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Keaton Energy Holdings Limited - Joint Announcement Keaton Makes A Cash Offer Of A$0.14 Per Share To Acquire The Entire Issued Share Capital Of Xceed

Release Date: 26/08/2013 07:15:00      Code(s): KEH     
Keaton Energy Holdings Limited
(A company incorporated in the Republic of South Africa with Registration number:
2006/011090/06)
ISIN: ZAE000117420
JSE Share Code: KEH
("Keaton")

Xceed Resources Limited
(A company incorporated in Western Australia with ABN79009181006)
ASX Share Code: XCD
 ("Xceed")

JOINT ANNOUNCEMENT: KEATON MAKES A CASH OFFER OF A$0.14 PER SHARE TO
ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL OF XCEED BY WAY OF A SCHEME OF
ARRANGEMENT


1. INTRODUCTION

Keaton and Xceed wish to announce that Keaton has made a cash offer to acquire the entire
issued share capital of Xceed (the ?Offer?). Pursuant to a scheme implementation deed (the
?Scheme Implementation Deed?) dated 23 August 2013 between Keaton and Xceed, the Offer
will be implemented by way of a scheme of arrangement (the ?Scheme") in accordance with Part
5.1 of the Australian Corporations Act of 2001, as amended (the ?Act") between Xceed and its
shareholders. Following implementation of the Scheme, Xceed will become a wholly owned
subsidiary of Keaton and will be delisted from the Official List of the Australian Securities
Exchange (?ASX?).

Due to Xceed not being a company that is registered in the Republic of South Africa (?South
Africa?) and instead having its place of central management and control in Australia, Xceed is not
subject to the provisions of the South African Companies Act of 2008 and the Takeover
Regulations. Xceed is, however, subject to the provisions of the Act, the regulation of the
Australian Securities and Investments Commission (?ASIC?) and the Australian Takeovers Panel.


2. RATIONALE

The Scheme forms part of Keaton?s strategy to grow into a 5+ million tonnes per annum producer
of diversified coal products. Xceed has an interest in three coal projects, the ore reserves and
mineral resources of which are set out below, estimated in accordance with the JORC Code:

                      Xceed        Measured        Indicated           Inferred           Total
                    interest in    Resources       Resources          Resources         Resources
 Project              project        GTIS            GTIS                GTIS             GTIS
               1
 Moabsvelden           (74%)       63 001 000        2 347 000                  -        65 348 000
               2
 Roodepoort            (15%)        9 860 000       13 590 000          5 850 000        29 300 000
               3
 Bankfontein           (15%)                -        6 050 000         13 714 000        19 764 000
 Totals                            72 861 000       21 987 000         19 564 000       114 412 000

                                             Proved               Probable
                    Xceed interest in       Reserves              Reserves           Total Reserves
 Project                project              tonnes                tonnes                Tones
             1
 Moabsvelden             74%               30 708 330            13 160 713            43 869 043

The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources
modified to produce the Ore Reserves.
The coal projects fit naturally within the existing Keaton portfolio of operating mines and
development projects.

Moabsvelden, an open pit thermal coal project (Xceed?s key asset) being located in close
proximity to Keaton?s Vanggatfontein Colliery in Mpumalanga, South Africa, will create significant
operational synergies and Keaton will use its experience in opencast mining and coal processing
to develop and operate this asset. At the end of May 2013 Xceed received notification from the
Department: Mineral Resources (the ?DMR?) of the issue of a Mining Right for Moabsvelden and
has signed a project finance term sheet with Standard Bank to develop the colliery. A positive for
Moabsvelden is that it will be entirely open castable, with a low stripping ratio and a mine life in
excess of 15 years.

    1-   Competent Person?s Report for the Moabsvelden Project, Project Number GMXP11034 July 2013 prepared by
         Gemecs (Pty) Limited

    2-   Competent Person?s Report for the Roodepoort Project, Project Number GMXP12025 July 2013 prepared by
         Gemecs (Pty) Limited

    3-   Competent Person?s Report for the Bankfontein Project, Project Number GMXP12025 July 2013 prepared by
         Gemecs (Pty) Limited

3. OFFER CONSIDERATION

Pursuant to the Scheme, Keaton will acquire the entire issued share capital of Xceed (being
140,500,435 fully paid ordinary shares) via a cash offer of A$0.14 per share (the "Offer
Consideration") held by the Xceed shareholders as at the record date (?Scheme
Shareholders?), with the maximum purchase consideration therefore equating to
A$19,670,060.90 (the "Purchase Consideration").

The Offer Consideration represents a premium of:

    -    27% to the last close of Xceed's ordinary shares on the ASX (as at 23 August 2013);

    -    35% to the 30-day volume weighted average price (?VWAP?) of Xceed's ordinary shares
         on the ASX (over the 30 trading days prior to today?s announcement); and

    -    66% to the 30-day VWAP to 19 June 2013, being the last trading day prior to the
         announcement by Xceed that it was in discussions about a potential corporate
         transaction.

Keaton has entered into an agreement with Gunvor Group Ltd (?Gunvor?), which holds a 23.9%
stake in Keaton through its wholly owned subsidiary Plusbay Limited ("Plusbay"), in terms of
which Gunvor will fund a maximum of US$18 million, and a minimum of US$10 million, of the
Purchase Consideration via a combination of:

    -    a specific issue of shares for cash (the ?Specific Issue?), subject to the approval of
         Keaton?s shareholders, which will result in the issue of 32,631,692 new Keaton shares to
         Plusbay at a price of R1.7782 per Keaton share (the ?New Keaton Shares?), and will
         increase Plusbay?s shareholding in Keaton from 23.92% to 34.99%. The issue price at
         which these shares are proposed to be issued to Plusbay represents a 10.0% discount to
         the 30-day VWAP of Keaton shares for the period ended 22 August 2013, and

    -    the balance in the form of a prepayment by Gunvor SA, a wholly owned subsidiary of
         Gunvor, which is contingent upon the approval of the Specific Issue by Keaton?s
         shareholders (with the difference to be funded by Keaton at its election from its own cash
         reserves), to be settled via the physical delivery of future export coal produced from
         Moabsvelden.


4. SCHEME IMPLEMENTATION DEED

A copy of the Scheme Implementation Deed is attached to the separate announcement released
by Xceed on the ASX platform and is available at Keaton?s offices in Johannesburg. The Scheme
Implementation Deed provides for other matters, including termination rights, which are
customary for transactions of this nature. Full details of these matters are set out in the Scheme
Implementation Deed.

Xceed and Keaton have agreed to co-operate with each other to implement the Scheme and
Xceed has given certain undertakings regarding the conduct of the Xceed business, on the terms
set out in the Scheme Implementation Deed.

Keaton and Xceed have also agreed to a compensation fee of A$196,700 being payable:

    -     by Xceed to Keaton if the Offer does not proceed for certain prescribed reasons relating
          to Xceed?s conduct; and

    -     by Keaton to Xceed if the Offer does not proceed for certain prescribed reasons relating
          to Keaton?s conduct.


5. CONDITIONS PRECEDENT TO THE OFFER

The Scheme is subject to the fulfillment of a number of conditions precedent, by no later than 6
months after the date of the Scheme Implementation Deed or such later date as Xceed and
Keaton may in good faith agree. The conditions precedent include the following:

-    From the date of the Scheme Implementation Deed until the Scheme meeting, no director
     of Xceed changes or withdraws his recommendation to Xceed?s shareholders to vote in
     favour of the Scheme and all resolutions incidental to the Scheme (if any);

-    An independent expert appointed by Xceed issues the independent expert's report before
     the date on which the scheme booklet is provided for registration with ASIC under section
     412 of the Act and concludes that the Scheme is in the best interests of Xceed?s
     shareholders and the independent expert does not change that conclusion;

-    The approval of the Scheme by a majority in number representing not less than 75% in
     value of the votes exercisable by Xceed shareholders present and voting (the ?Scheme
     Members?) either in person or by proxy at a meeting of Scheme Members to be convened
     pursuant to an order of the Federal Court of Australia (?the Court?) or at any adjournment
     thereof;

-    The Scheme being approved by the Court (with or without modification, such modification
     being acceptable to both Xceed and Keaton);

-    The approval of the acquisition of Xceed and the Specific Issue by 75% of Keaton
     shareholders (excluding Gunvor and its associates for the Specific Issue) present and
     voting either in person or by proxy at a meeting of Keaton shareholders to be convened to
     approve such acquisition and capital raising;
-    The approval of the Offer by the South African Competition Authorities in terms of the
     Competition Act No.89 of 1998, either unconditionally or subject to such conditions as may
     be acceptable to Keaton;

-    The approvals for the Scheme and financing arrangements described in section 3 above
     are obtained (if and to the extent necessary) by certain regulatory authorities, including the
     South Africa Reserve Bank, the Takeover Regulation Panel (the ?TRP?), the JSE Limited
     (the ?JSE?) and the DMR;

-    The JSE granting permission or agreeing to grant permission for the listing of the New
     Keaton Shares on the Main Board of the JSE (pursuant to the financing arrangements
     described in section 3 above) subject only to (i) the allotment of the New Keaton Shares
     and/or (ii) the Keaton shareholders voting in support of the resolutions pertaining to this;

-    The required ?third party consents? (as defined in the Scheme Implementation Deed) are
     obtained and those consents are not withdrawn, cancelled or revoked;

-    No "material agreement" (as defined in the Scheme Implementation Deed) is amended in a
     material respect or terminated;

-    An announcement in relation to Xceed shareholder support is made and is maintained (see
     section 6 below);

-    No "material adverse event" (as defined in the Scheme Implementation Deed) occurs, or
     becomes known to Keaton;

-    The closing spot A$/ZAR exchange rate as at 4.00 pm (UK time) does not fall, for a period
     of more than three consecutive business days prior to the Scheme meeting, to a level
     where 1 A$ converts to over 10.00 ZAR;

-    Xceed does not deviate from the "target budget" (as defined in the Scheme Implementation
     Deed) beyond the limits specified in the Scheme Implementation Deed; and

-    Subject to obtaining the applicable shareholder approvals and regulatory approvals,
     sufficient funds are unconditionally available to Keaton to pay the scheme consideration for
     draw down and payment by Keaton at 5:00pm on the business day before the Scheme
     meeting, and such funds remain available.

See clause 3 of the Scheme Implementation Deed (attached to the separate announcement
released by Xceed on the ASX platform) for full details of the conditions precedent, along with
their respective timing requirements.


6. XCEED SHAREHOLDER SUPPORT

The following are shareholders of Xceed, and together they hold approximately 57% of its issued
share capital:

-    Daleglen Holdings Pty Ltd;1
-    SF Belben (ATF Belben Family Trust) and SF and PJ Belben (ATF Belben Super Fund);2
-    SG Growth Equities Pty Ltd, Ettenan Nominees Pty Ltd and Cenotaph Nominees Pty Ltd;3
-    Dow Super Pty Ltd and Dhow Nominees Pty Ltd; and
-    Maberley Holdings Pty Ltd;
     (together, the "Xceed Supporting Shareholders").

        Notes:
        1. An entity associated with Mr Ian Culbert, Managing Director of Xceed.
        2. SF Belben is Mr Stephen Frank Belben, Finance Director of Xceed.
        3. Entities associated with Mr Patrick O? Connor, non-executive Chairman of Xceed.

The Xceed Supporting Shareholders have authorised Keaton and Xceed to announce their
intention to vote all Xceed shares directly or indirectly held by them in favour of the Scheme at the
Scheme Meeting, subject to the independent expert concluding and continuing to conclude that
the Scheme is in the best interests of Xceed?s shareholders and in the absence of a superior
proposal ("Voting Intention Statement"). The Xceed Supporting Shareholders have agreed not
to change, withdraw or modify their Voting Intention Statement, or indicate an intention do so,
except where this arises from the disposal of any shares to a person that, prior to any such
disposal, has provided the same Voting Intention Statement.


7. RECOMMENDATION AND INDEPENDENT EXPERT OPINION

The board of directors of Xceed (the ?Board") has appointed RSM Bird Cameron Corporate Pty
Ltd as independent expert (the ?Independent Expert?) to consider the Scheme and opine
whether it is in the best interests of Xceed shareholders.

Subject to the Independent Expert concluding and continuing to conclude that the Scheme is in
the best interests of Xceed?s shareholders, and in the absence of a superior proposal, each
director of Xceed:

    -     recommends that Xceed shareholders vote in favour of the Scheme; and

    -     intends to vote all Xceed shares held or controlled by him in favour of the Scheme.


8. ANNOUNCEMENTS BY KEATON AND XCEED

Keaton and Xceed shareholders are referred to the separate announcements released by Keaton
and Xceed simultaneously with this announcement, which provide more information about the
Offer and the Scheme.


9. DIRECTORS? RESPONSIBILITY STATEMENT

The directors of Xceed and the directors of Keaton accept responsibility for the accuracy of the
information contained in this announcement, insofar as such information relates to the respective
company of which they are directors, and certify that, to the best of their knowledge and belief,
having taken all reasonable care to ensure that this is the case, such information is correct and
that there are no omissions of material facts or considerations which would make any statements
of fact or opinion contained in this announcement false or misleading.
 10. NEXT STEPS

 Xceed intends to send a scheme booklet to shareholders in late October 2013 containing full
 details of the Scheme. The scheme booklet will include, among other things, the reason for the
 Board's unanimous recommendation and a copy of the Independent Expert's Report.

 Further details of the expected timetable are set out in Schedule 1 to the Scheme Implementation
 Deed.


 Johannesburg, South Africa and Perth, Australia
 26 August 2013

 Keaton
 Financial advisers:               Qinisele Resources (Pty) Limited & Ceres Capital Limited
 Legal advisers in Australia:      Ashurst Australia
 Legal advisers in South Africa:   Norton Rose Fulbright
 Investment Bank and Sponsor:      Nedbank Capital


 Xceed
 Legal adviser in Australia:       Steinepreis Paganin

 Enquiries:

FOR KEATON:                                               FOR XCEED:
Mandi Glad                                                Ian Culbert
Keaton Energy Holdings Limited                            Xceed Resources Limited
Tel +27 (0) 11 317 1700                                   Tel +61 (8) 9226 0329

Andreas Lobert
Qinisele Resources (Pty) Limited
Tel +27 (0) 82 855 0478

Richard Charrington
Ceres Capital Ltd.
Tel +230 498 8070



 This press release includes mineral reserve and resource information prepared in accordance
 with the South African Code for the Reporting of Exploration Results, Mineral Resources and
 Mineral Reserves (the ?SAMREC Code?).

 Competent Person Statement
 Mr Kobus Dippenaar, who is the Competent Person for Xceed Resources Limited, consents to
 the inclusion in this release of all coal resource information relating to Xceed in the form and
 context in which they appear for the purposes of both the JORC Code and the SAMREC Code.
 Mr Dippenaar has a honours degree in geology and is a professional natural scientist registered
 with the South African Council for Natural Scientific Professions (SACNASP), membership
 number 400060/98. Mr Dippenaar is also a member of the Geological Society of South Africa
 (GSSA) and is a senior coal geologist at Gemecs. He has 21 years? experience relevant to the
 style of mineralisation and type of deposit under consideration, and to the activity which he is
 undertaking, to qualify as a Competent Person for the purposes of both and the SAMREC Code
 and JORC Code. Further information on Xceed?s resource statement and Competent Persons
disclosure is available in the resource statements released in the Xceed 2012 Annual Report and
the Xceed website.

The Coal Reserve estimate was prepared by Mr Van Reenen Jewaskiewitz, who is a registered
Professional Mining Engineer with the Engineering Council of South Africa (ECSA) (a Recognised
Overseas Professional Organisation) and has a Mine Managers Certificate of competency for
coal mines. He has more than 25 years? experience in the South African coal and minerals
industries. Mr Jewaskiewitz is a full time employee of Xceed Resources Limited and has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a Competent Person as defined in the
2004 Edition of the ?Australasian Code for Reporting of Exploration, Mineral Resources and Ore
Reserves?. Mr Jewaskiewitz consents to the inclusion in the ASX release of the matters based on
his information in the form and context in which it appears.

Date: 26/08/2013 07:15:00 Supplied by www.sharenet.co.za                     
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