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Release Date: 07/03/2013 07:06:00      Code(s): EXX     
Incorporated in the Republic of South Africa
(Registration Number: 2000/011076/06)
JSE share code: EXX
ISIN code: ZAE000084992



    Core net operating profit of R2,9 billion
     Headline earnings per share (HEPS) of 1 401 cents
     Final dividend of 150 cents per share
     Top 10 total shareholder returns (TSRs) over 10 year period in global survey
     2nd place in mining sector of the 2012 Deloitte Best Company to Work For (7th place overall)

    Lost time injury frequency rate (LTIFR) at 0,29 against target of 0,15
     Two fatalities

Comments are based on a comparison of the group?s reviewed financial results and unreviewed physical
information for the years ended 31 December 2012 and 2011 respectively. These results are not
comparable due to profits realised on the sale of mineral sands (R3 541 million), Rosh Pinah operation
(R544 million) and other non-core assets of R42 million in 2012, the partial impairment reversal of the
carrying value of property, plant and equipment at KZN Sands of R103 million in 2012 (2011: R869 million),
as well as a R516 million impairment of the carrying value of property, plant and equipment at the Zincor
refinery in 2011. The conclusion of these two sale transactions resulted in the mineral sands and Rosh
Pinah businesses? financial results effectively being included in these annual results for approximately five
and a half and five months respectively compared to the full 12-month period in 2011. Where relevant,
comments exclude transactions which make the results under review not comparable.

The group early adopted the revised suite of consolidation standards, which included International
Accounting Standards (IAS) 27 Separate Financial Statements, IAS 28 Investments in Associates and Joint
Ventures as well as International Financial Reporting Standards (IFRS) 10 Consolidated Financial
Statements, IFRS 11 Joint Arrangements and IFRS 12 Disclosures of Interests in Other Entities. As such
the Mafube Coal Proprietary Limited and South Dunes Coal Terminal Company Proprietary Limited (SDCT)
joint ventures, which were previously proportionately consolidated, are now equity accounted. This has
resulted in the restatement of the 2011 financial results to reflect the new accounting method.


Construction on the Grootegeluk Medupi Expansion Project to supply Eskom?s Medupi power station with
14,6Mtpa of coal continues to progress well. Exxaro was able to meet its contractual commitments on time
with first coal delivered during 2012.

Mineral sands
Further to the interim results announcement, Exxaro has increased its shareholding in Tronox Limited
(Tronox), listed on the New York Stock Exchange, from the 39,2% held at date of transaction to 44,65% at
31 December 2012. This is in line with the group?s strategy to increase its exposure to the mineral sands
and pigment businesses.

Following the previous announcement regarding the acquisition of the African Iron Limited (AKI) group of
companies, Exxaro continues with the group?s strategy to develop an Exxaro ?managed and controlled? iron
ore business. The group has spent the most part of 2012 on activities to increase the resource, completing
the bankable feasibility study for a 2Mtpa operation and securing a mining convention with the government
of the Republic of Congo.

Further to the shareholders? agreement signed with Tata Power?s wholly-owned subsidiary Khopholi
Investments in the first quarter of 2012, Exxaro has recently concluded a term sheet with Linc Energy
Limited to jointly pursue underground coal gasification as a commercial business to develop energy
solutions in Sub-Saharan Africa. This is in line with Exxaro?s strategy to include clean energy technologies
as part of future energy growth aspirations.

Safety remains a top priority. The group continues to strive to achieve zero harm at our operations, with a
focus on proactive risk identification and assessment, as well as enhancing the effectiveness of control
measures undertaken.The average LTIFR per 200 000 man-hours worked increased from 0,20 in 2011 to
0,29 in 2012, reflecting a 45% regression from 2011?s achievement. The group?s target is 0,15. Six
business units achieved no lost time injuries in the year ended 31 December 2012 compared to five in

Regrettably, the group experienced two fatalities in the second half of 2012. Nonhlanhla Shabalala, an
employee at Matla mine in Mpumalanga, died on 5 August 2012 following secondary complications
resulting from surgery that was performed on an injury sustained in an underground accident on
14 July 2012. Shadrack Moroka, an employee at Grootegeluk mine in Lephalale, sustained fatal injuries
when a haul truck collided with a light duty vehicle in which he was an occupant.

New mining rights applications in terms of the Mineral and Petroleum Resources Development Act of South
Africa were submitted for the Paardeplaats and Thabametsi projects. Final Environmental Management
Plans were submitted in the first quarter of 2013.

A wetland strategy project was initiated in 2012 to assist operations to address the challenges of mining in
ecologically sensitive environments.

All 12 Exxaro operated business units have retained their ISO 14000 and OHSAS 18001 certifications in

HIV/AIDS and tuberculosis also remain areas of focus for the group with employees and contractors who
are affected and impacted by these conditions receiving support. In order to create a workplace
environment free from stigma, Exxaro launched an HIV/AIDS disclosure initiative as well as training of staff
on how to support employees affected and impacted by these diseases. Following the launch of the
disclosure initiative, there was a substantial increase in the number of employees enrolling for treatment
(from 325 to 454) in the second half of the year.

The group?s contribution to the Chairman?s Fund during 2012 earmarked for investments in social and
labour plans was R50 million, from which R24 million was spent on community development initiatives in
the year. An additional discretionary R10 million was also contributed from the corporate departments.

The Carbon Disclosure Project requires South Africa?s top listed companies to measure and disclose what
climate change means for their business. The latest report (2012) reflects the trend of increasing
engagement by the South African business sector in anticipating and responding to climate change issues.
Companies have to qualify for the Carbon Disclosure Leadership Index on a pre-determined point system in
a manner that demonstrates exceptional transparency and data management. Exxaro was the overall
leader out of 12 companies that qualified for the 2012 Carbon Disclosure Leadership Index with 100
normalised points.

To ensure the sustainability of the group, Exxaro has several breakthrough innovations which are expected
to turn into commercial operations. These are expected to contribute to the group?s strategic goal of
achieving a US$20 billion market capitalisation by 2020, as well as contributing to the development of
South Africa. One such initiative is the Ultra High Dense Medium Separation processing technology which
provides a solution to the challenge of declining iron ore qualities and the limitations of existing
technologies by improving resource utilisation and increasing life of mine.

Exxaro was named one of the global Top 10 mining companies delivering the highest total shareholder
returns over a 10-year period in a recent survey by the Boston Consulting Group.

The group?s chief executive officer, Sipho Nkosi, was awarded the Frost & Sullivan 2012 Growth Innovation
Leadership Award for his commitment and dedication to building a greater sustainable mining industry,
while continuing to drive and lead South Africa into the future. He was also named the winner in the Master
Entrepreneur Category of the South African Ernst & Young World Entrepreneurs Awards for excellence in
his field of work.

Exxaro achieved second place in the mining category of the 2012 Deloitte Best Company to Work For

Revenue and net operating profit
Group consolidated revenue decreased 23% to R16 122 million, mainly as a result of the inclusion of the
mineral sands and Rosh Pinah businesses for effectively only five and a half and five months, respectively,
in the 2012 financial year compared to 12 months in 2011, as well as challenging coal trading conditions.

Group consolidated net operating profit was R462 million lower at R3 310 million after exclusion of the
R103 million (2011: R869 million) partial reversal of the impairment of the carrying value of property, plant
and equipment at KZN Sands, the profits recognised on the sale of mineral sands, Rosh Pinah operation
and other non-core assets of R3 451 million, R544 million and R42 million respectively, as well as the R516
million impairment of the carrying value of property, plant and equipment at the Zincor refinery in 2011.

The cessation of production at Zincor at the end of 2011 and the inclusion of Rosh Pinah in 2012 for only
five months resulted in cost savings of approximately R2 143 million in 2012. However, the recent structural
alignment of the group as well as the implementation of the SAP ECC6 system resulted in cost increases of
approximately R262 million. Included in other group costs are costs relating mainly to the corporate office.

Attributable earnings, inclusive of Exxaro?s equity accounted investment in associates, amounted to R9 677
million or 2 734 cents per share, representing a 24% increase from 2011 mainly as a result of the profits
realised on the sale of subsidiaries and other non-core assets.

Headline earnings
Headline earnings recorded, which exclude, inter alia, the impact of the impairment and partial impairment
reversal as well as profits realised on the sale of the subsidiaries, were R4 958 million or 1 401 cents per
share. This represents a 33% decrease on the 2011 headline earnings per share.

Cash flow

Cash retained from operations was R3 969 million for the group. This was primarily used to fund net
financing charges of R137 million, taxation payments of R277 million and dividends paid of R3 012 million.
A total of R3 761 million of capital expenditure was invested in new capacity, with R1 572 million applied
towards sustaining and environmental capital. A total of R3 154 million of the capital investment in new
capacity was for the Grootegeluk Medupi Expansion Project.

After the receipt of R4 023 million in dividends, primarily from Sishen Iron Ore Company Proprietary Ltd
(SIOC) and Tronox, as well as the outflow associated with the acquisition of AKI of R2 603 million, the
group had a net cash outflow before financing activities of R3 575 million for the year under review. Net
debt reported at 31 December 2012 was R2 198 million, reflecting a net debt to equity ratio of 8%.

Exchange rates realised
An average exchange rate of R8,08 to the US dollar was realised for the year ended 31 December 2012
compared to R7,28 in 2011. Unrealised foreign currency profits of R56 million, on the revaluation of
monetary items denominated in a foreign currency, were recorded based on the relative weakness of the
local currency to the US dollar at 31 December 2012.

Equity accounted investments
Equity accounted investments in the post-tax profits of associates consist of Exxaro?s interest in SIOC of R3
202 million, in Black Mountain Mining Proprietary Ltd (Black Mountain) of R101 million and in Tronox?s
effective losses of R250 million. After the completion of the purchase price allocation process, R470 million
was accounted for as the excess of fair value of the net asset value over the cost of the investment in

Challenging trading conditions were experienced in 2012 with average export prices dropping from US$105
per tonne in January to a low of US$85 per tonne in November. A general decline in export volumes was
also experienced during the year. Exxaro realised an average export price of US$94 per tonne in 2012
compared to US$118 per tonne in 2011. Production earmarked for export was successfully re-directed into
the domestic steam market where opportunity arose.

Demand from the metallurgical market was also depressed due to the ferrochrome smelter shutdowns in

Revenue and net operating profit
The combination of lower prices realised on domestic and export sales, coupled with lower volumes,
translated into Coal revenue of R12 064 million being 3% lower than in 2011. This was partially offset by
higher revenue from Eskom sales.

A 32% decrease in net operating profit to R2 105 million (at an operating margin of 17%) was recorded,
mainly as a result of the decrease in export volumes (R213 million) and selling prices (R316 million),
inflationary pressures (R365 million) and higher operating costs (R684 million). These were partially offset
by the favourable impact of the local currency weakness against the US dollar in 2012 compared to 2011
(R486 million). Included in the cost increases were R207 million higher distribution costs, R223 million price
adjustments on the Mafube buy-ins as well as corporate service fee re-directed to the coal business of
R253 million, mainly as a results of the discontinuation of the mineral sands and Rosh Pinah operations.
The estimated coal rehabilitation and decommissioning provisions were independently reviewed and
standardised in 2012. This had a R102 million negative impact on the net operating profit in recorded scope
changes for the coal operations.

Production and sales volumes
Overall coal production (excluding buy-ins from Mafube) remained stable for the year ended 31 December
2012 at 40 Mtpa.

Power station coal production from the tied mines was 588kt (5%) higher compared with 2011 mainly as a
result of a 798kt increase at Matla which is partly offset by the closure of the Mooifontein open cast mine
and the on-going difficult geological conditions which resulted in lower production volumes at Arnot.

The higher sales volumes from the tied mines were mainly due to higher production at Matla and increased
demand from Eskom.

The commercial mines? power station coal production was lower by 311kt (2%) compared with 2011 due to
933kt lower production at Grootegeluk. The dispatch conveyor belt to Eskom Matimba power station broke
down early in 2012 resulting in production cut-backs. This was partly offset by 452kt higher production at
NBC due to improved yields achieved. Leeuwpan production increased by 170kt as a result of improved

Grootegeluk?s coking coal production was 166kt (9%) higher as a result of increased off-take from Eskom
coupled with an improved logistics process. This resulted in 137kt (5%) higher sales, partly offset by lower
off-take by AMSA.

Steam coal production was 367kt (-6%) lower mainly due to 355kt lower production at Leeuwpan as a result
of lower yields achieved coupled with lower demand from AMSA.

The Char plant production was 70% lower mainly due to the downturn in the ferrochrome industry, with
production deliberately reduced to manage high stock levels. This industry downturn translated into
decreased sales compared to 2011.

Export sales were 21% lower mainly due to Transnet Freight Rail performing at a lower level compared to
the previous year, lower exports via Maputo due to the lower average price realised as well as production
difficulties predominantly at Mafube. Some of the steam coal was successfully re-directed to the domestic
market mainly from Leeuwpan and NCC, albeit at lower prices.

Exxaro?s growth initiatives continue to focus on diversifying the business with carbon, reductants, ferrous
and energy projects, aligned with the group?s approved commodity strategy.

The Grootegeluk Medupi Expansion Project (GMEP) expenditure to date is                 R7,1 billion with the
project at 92% stage of completion. It is expected that the total project expenditure will be approximately
R10,2 billion. The revised budget has increased by R700 million due to a combination of factors, including
additional escalations, labour unrest, steel shortages and additional scope that was added to the project.
The first coal based on a revised ramp-up schedule agreed with Eskom was delivered to Eskom for the
commissioning of the respective coal handling systems. The coal supply ramp-up will commence during the
first half of 2013 and is expected to continue until the second half of 2016.

The project will be implemented in three phases to make provision for the delayed ramp-up of Eskom to
tonnages. Phase one includes the first mining equipment, the run of mine bunker, the total plant complex
and the total dispatch facilities. It is anticipated that coal will be produced through the plant during the first
half of 2013. Phase two, which is 75% complete, includes the conveyors and semi mobile tip and crushers
in the pit. It is forecast to be completed by the third quarter of 2013. Phase three includes the remaining
mining equipment and the housing project of 740 units on this project is forecast to be completed in the first
half of 2013.

The backfill project at Grootegeluk is progressing well with phase one forecast to be completed in the third
quarter of 2013 and phase two by the end of 2014.

Exxaro continues to engage with the relevant stakeholders for the conclusion of implementation plans for
integrated infrastructure for the Waterberg coalfields which will include the supply of water, rail, road and
housing. The upgrade of the Zeeland Water Treatment Works plant from 20M /day to 40M /day, which
supplies the Lephalale municipality with potable water, was completed and commissioned in 2012. This
integrated infrastructure is deemed crucial to the development of all projects in the Waterberg, geared to
both domestic and export markets.

Recent weak market conditions led to the delay in the Char Phase II expansion project. The completion of
the bankable feasibility study is still aimed to be completed in the first half of 2013. Exxaro is also currently
evaluating a bankable feasibility study to produce market coke from semi-soft coking coal at Grootegeluk
which is expected to be completed in 2013.

The bankable feasibility study on the Belfast project in Mpumalanga continues to progress and is expected
to be completed in the first half of 2013. Exxaro has received the mining right for this project in the first
quarter of 2013.

The Moranbah South project is a 50/50 joint venture with Anglo American, located in the Bowen Basin of
Queensland, Australia. The pre-feasibility study indicated a high potential for a dual long wall mine to
produce between 10 and 12Mtpa of prime hard coking coal product. The joint value engineering between
Exxaro and Anglo Amercian are progressing as planned and it is anticipated that it will continue throughout
the first half of 2013, after which the pre-feasibility study will be updated, before obtaining approval to
commence with the definitive feasibility study.

A review of the operations and technical aspects of the Mayoko project was completed during the second
half of 2012.

Implementation of Phase I of the project has progressed rapidly after it was approved by the Exxaro board
in 2012. The immediate priority in this regard is to produce the initial tonnes by the second half of 2013 by
focusing on transported ore which does not require much processing. The initial phase is also aimed at
ensuring access to critical rail and port infrastructure and to de-bottleneck the entire production and
logistics chain before ramping production up to a rate of 2Mtpa in 2014. The ultimate objective is to develop
the project in phases with the eventual goal of producing and exporting 10Mtpa by 2016/7.

A legally binding Memorandum of Understanding detailing the principles of the final Republic of Congo
mining convention was concluded between Exxaro and the government of the Republic of Congo in
December 2012. All efforts are directed at reaching agreement with the government for the mining
convention to be enacted during the parliamentary session in the second half of 2013.

Regular engagement with the relevant Republic of Congo government authorities continues at all levels to
ensure that the project is successfully implemented.

The bankable feasibility study for the Ferrosilicon expansion project will be conducted in 2013 and it is
envisaged that production will increase from the third quarter of 2014 ramping up to almost double the
existing capacity to meet growing customer demand.

Exxaro continues to explore opportunities in the energy markets with a focus on cleaner energy initiatives.

Cennergi, a 50/50 joint venture with Tata Power was granted preferred bidder status on two of their projects
submitted in Window 2 under the Independent Power Producer Procurement Programme. The joint
venture will continue to focus on obtaining financial closure on the Amakhala and Tsitsikamma wind
projects by the first half of 2013 as well as the process of submitting additional renewable energy projects in
Window 3 of the Department of Energy?s Renewable Energy Independent Power Producer Programme in
the third quarter of 2013.

The pre-feasibility study for the development of the 600MW coal-fired base load independent power
producer power station in the Waterberg continues. Following a selection process, Exxaro and an
independent power producer developer concluded a project development agreement for the development
of the 600MW coal-fired base load independent power producer power station in the Waterberg, in
November 2012. The project development agreement was approved by the Exxaro board and remains
subject only to the conclusion of a coal supply and off-take term sheet by the second quarter of 2013. The
environmental impact assessment process and associated studies are underway and due for completion
during 2013. The bankable feasibility study is conditional on the establishment of an appropriate enabling
environment in which such a development can proceed.

Thabametsi is a prospective greenfields mine adjacent to Grootegeluk mine in the Waterberg. The
development of the project will coincide with the 600MW coal-fired base load independent power producer
power station. The mining right application is in process and the first coal production is expected by
2016/17, although it is dependent on the 600MW Waterberg independent power producer and water supply
development schedules.

Exxaro and Linc Energy signed a term sheet for the development of underground coal gasification projects
in Sub-Saharan Africa in October 2012.

Mining rights for Arnot, Strathrae and Belfast have been granted and executed. Tshikondeni and Matla?s
mining rights, although granted, still require execution. Until execution old order mining licences remain in

Exxaro will continue to focus on creating and maintaining a safe and healthy environment for our people to
work in.

Exxaro?s strategy remains focused on being a sustainable and diversified mining company with a global
footprint encompassing significant investments in carbon, reductants, mineral sands, ferrous and energy.

The 2013 financial and operational results are expected to be impacted by commodity price volatility, the
ZAR/US$ exchange rate fluctuations as well as the availability of trains in the export coal business.

Both thermal and coking coal seaborne markets are expected to be soft as a result of sluggish demand in
Europe, India and China, Further exacerbated by increased stock levels. As a result of this, it is expected
that Exxaro will continue to pursue new domestic markets, albeit at lower prices, in the short to medium

It is expected that the domestic steam coal market will continue to remain stable with a marginal increase in
the demand from Eskom.

Cost management across the group will remain priority for the year ahead. As part of overcoming the
current economic challenges, Exxaro will continue to strive for cost reduction and increased efficiencies in
all its processes.

The group is focused on developing a clear ramp-up strategy for GMEP, incorporating possible effects of
the current labour unrest at the Medupi power station. The ferrous project team continues to work ahead on
the Mayoko project to ensure that the 2Mtpa Phase I is delivered successfully, on time and within budget.
This will include finalisation of key concessions with the government of the Republic of Congo.

Exxaro?s equity income in 2013 will continue to be under pressure. This is expected to improve toward the
second half of 2013. It is believed that pigment markets will be soft in the first half of 2013, thereby resulting
in tighter supply-demand conditions in the second half of 2013. Tronox is also expected to be in a position
to fully demonstrate the value of its vertically integrated structure and the material cost advantage which is
brought on by this structure. As reported in the Kumba Iron Ore results announcement on 12 February

2013, annual production volumes from Sishen mine are expected to increase in 2013, while export sales
volumes are expected to be similar to those in 2012.

The financial information on which the outlook statement is based has not been reviewed nor reported on
by the group?s external auditors. These forward-looking statements are based on management's current
beliefs and expectations and are subject to uncertainty and changes in circumstances. The forward-looking
statements involve risks that may affect the group's operations, markets, products, services and prices.
Exxaro undertakes no obligation to update or revise any forward-looking statements, whether as a result of
new information or future developments.

Mr    CI     Griffith  resigned      as  non-executive director    effective 29    November       2012.
Mr NB Mbazima was subsequently appointed to succeed Mr Griffith as non-executive director of the board
with effect 30 November 2012. Mr U Khumalo resigned as non-executive director effective 31 January
2013. The board expressed its sincere appreciation to Mr Griffith and Mr Khumalo for their contributions
during their respective terms of office.

Notice is hereby given that a final dividend Number 20 of 150 cents per share for the 2012 financial year
has been declared, payable to shareholders of ordinary shares. This brings the total dividend for the year to
500 cents per share.


Editor?s Note:
Exxaro is one of the largest South African-based diversified resources groups, with interests in the carbon,
reductants, mineral sands, ferrous and energy markets. www.exxaro.com


Wim de Klerk
Finance Director
Tel: + 27 12 307 4848
Mobile: +27 82 652 5145
Email: wim.deklerk@exxaro.com

07 March 2013

Deutsche Securities (SA) (Proprietary) Limited


Date: 07/03/2013 07:06:00 Supplied by www.sharenet.co.za                     
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