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Keaton Energy Holdings Limited - Reviewed Provisional Condensed Consolidated Results For The Year Ended 31 March 2013

Release Date: 12/06/2013 08:00:00      Code(s): KEH     
Keaton Energy Holdings Limited 
(incorporated in the Republic of South Africa)
Registration number 2006/011090/06  
JSE share code: KEH ISIN ZAE000117420 
(Keaton Energy or the Company or the Group)

Reviewed provisional condensed consolidated results for the year ended 31 March 2013

Salient features
- Record safety performances at both Vanggatfontein and Vaalkrantz
- 94% increase in group revenue to R919 million
- R11 million gross profit for the second half of FY13, compared with a gross loss of R38 million for the first half
- 58% increase in Eskom sales to 1.5 million tonnes
- R42 million project finance facility repayment
- Pit 3 at Vanggatfontein developed from operational cash flows
- Studies on development projects advanced
- 25% reserve increase at Vanggatfontein to 45 million tonnes

Commentary

Dear Shareholder
The 2013 financial year saw the Keaton Energy group not only build successfully on the production platform it
established in the previous year, but also advance its portfolio of development projects significantly. The following 
commentary summarises the groups key activities during the year. Our detailed Integrated Annual Report will be 
published in July 2013.
 
Safety
Safety is of paramount importance to the Keaton Energy group. Our continuous focus on safety, coupled with intensive
safety training initiatives and rigorous management, resulted in record safety figures in FY13. It is pleasing to report
that Vanggatfontein ended the year with a zero Lost Time Injury Frequency Rate (LTIFR) compared with 0.38 for FY12
whilst Vaalkrantz LTIFR improved to 0.36 from 0.45 over the same period. We congratulate all involved in keeping our
workplaces safe.

Markets
Our coal is sold into three distinct markets:
1.  Domestic thermal coal contracted to Eskom;
2.  5-Seam coal and premium anthracite to domestic metallurgical customers; and
3.  Anthracite exported to Brazil, through our off-take partner Gunvor International BV.
Our relationship with Eskom, our biggest customer by volume, has continued to strengthen through the delivery of a
consistent quality product to a number of their power stations. 
Our entire 5-Seam and premium anthracite production remains in great demand locally and all product is sold as it is
produced. Domestic metallurgical coal prices remained buoyant during the period despite furnace operators reducing
output. In contrast, our single export market for anthracite, the Brazilian iron ore pelletising industry, saw prices decline
in line with the softening of coal prices globally. 

Operational review
Vanggatfontein
Vanggatfontein delivered 1 509 681t of washed 2- and 4-Seam thermal coal to Eskom during FY13, an increase of 58% from
the previous years 955 504t. As expected, 5-Seam metallurgical coal sales declined to 65 661t from 140 241t, as a
result of Pit 1 5-Seam coal being depleted in line with the mine plan. The spare capacity of the 5-Seam plant was utilised
for the toll washing of 106 873t of third party coal. The development of Pit 3 during the second half of the year,
however, provides renewed and consistent 5-Seam supply as well as better yielding 2- and 4-Seam coal.
Record safety and production performances were achieved at the colliery, despite significant challenges in terms of
the continuity of local electricity supply, continued poor performance of the front end of the 2- and 4-Seam plant and, of
course, the transport workers strike action during the middle of the year. Mining operations improved significantly
from August with the change in mining contractor. Eskom has worked diligently to resolve the power supply issues,
including a five day supply change-out in December - and we have started to see benefits in this regard. Work still remains 
to be done to reach acceptable performance levels at the front end of the plant.
Vaalkrantz
Vaalkrantz dispatched 326 597t of anthracite to domestic and international metallurgical markets, a 7% decrease over
the previous years 351 331t. The operation suffered from extremely difficult mining conditions in the West Alfred
section of the mine which limited production. Nevertheless, it is pleasing to note that, notwithstanding these difficulties,
the collierys safety performance improved. 

Group operating and financial performance
Group revenue increased by 94% from R474 million in FY12 to R919 million in FY13. The increase was as a result of
improved deliveries of thermal coal to Eskom and the inclusion of twelve months of Vaalkrantz sales compared to only three
and a half months in FY12. However, group revenue was impacted negatively by lower than planned thermal coal sales to
Eskom as a result of poor plant throughput at Vanggatfontein, and a decrease in sales tonnes and export prices at
Vaalkrantz . 
The group recorded a gross loss of R27 million for FY13 compared to a gross profit of R15 million in FY12. This is
mainly due to lower than planned thermal coal sales as noted above and a higher depreciation charge of R227 million
compared to R123 million in FY12 as a result of an increase in coal production at Vanggatfontein and the early adoption of
IFRIC 20. However, the second half of FY13 saw improved performance resulting in a decrease of the gross loss reported at
half year from R38 million to R27 million for the year. Production costs were tightly controlled and cost reduction
remains a key focus at both operations.
During the year a decision was taken to close Pit 1 at Vanggatfontein as it was no longer economic. This decision
resulted in a loss on the derecognition of the asset of R51 million. Future coal production from Pit 2 will now be
supplemented by coal from Pit 3. 
As a result total comprehensive income declined to a loss of R132 million compared to a profit of R112 million in FY12
which included the once off recognition of the gain on business combination of R114 million with the acquisition of LME
in FY12. Headline earnings per share reduced from a profit of 9.5 cents in FY12 to a loss of 30.2 cents in FY13.
Capital investment for the group totalled R210 million in FY13 compared to R252 million in FY12 (excluding the
acquisition of LME). The majority of capital was spent at Vanggatfontein, with some R204 million being invested, mainly 
applied to stripping costs of R131 million, box cut development in both Pit 2 and Pit 3 of R55 million and infrastructure of
R14 million.
Cash and cash equivalents at the end of the year decreased by R41 million mainly due to the capital investment
discussed above, funding of additional rehabilitation commitments of R7 million and the repayment of R42 million of the Nedbank
project finance facility. These were offset by cash generated from operations of R217 million and cash raised by the
issue of shares in July 2012 of R9 million.

Development pipeline
During FY13 the group completed concept studies on both the Braakfontein and Sterkfontein projects resulting in a 32%
increase in the Sterkfontein resource. Both projects will be advanced in FY14 with Braakfontein taking priority.
Drilling for portal placement at Koudelager, Vaalkrantzs life extension project, will be completed during Q2 FY14 with the
intention of commencing mining activities during the course of the year.

Reserve and Resource Statement
The updated Reserve and Resource Statement for the group will be released in July 2013 as part of the Integrated
Annual Report.
 
Litigation
Group subsidiary Keaton Mining terminated its contract mining agreement with Megacube Mining Proprietary Limited at
Vanggatfontein on 5 July 2012 in accordance with the provisions of the agreement. This subsequently led to Megacube
lodging a claim for R42.5 million against Keaton Mining. We are defending this claim vigorously in terms of the contracts
dispute resolution provisions. Furthermore, Keaton Mining has lodged a damages claim for R119 million against Megacube
relating to breaches of several provisions of the contract. This matter is likely to be heard during FY14.
In addition, the matter between Keaton Mining and DRA Mineral Projects Proprietary Limited, relating 
to the failure of the structure supporting the DMS feed bins in May 2011, has finally been set down for the
arbitration hearing in February 2014.

Corporate activities
The group was able to sustain its activities during the year without raising significant additional capital. A planned
capital raise in June 2012 was abandoned due to poor market conditions, with only some R9 million being raised, and the
development of Pit 3 at Vanggatfontein was instead funded from operational generated cash flows.
The group retained the financial support of its principal shareholders and pursued a number of M&A opportunities
during FY13. All of these foundered on price or technical aspects. We continue to evaluate opportunities but remain 
committed to not overpaying for assets. 
Founding Managing Director Paul Miller left the group in July 2012 having succeeded in his mandate of taking Keaton
Energy from an unlisted explorer to a listed producer. We thank him for all of his hard work and wish him well in his new
endeavours. Rowan Karstel replaced Paul for a brief period before being replaced in September 2012 by current CEO Mandi
Glad. Mandi, another founding executive of the group, was previously group COO and, prior to that, group Marketing
Director. To assist in the transition David Salter assumed a short-term Executive Chairmanship role and, in the interests 
of good corporate governance, Lizwi Mtumtum was appointed Lead Independent Director. The board was strengthened further in
November 2012 when well-known mining industry leader Gerard Kemp joined the board as an Independent Non-executive
Director.
 
Looking ahead
We continue to pursue our longer-term strategy of becoming a 5Mtpa producer. Accordingly, we are now in a period of
optimising operations, advancing our internal pipeline of projects and aggressively pursuing acquisition opportunities
where these offer value for our shareholders. Although FY13 presented the Keaton Energy group with some challenges, we
believe that these have been or are in the process of being overcome and we remain confident that the current financial year
will be a year of profit and growth for the group. Our confidence is supported by Vanggatfonteins performance in both
April and May 2013 in delivering records across production, plant feed, Eskom deliveries and cash generation. This
performance augurs well for the group and for presenting much improved interim financial results in November 2013.

On behalf of the Board
David Salter                                  Mandi Glad
(Executive Chairman)                         (Chief Executive Officer)                    11 June 2013

Preparation of provisional condensed consolidated financial statements
The provisional condensed consolidated financial statements for the year ended 31 March 2013 have been reviewed in
terms of the Companies Act 71, 2008. Their preparation was supervised by the Chief Financial Officer, Jacques Rossouw, a
Chartered Accountant (SA).
The provisional condensed consolidated financial statements were published on 12 June 2013.


Provisional condensed consolidated statement of comprehensive income


                                                                         Year ended                           
                                                               31 March                31 March   
                                                                   2013                    2012   
  R000                                              Note     (Reviewed)            (Audited)(1)  
  Revenue                                               2       918 807                 474 366   
  Cost of sales                                                (946 081)               (459 793)   
  Gross (loss)/profit                                   2       (27 274)                 14 573   
  Other income                                                   10 594                  25 544   
  Mining and related expenses                           5       (70 492)                (10 350)   
  Net gain on financial instruments                               2 485                   1 690   
  Administrative and other operating expenses           7       (54 723)                (26 521)   
  Results from operating activities                            (139 410)                  4 936   
  Gain on business combination                                        -                 114 385   
  Operating (loss)/profit before net finance cost              (139 410)                119 321   
  Net finance cost                                              (32 199)                (13 405)   
  Finance income                                                  2 109                  17 542   
  Finance costs                                                 (34 308)                (30 947)                                                                                                   
  Net (loss)/profit before taxation                            (171 609)                105 916   
  Income taxation credit                                4        39 335                   6 184   
  Total comprehensive income for the year                      (132 274)                112 100   
  Total comprehensive income attributable to:                                                     
  Owners of the company                                         (84 491)                132 016   
  Non-controlling interest                                      (47 783)                (19 916)   
  Basic earnings per share (cents)                      3         (44.2)                   75.2   
  Diluted earnings per share (cents)                    3         (44.2)                   75.2   
  The accompanying notes are an integral part of these provisional condensed consolidated financial statements.    
  
 (1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 - Stripping cost in
 the production phase of a surface mine. Refer to the notes to the provisional condensed consolidated financial statements,
 note 1.3.                                                  

Provisional condensed consolidated statement of financial position
                                                                              At                 At   
                                                                        31 March           31 March   
                                                                            2013             2012(1)   
  R000                                                      Note      (Reviewed)          (Audited)  
  Assets                                                                                              
  Property, plant and equipment                                 5        776 070            832 703   
  Intangible assets                                                      424 131            423 888   
  Deferred tax                                                  4         92 230             16 638   
  Restricted cash                                                          7 423              7 423   
  Restricted investments                                                  26 683             13 027   
  Total non-current assets                                             1 326 537          1 293 679   
  Inventory                                                               38 493             23 117   
  Trade and other receivables                                             85 215            104 325   
  Restricted cash                                                              -              6 600   
  Cash and cash equivalents                                               19 614             60 549   
  Total current assets                                                   143 322            194 591   
  Total assets                                                         1 469 859          1 488 270   
  Equity                                                                                              
  Share capital                                                              192                189   
  Share premium                                                          640 711            632 054   
  Share-based payment reserve                                             12 497              6 180   
  Other reserves                                                         (18 751)           (18 751)   
  Retained earnings                                                       74 573            159 064   
  Total equity attributable to owners of the company                     709 222            778 736   
  Non-controlling interest                                               (23 185)            24 598   
  Total equity                                                           686 037            803 334   
  Liabilities                                                                                         
  Borrowings                                                    7        235 390            248 156   
  Long-term financial liabilities                                            304                613   
  Mine closure and environmental rehabilitation provision       6        137 451            112 857   
  Deferred tax                                                           127 751             93 838   
  Total non-current liabilities                                          500 896            455 464   
  Borrowings                                                    7         49 428             49 176   
  Mine closure and environmental rehabilitation provision       6          2 859                326   
  Trade and other payables                                      8        229 801            179 356   
  Taxation                                                                   838                614   
  Total current liabilities                                              282 926            229 472   
  Total equity and liabilities                                         1 469 859          1 488 270   
  The accompanying notes are an integral part of these provisional condensed consolidated financial statements.  
  
  (1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 -  Stripping cost in 
  the production phase of a surface mine. Refer to the notes to the provisional condensed consolidated financial statements,
  note 1.3.                                              

Provisional condensed consolidated statement of changes in equity
for the year ended 31 March 2013
                                                                                                                                Total                              
                                                                                                                               equity                              
                                                                                                                             attribu-                              
                                                                                        Share-                               table to         Non-                 
                                                                                         based                                 owners     control-                 
                                                                                          pay-                                 of the         ling                 
                                                                Share        Share        ment     Retained        Other         com-     interest          Total   
  R000                                                       capital      premium     reserve     earnings     reserves         pany        (NCI)         equity   
  Balance at 31 March 2011 as previously reported                 171      567 718       2 395       21 018            -      591 302       (9 757)       581 545   
  Effects of adopting IFRIC 20(1)                                   -            -           -            -            -            -            -              -   
  Revised balance at                                              171      567 718       2 395       21 018            -      591 302       (9 757)       581 545   
  31 March 2011                                                                                                                                                    
  Total comprehen-sive income for the year                          -            -           -      132 016            -      132 016      (19 916)       112 100   
  Transactions with owners                                                                                                                                         
  of the company recognised directly in equity                                                                                                                     
  Ordinary shares issued for consideration other than cash         18       76 403           -            -            -       76 421            -         76 421   
  Share issue expenses                                              -          (67)          -            -            -          (67)           -            (67)   
  Share-based payments                                              -            -       3 785            -            -        3 785            -          3 785   
  Reserves attributable to business combination                     -            -           -            -      (30 751)     (30 751)           -        (30 751)   
  Share-based payments transferred                                  -      (12 000)          -            -       12 000            -            -              -   
  Changes in ownership interests in subsidiaries                                                                                                                   
  Business combination                                              -            -           -            -            -            -       60 301         60 301   
  Dilution of non-controlling interests                             -            -           -        6 030            -        6 030       (6 030)             -   
  Balance at 31 March 2012                                        189      632 054       6 180      159 064      (18 751)     778 736       24 598        803 334   
  Total comprehen-sive income for the year                          -            -           -      (84 491)           -      (84 491)     (47 783)      (132 274)   
  Transactions with owners                                                                                                                                         
  of the company recognised directly in equity                                                                                                                     
  Ordinary shares issued for cash                                   3        9 020           -            -            -        9 023            -          9 023   
  Share issue expenses                                              -         (363)          -            -            -         (363)           -           (363)  
  Share-based payments                                              -            -       6 317            -            -        6 317            -          6 317   
  Balance at 31 March 2013                                        192      640 711      12 497       74 573      (18 751)     709 222      (23 185)       686 037   
  
 (1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 -  Stripping cost in the production phase of a surface mine.
  Refer to the notes to the provisional condensed consolidated financial statements, note 1.3.                                                                                                          
                                                                                                                                                                   
Provisional condensed consolidated statement of cash flows
                                                                          Year ended                           
                                                                31 March                31 March   
                                                                    2013                    2012   
  R000                                                        (Reviewed)               (Audited)(1)  
  Cash flows from operating activities                           191 798                 129 520   
  Cash flows from investing activities                          (216 946)               (295 878)   
  Cash flows from financing activities                           (15 787)                199 907   
  Net (decrease)/increase in cash and cash equivalents           (40 935)                 33 549   
  Cash and cash equivalents at the beginning of the period        60 549                  27 000   
  Cash and cash equivalents at the end of the period              19 614                  60 549   
  
 (1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 -  Stripping cost in the production phase of a surface mine. 
  Refer to the notes to the provisional condensed consolidated financial statements, note 1.3                                              

Segmental report
for the year ended 31 March 2013                                                                                                                                                                                                                                                               
                                                                                                            Operating profit/(loss)                                                         
                                                                                                             before depreciation/                                                     
                                                                                          Revenue                amortisation             Depreciation/amortisation               
                                                                                    Year to      Year to      Year to      Year to          Year to        Year to    
                                                                                   31 March     31 March     31 March     31 March         31 March       31 March    
  R000                                                                                2013         2012         2013         2012             2013           2012    
  Vanggatfontein Colliery (1) (5) (6)                                               645 860      381 828       98 140       93 234         (184 641)      (108 039)    
  Sterkfontein Project                                                                    -            -            -            -                -              -    
  Keaton Energy Holdings Limited (2) (7)                                             90 490       77 941       59 981       59 259                -              -    
  Keaton Administrative and Technical Services Proprietary Limited (2)               20 241       11 783        1 917       (1 618)            (209)          (315)    
  Vaalkrantz Colliery (1) (5)                                                       272 948       92 538       30 826       36 763          (42 258)       (14 854)    
  Leeuw Braakfontein Project                                                              -            -       (9 999)           -                -              -    
  Koudelager Project                                                                      -            -            -            -                -              -    
  Other segments (3)                                                                      -            -       (1 368)       2 053                -              -    
  Total segments                                                                  1 029 539      564 090      179 497      189 691         (227 108)      (123 208)    
  Reconciliation to statements of comprehensive income and financial position                                                                                         
  Intersegment and other consolidation adjustments                                 (110 732)     (89 724)     (91 800)     (61 547)               -              -    
                                                                                    918 807      474 366       87 697      128 144         (227 108)      (123 208)    
  Gain on business combination                                                                                                                                                  
  Net finance (cost)/income (4)                                                                                                                                                 
  Assets/liabilities not allocated to segments                                                                                                                                  
  Net profit before taxation                                                                                                                                                    
  Total assets and liabilities                                                                                                                                                  

Segmental report (continued)
for the year ended 31 March 2013                                                                                                                                                                                                                                                               
                                                                                  Operating (loss)/profit                                                                             
                                                                                    after depreciation/                                                                             
                                                                                        amortisation                Segment assets             Segment liabilities                  
                                                                                   Year to       Year to        Year to        Year to        Year to        Year to   
                                                                                  31 March      31 March       31 March       31 March       31 March       31 March   
  R000                                                                               2013          2012           2013           2012           2013           2012   
  Vanggatfontein Colliery (1) (5) (6)                                              (86 501)      (14 805)       807 140        793 053      1 135 924        940 515   
  Sterkfontein Project                                                                   -             -         65 513         65 092         56 783         53 606   
  Keaton Energy Holdings Limited (2) (7)                                            59 981        59 259        801 363        739 697          4 061          3 373   
  Keaton Administrative and Technical Services Proprietary Limited (2)               1 709        (1 933)         7 424         10 271         16 186         20 637   
  Vaalkrantz Colliery (1) (5)                                                      (11 431)       21 909        237 095        287 202        369 996        336 974   
  Leeuw Braakfontein Project                                                        (9 999)            -        317 199        291 338         67 248         48 934   
  Koudelager Project                                                                     -             -         23 552         23 552              -              -   
  Other segments (3)                                                                (1 368)        2 053         19 667         19 999         23 083         18 333   
  Total segments                                                                   (47 609)       66 483      2 278 953      2 230 204      1 673 281      1 422 372   
  Reconciliation to statements of comprehensive income and financial position                                                                                          
  Intersegment and other consolidation adjustments                                 (91 800)      (61 547)      (809 094)      (741 934)      (889 459)      (737 436)   
                                                                                  (139 410)        4 936      1 469 859      1 488 270        783 822        684 936   
  Gain on business combination                                                           -       114 385              -              -              -              -   
  Net finance (cost)/income (4)                                                    (32 199)      (13 405)             -              -              -              -   
  Assets/liabilities not allocated to se                                                                                                                                                                        
  Net profit before taxation                                                      (171 609)      105 916                                                               
  Total assets and liabilities                                                                                1 469 859      1 488 270        783 822        684 936   
                                         
(1) Revenue represents sales to external customers only.
(2) Revenue represents intersegment sales only.
(3) Includes the subsidiaries Amalahle Exploration Proprietary Limited, Labohlano Trading 46 Proprietary Limited, Klip Colliery 
and the Mpati and Balgray prospecting rights acquired through the business combination during the year ended 31 March 2012.
(4) Net finance cost/income is no longer reported as forming part of each segment profit or loss as these are not measured 
or reported to the chief operating decision maker (CODM) in connection with the segment but rather on a collective 
company/group basis.
(5) Coal sales to major customers as a percentage of revenue equals 91% (92% at 31 March 2012)
(6) The comparative information for the period 31 March 2012 has been re-presented as a result of the early adoption of IFRIC 20 - 
Stripping cost in the production phase of a surface mine.
(7) Investment income received by Keaton Energy Holdings Limited from its subsidiaries has been reclassified from finance income to 
revenue.

Notes to the provisional condensed consolidated financial statements

 1. Accounting policies                         
 1.1 Basis of accounting                        
 The provisional condensed consolidated financial statements for the year ended 31 March 2013 have been prepared in accordance 
 with the recognition and measurement principles of International Financial Reporting Standards (IFRSs), the presentation and 
 disclosure requirements of IAS 34: Interim Financial Reporting, the Companies Act of 2008, the JSE Listing Requirements and 
 the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee. They should be read in conjunction with 
 the annual financial statements for the year ended 31 March 2012, which have been prepared in accordance with IFRSs as issued 
 by the International Accounting Standards Board. The accounting policies are consistent with those described and applied in 
 the annual financial statements, except for the early adoption of a new interpretation issued by the IFRS Interpretations 
 Committee, IFRIC 20 - Stripping costs in the production phase of a surface mine. Refer to notes 1.2 and 1.3 in this regard.                        
 1.2 Early adoption of IFRIC 20 - Stripping costs in the production phase of a surface mine                        
 Stripping costs incurred during the production phase of the groups surface operations, to remove overburden and expose the 
 coal reserve, are capitalised as a stripping activity asset only when:                        
 i) it is probable that the future economic benefits (improved access to the coal reserve) associated with the stripping 
 activity will flow to the group;                        
 ii) the group can identify the component of the coal reserve exposed by the stripping activity; and                        
 iii) the costs relating to the stripping activity associated with that component can be measured reliably.                        
 The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset (mine development).
 The stripping activity asset is initially measured at cost, being the accumulation of costs directly attributable to the stripping 
 activity, plus an allocation of directly attributable overhead costs. The group identifies a component as the smallest measurable 
 portion of the coal reserve within a pit, which the stripping activity provides direct access to and is usually identified through 
 survey results. After initial recognition, the stripping activity asset is measured at cost less accumulated depreciation and 
 accumulated impairment losses. The stripping activity asset is depreciated on a systematic basis, over the expected production 
 life of the identified component of the coal reserve.                        
 1.3 Comparative information                        
 As a result of adopting IFRIC 20 the comparative information has been re-presented to comply with the transitional provision as 
 outlined in IFRIC 20 as follows:                        
 12 months ending 31 March 2012 and at 31 March 2012                        
 -  Property, plant and equipment decreased by R13.2 million with a corresponding increase in cost of sales. This also decreased 
 cash flows from operating activities and reduced the investment in cash flows from investing activities by R13.2 million respectively 
 in the condensed consolidated statement of cash flows.                        
 -  Depreciation expense increased by R38.5 million with a corresponding increase in accumulated depreciation.                        
 -  Deferred tax asset increased by R14.5 million with a corresponding increase in income taxation credit in the statement of 
 comprehensive income.                        
 -  Basic and diluted earnings per share decreased from 90.9 cents to 75.2 cents.                        
 -  Headline and diluted headline earnings per share decreased from 25.2 cents to 9.5 cents.                        
 
 2. Revenue and gross (loss)/profit margin                        
 Vanggatfontein delivered 1 509 681 tonnes of washed 2- and 4-Seam thermal coal to Eskom during the year, an increase of 58% from the 
 previous years 955 504 tonnes. As expected, 5-Seam metallurgical coal sales declined to 65 661 tonnes (31 March 2012: 140 241 tonnes), 
 as a result of depletion in Pit 1, in line with the mine plan. Vanggatfontein generated revenue of R433.7 million (31 March 2012: 
 R303.9 million) from coal sales, R15.5 million from toll washing (31 March 2012: nil) and transport revenue of R196.6 million
 (31 March 2012: R78 million) during the year.                        
 Vaalkrantz sold 326 597 tonnes of anthracite to domestic and international metallurgical markets, a 7% decrease over the previous years 
 351 331 tonnes. The operation suffered from extremely difficult mining conditions in the West Alfred section of the mine which limited 
 production. Vaalkrantz generated revenue of R272.9 million (three and a half months ended 31 March 2012: R92.5 million) for the year.                             
 The group recorded a gross loss of R27.3 million or -3% of sales for the year ended 31 March 2013 (31 March 2012: R14.6 million gross profit 
 or 3% of sales). The decrease in gross profit was a result of lower than expected sales due to the operational factors noted above. Cost of 
 sales was higher, mainly due to an increase in coal production at Vanggatfontein and additional depreciation charges as a result of adopting 
 IFRIC 20.    
 
 3. Earnings and net asset value per share                                                                                                                                                                                                                                                                                                                                                                                                         
 The calculation of basic and diluted earnings per share is based on a loss for the year ended 31 March 2013 (attributable to owners of 
 the company) of R84.5 million (31 March 2012: profit of R132 million) and a weighted average number of shares in issue during the year 
 of 190.9 million 31 March 2012: 175.6 million).                                                                                                                     

                                                                                      Year ended                           
                                                                            31 March                31 March   
                                                                                2013                    2012   
  R000                                                                    (Reviewed)               (Audited)(1)  
  Total earnings per ordinary share (cents)                                             
  Basic earnings                                                               (44.2)                   75.2   
  Diluted earnings                                                             (44.2)                   75.2   
  Headline earnings                                                            (30.2)                    9.5   
  Diluted headline earnings                                                    (30.2)                    9.5   
  Reconciliation of headline earnings (net of tax and NCI):                                             
  Total comprehensive income attributable to owners of the company           (84 491)                132 016   
  Loss on derecognition of assets                                             27 276                      65   
  Profit on disposal of property, plant and equipment                           (476)                      -   
  Profit on disposal of intangible asset                                           -                    (287)   
  Reversal of impairment of intangible asset                                       -                    (648)   
  Gain on business combination                                                     -                (114 385)   
  Total headline earnings                                                    (57 691)                 16 761   
  Net asset value per share                                             
  Number of shares in issue (millions)                                         191.7                   188.7   
  Net asset value per share (cents)                                              358                     426   
  
 (1) The comparative information has been re-presented as a result of the early adoption of IFRIC 20 -  Stripping cost in                                               
 the production phase of a surface mine. Refer to the notes to the provisional condensed consolidated financial statements, note 1.3.                                              

 4. Income taxation credit                                                                                                                                                                                                                                                                   
 The income taxation credit of R39.3 million for the year ended 31 March 2013 is mainly attributable to the increase in estimated tax 
 losses and unredeemed capital expenditure relating to Keaton Mining Proprietary Limited. Refer to note 1.3 for the effect IFRIC 20 
 had on the income taxation credit for the year ended 31 March 2012.                                                                                                                                                                                                                                                                                                                                                                 
 
 5. Property, plant and equipment                                                                                                                                                                                                                                                            
 The net decrease of R56.6 million from 31 March 2012 is mainly attributable to the following:                                                                                                                                                                                               
 -  Capital investments at Vanggatfontein of R204 million (attributable mainly to mine development of R186.8 million and mine infrastructure
 of R13.9 million). The rehabilitation assets at Vangatfontein also increased by R13.4 million, relating to the increase in the rehabilitation
 liability.  Refer to note 6.                                                                                                                                                                                                                                                                                                                                                                                       
 -  Capital investments at Vaalkrantz of R6.3 million. In addition the rehabilitation asset also increased by R6.8 million relating to the 
 increase in the rehabilitation liability. Refer to note 6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
 These were offset by depreciation charges of R235.2 million (31 March 2012: R127.4 milion).                                                                                                                                                                                                 
 During the year a decision was taken to close Pit 1 at Vanggatfontein as it was no longer economic. This resulted in a loss on derecognition 
 of assets of R51.2 million recorded in mining and related expenses in the statement of comprehensive income with a corresponding decrease 
 in the mine development asset.                                                                                                                                                                                                                                                                                                                                                                                       
 
 6. Mine closure and environmental rehabilitation provision                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
 The rehabilitation liability at Vanggatfontein increased by R16.5 million during the year. The increase is mainly attributable to the additional 
 ground disturbances caused by the opening-up of Pit 3. The rehabilitation liability at Klip Colliery also increased by R2.5 million where 
 rehabilitation work is in its final stage. The rehabilitation liability at Vaalkrantz increased by R8 million during the year, due to additional 
 environmental disturbances.                                                                                                                                                                                                                                     
 
 7. Borrowings                                                                                                                                                                                                                                                                               
 Total borrowings decreased by R12.5 million, mainly as a result of debt repayments to the value of R47.9 million (R42.2 million relates to the 
 Nedbank project finance facility). The decrease was offset by finance costs of R25.1 million and a foreign exchange loss of R10 million, 
 included in administrative and other operating expenses in the statement of comprehensive income.                                                                                                                                                                                                                                                                                                                   
 
 8. Trade and other payables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
 Keaton Mining Proprietary Limited (Keaton) vs Megacube Mining Proprietary Limited (Megacube):                                                                                                                                                                                           
 Included in trade and other payables in the Statement of Financial Position is an amount of R42.5 million for contract mining services rendered 
 by Megacube to Keaton for the period June 2012 to July 2012. As a result of several breaches of the contract mining agreement, Keaton disputes 
 that this amount is due and owing to Megacube. As a result of Megacubes breaches of the contract mining agreement, Keaton has lodged several 
 claims against Megacube for damages and losses sustained. Keaton delivered a notice of termination of the agreement to Megacube on 16 May 2012 
 in accordance with the provisions of the agreement and subsequently terminated the agreement on 5 July 2012.    
 Keaton Mining Proprietary Limited (Keaton) vs DRA Mineral Projects Proprietary Limited (DRA):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
 Also included in trade and other payables is an amount of R33 million which DRA contends is owing to it as reported in Keaton Energys annual 
 report for the year ended 31 March 2012. The litigation relates to whether the amount claimed by DRA is due and payable (due to various 
 breaches of the construction, design and commissioning agreement by DRA) and the litigation is on-going.                                                                                                                                                                                                          

 9. Commitments and contingencies                                           
 The groups capital commitments are:                                           
 R000                                           
                                                                                        At                   At   
                                                                                  31 March             31 March   
                                                                                      2013                 2012   
                                                                                 (Reviewed)            (Audited)  
  Exploration and mine development expenditure authorised and contracted             3 864               13 955   
  Exploration and mine development expenditure authorised but not contracted        66 845               55 682   
                                                                                    70 709               69 637  
																					
 All contracted amounts will be funded both through existing funding mechanisms within the group and cash generated from operations. For a detailed 
 disclosure on contingent liabilities refer to Keaton Energys annual report for the year ended 31 March 2012, available on the groups website at                                            
 www.keatonenergy.co.za. There were no material changes to the matters reported as at 31 March 2012.                                           
 
 10. Subsequent events                                           
 A special resolution in terms of regulation 31 of the Companies Act Regulations 2011 was adopted at the General Meeting held on 28 May 2013 whereby 
 all the ordinary shares were converted into ordinary shares with no par value. It was resolved that all 250 million authorised shares and 191.7 million 
 issued ordinary shares with a par value of 0.1 cents be converted into ordinary shares with no par value and that the share capital account and the share 
 premium account of the Company be transferred to the stated capital account. It was also resolved that the authorised share capital increase from 
 250 million ordinary no par value shares to 750 million ordinary no par value shares.                                           
 At the same General Meeting it was resolved that the new Memorandum of Incorporation (MOI), ensuring harmonisation with the JSE Listing Requirements 
 and the Companies Act of South Africa be adopted.                                           
 
 11. Dividends                                           
 No dividends have been declared nor are any proposed for the year ended 31 March 2013 (31 March 2012: Rnil).                                           
 
 12. Coal reserve and resource statement                                           
 The Vanggatfontein east resource block Run-of-Mine (ROM) coal reserve increased by 25% from                                            
 35.9 million tonnes (31 March 2012) to 45.0 million tonnes on the back of a 20% increase in mineable in-situ coal resource from 58.4 million tonnes 
 (31 March 2012) to 70.3 million tonnes. This increase is exclusively due to the inclusion of the Pit 5 resource.                                           
 In addition, the Sterkfontein Project declared its first underground ROM coal reserve of 23.6 million tonnes on the back of a 32% increase in the 
 mineable in-situ coal resource from 68.9 million tonnes (31 March 2012) to 90.8 million tonnes. This increase is due to the inclusion of two newly 
 awarded Prospecting Rights over the contiguous properties.                                           
 There were no further significant changes to the previously reported resource and reserve statements.                                           
 
 13. Review report                                           
 The provisional condensed consolidated financial statements for the year ended 31 March 2013 on pages 4 to 13, have been reviewed by KPMG Inc. in 
 accordance with International Standards on Review Engagements 2410 - Review of interim financial information performed by the Independent Auditors 
 of the entity. Their unmodified review report is available for inspection at the companys registered office.                                           

www.keatonenergy.co.za

Registered Office:
Ground Floor, Eland House, The Braes, 3 Eaton Avenue, Bryanston, South Africa
(Postnet Suite 464, Private Bag X51, Bryanston, 2021)
Tel: +27 11 317 1700     
Telefax: +27 11 463 4759
E-mail: info@keatonenergy.co.za
Directors:
Dr JD Salter (Executive Chairman)*, AB Glad (Chief Executive Officer), J Rossouw (Chief Financial Officer), 
LX Mtumtum++, P Pouroulis**+, OP Sadler++, APE Sedibe+, D Jonker***+, GH Kemp++
*British **South African / Cypriot ***Dutch
+non-executive, ++independent non-executive, lead independent director
Company Secretary:
Michelle Taylor
Transfer Secretaries:
Computershare Investor Services South Africa Proprietary Limited
Ground Floor, 70 Marshall Street, Johannesburg, South Africa  
(PO Box 61051, Marshalltown, 2107)
Auditors:
KPMG Inc. 1226 Schoeman Street, Hatfield, Pretoria
Date: 12/06/2013 08:00:00 Supplied by www.sharenet.co.za                     
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