EXXARO RESOURCES LIMITED - Exxaro contemplates cessation of production at New Clydesdale Colliery (NCC)Release Date: 08/08/2013 13:01:00 Code(s): EXX
EXXARO RESOURCES LIMITED
Incorporated in the Republic of South Africa
(Registration Number: 2000/011076/06)
JSE share code: EXX
ISIN code: ZAE000084992
ADR code: EXXAY
EXXARO CONTEMPLATES CESSATION OF PRODUCTION AT NEW CLYDESDALE
Diversified South African-based resources group Exxaro announced today that it is
contemplating cessation of production at its New Clydesdale Colliery (NCC) situated near
eMalahleni in Mpumalanga, subject to the consultation and engagement processes as
stipulated and required in terms of the Labour Relations Act 66 of 1995 (LRA), as amended,
and the Mineral and Petroleum Resources Development Act 28 of 2002, as amended.
Prior to today?s announcement, in November 2012, Exxaro had approved the potential sale
of NCC through a tender sale process. The decision to dispose of NCC was made after
Exxaro completed an internal review on its coal assets, from which it was established that
NCC is no longer strategically aligned to Exxaro?s group strategy. The misalignment is
mainly due to NCC being a negative-margin operation with a shorter life-of-mine. Exxaro?s
strategy has a focus on high-margin operations with longer life of mine timeframes.
Furthermore, Exxaro had also received a number of expressions of interest from parties with
operations adjacent to NCC as well as other parties who indicated possible benefit from the
usage of NCC?s infrastructure and thus extend NCC?s life-of-mine. It is Exxaro?s opinion that
a third party may be better placed to extract optimal value from this unique asset.
A divestment process started in April 2013 and interested parties were asked to submit
expressions of interests. However, shortly thereafter, it became apparent that NCC?s
operations were under significant and unanticipated stress as revised 2013 forecasts for the
operation indicated a substantial decrease in operating profit. The main contributors to the
negative forecast are reduced coal prices and exchange rate movements, mining difficulties
which are incurring increased mining costs at lower yields, and a shortfall of sales due to
unique characteristics of the NCC siding. The in-principle decision was therefore taken to
contemplate the cessation of production at NCC while in parallel allowing the tender sale
process to continue.
As Exxaro is contemplating cessation of production at NCC, the group has informed the
relevant trade unions in line with Section 189 of the LRA and a minimum 60-day consultation
process is now underway.
NCC employs 402 people. In 2012 the mine produced 717kt of steam coal, primarily for the
export market. Coal is mined using both open-pit and underground methods.
Exxaro is one of the largest South African-based diversified resources groups, with interests
in the coal, mineral sands, iron ore and energy markets. www.exxaro.com
Executive Head: Strategy & Corporate Affairs
Tel: + 27 12 307 4481
Mobile: +27 83 417 6375
08 August 2013
Deutsche Securities (SA) Proprietary Limited
Date: 08/08/2013 01:01:00 Supplied by www.sharenet.co.za
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