committing or agreeing to take or announcing any of the        
actions referred to in paragraphs 3.1 to 3.25 above insofar as it applies   
    to Territory or the subsidiary of Territory the subject of such direct or   
    indirect authorisation, commitment, agreement or announcement.              
    provided that it will not include any occurrence:                           
-    fairly disclosed to Exxaro before the Announcement Date in the Territory   
    Due Diligence Material or as a result of disclosures made to ASX or         
    documents lodged with ASIC;                                                 
-    occurring as a result of any matter, event or circumstance required by     
this document, the Takeover Bid or the transactions contemplated by them;   
    or                                                                          
-    approved in writing by Exxaro.                                             
4    No exercise of change of control rights by a third party                   
No person exercises any right (whether subject to conditions or not) as a   
    result of Exxaro acquiring Territory Shares to:                             
-    acquire, or require Territory or a subsidiary of Territory to dispose of,  
    or offer to dispose of, any material asset of Territory or a subsidiary     
of Territory;                                                               
-    terminate or vary any material agreement with Territory or a subsidiary    
    of Territory; or                                                            
-    accelerate or adversely modify the performance of any obligations of       
Territory or any of its subsidiaries in a material respect under any        
    material agreements, contracts or other legal arrangements,                 
    save that this condition does not apply to the Marketing and Offtake        
    Agreement between Territory and Noble Resources Limited executed on or      
about August 2007 and any financing agreements with Noble in existence at   
    the date of the Bid Implementation Agreement.                               
5    Swan Gold Limited loan termination                                         
    During the Condition Period Territory enters into an agreement in           
relation to the termination of its loan arrangements with Swan Gold         
    Limited under which Territory is entitled to receive no less than           
    $6,700,000 in cash.                                                         
6    Definitions                                                                
In this Schedule:                                                               
Agreed Announcement means the joint announcement agreed by the parties in       
relation to the Bid substantially in the form set out in Schedule 4.            
Announcement Date means the date of release of the Agreed Announcement.         
ASIC means the Australian Securities and Investments Commission.                
ASX means ASX Limited or the Australian Securities Exchange, as appropriate.    
AUD means Australian dollars.                                                   
Bid Implementation Agreement means the Bid Implementation Agreement entered     
into by Exxaro and Territory on or prior to the Announcement Date.              
Bidder`s Statement means the bidder`s statement to be issued by Exxaro with     
respect to the Bid Offer.                                                       
Business Day means a day (other than Saturday, Sunday or public holiday) on     
which banks are open for general banking business in Perth, Western Australia.  
CFR means Cost and Freight and, with respect to a named port of destination:    
(b)  Carriage of goods is to be arranged by the seller;                         
(c)  Risk transfers from the seller to the buyer when the goods pass the        
ship`s rail; and                                                            
(d)  Cost transfer at port of destination, buyer paying such costs as are not   
for the seller`s account under the contract of carriage.                        
Condition Period means the period beginning on the date of this agreement and   
ending at the end of the Offer Period.                                          
Corporations Act means the Corporations Act 2001 (Cth).                         
Exxaro means Exxaro Resources Limited Registration Number 2000/011076/06 (a     
public company duly incorporated in South Africa) of Roger Dyason Road,         
Pretoria West 0183, South Africa.                                               
Exxaro Group means Exxaro and its related bodies corporate (as defined in the   
Corporations Act).                                                              
Noble means Noble Group Limited (a company duly incorporated in Bermuda) of     
Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and its related       
bodies corporate (as defined in the Corporations Act).                          
Offer means the offer to acquire Territory Shares to be made by Exxaro to       
Territory shareholders.                                                         
Offer Period means the period during which the Offer is open for acceptance.    
Public Authority means any government or any governmental, semi-governmental,   
administrative, statutory or judicial entity or authority, or any minister,     
department, office or delegate of any government, whether in Australia or       
elsewhere. It also includes any self-regulatory organisation established under  
statute and any stock exchange.                                                 
Register Date means the date set by Exxaro pursuant to section 633(2) of the    
Corporations Act.                                                               
Relevant Interest has the same meaning as given in sections 608 and 609 of the  
Corporations Act.                                                               
Territory means Territory Resources Limited ACN 100 552 118 of Ground floor,    
23 Ventnor Avenue, West Perth, Western Australia 6005.                          
Territory Data Room means the virtual data room established by Territory to     
provide Exxaro access to information about Territory.                           
Territory Due Diligence Material means all information (including in            
electronic form) relating to the business, assets, liabilities, operations,     
profits and losses, financial position and performance and prospects of         
Territory provided by Territory to Exxaro in the Territory Data Room.           
Territory Option means an option to subscribe for a Territory Share granted by  
Territory.                                                                      
Territory Performance Right means a right granted under Territory`s             
performance right plan to acquire by way of issue a Territory Share subject to  
the terms of such plan.                                                         
Territory Share means a fully paid ordinary share in the capital of Territory   
which is on issue as at the Register Date together with any Territory Share     
that is issued during the Offer Period as a result of the exercise of a         
Territory Option or the vesting of a Territory Performance Right.               
Trading Day has the meaning given in the Listing Rules of the ASX.              
USD means United States of America Dollars.                                     
     Appendix B - Summary of Key Terms of Facility Agreement                    
Exarro (acting through FirstRand Bank Limited (acting through its Rand          
Merchant Bank Division (RMB)) and Territory entered into a Facility Agreement   
on 22 May 2011 under which RMB has agreed to provide financing support to       
Territory of up to US$36 million (Facility) to satisfy moneys owning to Noble   
Resources Ltd and for other working capital purposes (Facility Agreement).  A   
summary of the terms of the Facility Agreement is set out below. This summary   
is not exhaustive and does not constitute a definitive statement of the rights  
and liabilities of each of RMB and Territory under the Facility Agreement.      
Under the Facility Agreement:                                                   
1    The Facility Agreement contains usual commercial terms for a Facility of   
this nature.                                                                
2    The Facility is to be secured by the provision of:                         
(a)  a mining mortgage over certain mining tenements held by Territory;         
(b)  a fixed and floating charge over all of the assets and undertakings of     
Territory and Territory Iron Pty Ltd;                                       
(c)  a share mortgage over the share held by Territory in Territory Iron Pty    
    Ltd and Territory Land Holdings Pty Ltd; and                                
(d)  a guarantee and indemnity granted by Territory Iron Pty Ltd.               
3    The Facility is available for drawing following the satisfaction of usual  
    conditions precedent for a Facility of this nature until the earlier of:    
(a)  the Bid lapsing due to the non-satisfaction of conditions or the Bid       
    being withdrawn;                                                            
(b)  a Superior Proposal being announced;                                       
(c)  if, on or before 10 June 2011, Territory has not offered to Exxaro or its  
    nominee an unconditional option to subscribe for up to the maximum number   
    of shares that Territory is able to issue pursuant to any applicable law    
at an offer price of $0.46 per share exercisable by Exxaro at any time      
    within 6 months after the offer of the option (Exxaro Options); and         
(d)  the final repayment date.                                                  
    RMB has agreed that the conditions precedent to drawing have been           
satisfied, subject to the satisfaction of certain conditions subsequent.    
4    The Facility is interest only payable monthly and must be repaid as a      
    bullet in full at the earlier of                                            
(a)  12 months from the date of first drawdown; and                             
(b)  15 months from the date of the Facility Agreement.                         
5    The Facility is also repayable in full in the following circumstances:     
(a)  if the Bid lapses due to non-satisfaction of the conditions or the Bid is  
    withdrawn, Territory must repay the Facility in full in 90 days;            
(b)  if a Competing Proposal is made which is:                                  
(1)  not recommended by the board of Territory within 5 Business Days of the    
    announcement, Territory must repay the Facility in full in a further 90     
    days;                                                                       
(2)  recommended by the board of Territory, Territory must repay the Facility   
    in full in 14 days;                                                         
(c)  if, on or before 10 June 2011, the Exarro Options have not been offered,   
    Territory must repay the Facility in full 14 days.                          
(d)  if the board of Territory does not recommend the Bid or withdraws,         
    qualifies or adversely modifies their recommendation of the Bid,            
    Territory must repay the Facility in full in 14 days.                       
Date: 23/05/2011 07:10:15 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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