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Exx - Exxaro Resources Limited - Unaudited Pro Forma Financial Effects Of The

Release Date: 11/11/2011 10:00:02      Code(s): EXX
EXX - Exxaro Resources Limited - Unaudited pro forma financial effects of the   
proposed transaction with Tronox Incorporated and withdrawal of cautionary      
announcement                                                                    
Exxaro Resources Limited                                                        
(Incorporated in the Republic of South Africa)                                  
(Registration number 2000/011076/06)                                            
Issuer Code: EXX                                                                
ISIN: ZAE000084992                                                              
("Exxaro")                                                                      
UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE PROPOSED TRANSACTION WITH TRONOX   
INCORPORATED AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                          
Exxaro shareholders are referred to the announcement released on SENS on 26     
September 2011 and published in the press on 27 September 2011 relating to the  
proposed transaction between Exxaro and Tronox Incorporated ("Tronox"), which   
entails the combination of Exxaro`s Mineral Sands Operations with the businesses
of Tronox under a newly-formed Australian holding company ("New Tronox") in     
exchange for approximately 38.5% of the shares in New Tronox (the "Proposed     
Transaction").                                                                  
The unaudited pro forma financial effects of the Proposed Transaction on Exxaro 
have now been finalised and are set out below. The financial effects of the     
Proposed Transaction on Exxaro have been prepared using Exxaro`s interim        
financial results for the 6 months ended 30 June 2011, which were released on   
SENS on 18 August 2011. For purposes of the impact of the Proposed Transaction  
on the consolidated statement of comprehensive income, it is assumed that the   
Proposed Transaction occurred on 1 January 2011, and for purposes of adjusting  
the consolidated statement of financial position, it is assumed that the        
Proposed Transaction occurred on 30 June 2011. The consolidated statement of    
comprehensive income of Exxaro includes the statement of comprehensive income of
Tronox for the 6 months ended 30 June 2011, while the pro forma consolidated    
statement of financial position of Exxaro includes the statement of financial   
position of Tronox as at 30 June 2011. The unaudited pro forma financial        
information is presented for illustrative purposes only, and because of its     
nature, may not fairly present Exxaro`s financial position, changes in equity,  
results of operations or cash flows going forward.                              
The unaudited pro forma financial information has been prepared using accounting
policies that are consistent with International Financial Reporting Standards   
(IFRS) and have been presented on the same basis using the accounting policies  
that Exxaro has adopted in its historical financial information.                
The Exxaro Board is responsible for the compilation, contents and presentation  
of the unaudited pro forma financial information contained in this announcement 
and for the financial information from which it has been prepared. Their        
responsibility includes determining that the unaudited pro forma financial      
information has been properly compiled on the basis stated; that the basis is   
consistent with the accounting policies of Exxaro; and that the pro forma       
adjustments are appropriate for the purposes of the unaudited pro forma         
financial information disclosed in terms of the JSE Limited Listings            
Requirements.                                                                   
Unaudited pro forma financial effects Before(1)  After     % change             
Earnings Per Share (Cents)                                                      
- basic                              921        3,272     255%                  
- diluted                            885        3,145     255%                  

Headline Earnings Per Share(Cents)(1)                                           
- basic                              1,045      981       (6%)                  
- diluted                            1,005      943       (6%)                  

Net Asset Value Per Share (Rands)     55         78        42%                  
                                                                                
Net Tangible Asset Value Per Share                                              
(Rands)                               55         77        40%                  
Ordinary shares (million)                                                       
- issue                               359        359       0%                   
- weighted average number of shares   348        348       0%                   
- diluted                             362        362       0%                   
Notes:                                                                          
(1)  Based on Exxaro`s reviewed interim results for the six months ended 30 June
2011, as published on 18 August 2011.                                           
(2)  The adjusted earnings per share shows the illustrative effect of the       
Proposed Transaction on earnings per share after adjusting for certain non-     
recurring accounting entries arising from the implementation of the Proposed    
Transaction.                                                                    
The items that have been adjusted for in the calculation of the illustrative    
adjusted earnings per share, and their impact, are as follows:                  
Illustrative headline earnings (Rand)            Gross        Tax  Net          
                                                Rm           Rm   Rm            
Exxaro headline earnings for the period ended                      3 637        
30 June 2011                                                                    
Pro forma transactions(1)                        8 181             8 181        
Adjusted for:                                                                   
Gains on disposal of property, plant and         (18)         5    (13)         
equipment                                                                       
Gain on disposal of subsidiaries and joint       (8 391)           (8 391)      
ventures                                                                        
Headline earnings                                                  3 414        
                                                                                
Illustrative headline earnings per share                                        
(Cents)                                                                         
Basic                                                              981          
Diluted                                                            943          
Notes:                                                                          
(1) The pro forma financial effects assume that Exxaro disposed of 74% of the   
shares and intercompany debt in Exxaro`s South African Mineral Sands Operations 
(the Namakwa Sands and KZN Sands mines and smelters (collectively the South     
African Operations)) and Exxaro`s 50% interest in the Tiwest Joint Venture in   
Australia on 1 January 2011, in return for 38.5% of the shares of New Tronox.   
The purpose of the financial effects is to illustrate the impact of the         
transaction on:                                                                 
-    attributable and headline earnings per share for the period 1 January 2011 
    to 30 June 2011; and                                                        
-    net asset value and net tangible asset value per share at 30 June 2011, on 
    the assumption that the transaction had been implemented on 30 June 2011.   
ASSUMPTIONS IN THE PREPARATION OF THE FINANCIAL EFFECTS                         
1.Flip-up option                                                                
The flip-up option has not been included in the calculation of the financial    
effects because it is expected that the current South African legislation in    
relation to Black Economic Empowerment will not change in the near future. For  
this reason it has been assumed that the option will not be exercised in the    
near future.                                                                    
2.Impairment reversals                                                          
No impairment reversals of the 2006 and 2009 KZN Sands Operations have been     
taken into account in the financial effects.                                    
3.Accounting for the South African assets                                       
    Exxaro will own a direct shareholding of 26% and an indirect shareholding   
of 38,5% through New Tronox of the total South African Operations. This results 
in an effective shareholding of 54,49 % of the South African Operations. Equity 
accounting has been applied in the preparation of the financial effects. It is  
expected that Exxaro will not have the power to govern the financial and        
operating policies of the operations, so as to benefit from their activities. It
has been assumed that the control of the operations will rest with New Tronox,  
although Exxaro will have significant influence.                                
4.The determination of fair value                                               
    The pro forma equity value of New Tronox used in the preparation of the     
financial effects is R27,8 billion, based on the volume weighted average price  
at which Tronox`s common shares traded  for the 30 trading days to 23 September 
2011 ("30 day VWAP"), being USD130,42 (R1 078,95 using a ZAR/USD exchange rate  
of 8,27 on 23 September 2011). The implied Exxaro value used was therefore R10,7
billion.                                                                        
5.Proceeds on disposal                                                          
The purchase price will be settled by the issue of shares. These proceeds on    
disposal are based on the volume weighted average price at which Tronox`s common
shares traded  for the 30 trading days to 23 September 2011 ("30 day VWAP"),    
being USD130,42 (R1 078,95 using a ZAR/USD exchange rate of 8,27 on 23 September
2011). The implied Exxaro value used was therefore R10,7 billion.               
6.Accounting policies                                                           
The pro forma financial effects have been prepared using accounting policies    
consistent with IFRS and have been presented on the same basis using the        
accounting policies that Exxaro has adopted in its historical financial         
information.                                                                    
7.Tronox reorganisation income                                                  
The pro forma financial information excludes Tronox`s reorganisation        
income.                                                                         
8.Conversion of Tronox Results for the period ended 30 June 2011                
Tronox`s results used in the preparation of the financial effects have been     
converted from US GAAP to IFRS and in accordance with the accounting policies of
Exxaro.                                                                         
9.Exchange rates used                                                           
  Against ZAR                           USD          AUD                        
The following exchange rates were     6.78         7.28                       
  used for the translation of the                                               
  statements of financial position                                              
10.Transaction fees                                                             
All transaction fees incurred and forecast have been included in the financial  
effects.                                                                        
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT                                           
In light of the above, Exxaro shareholders are advised that caution is no longer
required to be exercised when dealing in Exxaro securities.                     
FORWARD-LOOKING STATEMENTS                                                      
This announcement contains "forward-looking statements" within the meaning of   
the Private Securities Litigation Reform Act of 1995 (a United States Act).     
Forward-looking statements are statements that are not historical facts,        
including statements concerning the anticipated timing of filings and approvals 
relating to the Proposed Transaction; the expected timing of the completion of  
the Proposed Transaction; the expected benefits and costs of the Proposed       
transaction; management plans relating to the Proposed transaction; the ability 
to complete the Proposed Transaction in view of the various closing conditions; 
the possibility that the Proposed Transaction may not be completed; any         
projections of earnings, revenues, synergies, accretion, margins or other       
financial items; any statements of operations, including the execution of       
integration plans; any statements of expectation or belief; and any statements  
of assumptions underlying any of the foregoing.  Any statement in this          
announcement that expresses or implies Tronox`s, Exxaro`s or New Tronox`s       
intentions, beliefs, expectations or predictions (and the assumptions underlying
them) is a forward-looking statement.  Forward-looking statements involve       
inherent risks, uncertainties and assumptions, including, without limitation,   
risks related to the timing or ultimate completion of the Proposed Transaction; 
the possibility that expected benefits may not materialize as expected; that,   
prior to the completion of the Proposed Transaction, Tronox`s business or       
Exxaro`s business may not perform as expected due to uncertainty; that the      
parties are unable to successfully implement integration strategies or otherwise
realise the synergies anticipated for the Proposed Transaction; and other risks 
and uncertainties that are beyond the parties` control.  If such risks or       
uncertainties materialise or such assumptions prove incorrect, actual results   
could differ materially from those expressed or implied by such forward-looking 
statements and assumptions.  The forward-looking statements contained in this   
announcement are made as of the date hereof, and Tronox and Exxaro each         
expressly disclaim any obligation to update or correct any forward-looking      
statements made herein due to the occurrence of events after the issuance of    
this announcement.                                                              
IMPORTANT ADDITIONAL INFORMATION                                                
This announcement is for informational purposes only and is not an offer to sell
or the solicitation of an offer to purchase or exchange any securities, nor     
shall there be any sale of securities, in any jurisdiction in which such offer, 
solicitation or sale would be unlawful prior to registration or qualification   
under the securities laws of any such jurisdiction.  The publication and        
distribution of this announcement and any separate documentation regarding the  
Proposed Transaction, the making of any offer for shares or the issuance and    
offer to purchase New Tronox`s shares may be subject to specific regulations or 
restrictions in certain jurisdictions.  As a result, persons in possession of   
this announcement must seek information as to any applicable local restrictions 
and comply therewith.  None of Tronox, Exxaro, New Tronox or any of their       
respective affiliates undertakes any liability of any kind for any violation of 
applicable law.  The solicitation of Tronox shareholder consent for the Proposed
Transactions and the offer of the New Tronox`s shares will only be made pursuant
to a solicitation and information statement and related materials that are      
intended to be filed with the SEC.                                              
Tronox and Exxaro intend for New Tronox to file a registration statement and    
solicitation and information statement, together with other related materials,  
with the SEC in connection with the Proposed Transaction.  Information regarding
the participants in the Proposed Transaction and a description of their direct  
and indirect interests, by security holdings or otherwise, will be contained in 
the relevant materials to be filed with the SEC when they become available.     
TRONOX SHAREHOLDERS ARE URGED TO READ THESE MATERIALS REGARDING THE PROPOSED    
TRANSACTION CAREFULLY PRIOR TO MAKING ANY DECISIONS WITH RESPECT TO THE PROPOSED
TRANSACTION, IF AND WHEN THESE MATERIALS BECOME AVAILABLE, BECAUSE THEY WILL    
CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE        
PROPOSED TRANSACTION.                                                           
Exxaro shareholders and Tronox stockholders will be able to obtain a free copy  
of such materials without charge at the SEC`s website (www.sec.gov) or from the 
information agent named in such materials once they have been filed with the    
SEC. These materials will also be made available for inspection at Exxaro`s     
registered offices, Exxaro Corporate Centre, Roger Dyason Road, Pretoria West,  
0183, South Africa for a period of 30 Days after filing.                        
For enquiries:                                                                  
Wim de Klerk                                                                    
Exxaro Resources Limited                                                        
Finance Director                                                                
Tel: + 27 12 307 4848                                                           
Mobile: +27 82 652 5145                                                         
Email: wim.deklerk@exxaro.com                                                   
11 November 2011                                                                
Pretoria                                                                        
Financial advisor to Exxaro                                                     
J.P. Morgan                                                                     
Reporting accountants                                                           
PWC                                                                             
US, European and Asian legal counsel to Exxaro                                  
Orrick, Herrington & Sutcliffe LLP                                              
SA legal counsel to Exxaro                                                      
Norton Rose South Africa                                                        
SA legal counsel to Exxaro                                                      
CLS Attorneys                                                                   
Australian legal counsel to Exxaro                                              
Freehills                                                                       
Sponsor to Exxaro                                                               
Deutsche Securities SA (Proprietary) Limited                                    
Financial advisor to Tronox                                                     
Goldman, Sachs & Co.                                                            
Financial advisor to Tronox                                                     
Moelis & Company                                                                
US legal counsel to Tronox                                                      
Kirkland and Ellis LLP                                                          
SA legal counsel to Tronox                                                      
Werksmans                                                                       
Australian legal counsel to Tronox                                              
Blake Dawson                                                                    
Date: 11/11/2011 10:00:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
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