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Keaton Energy Holdings Limited - Detailed Terms Announcement And Withdrawal Of Cautionary

Release Date: 15/02/2016 16:00:00      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 ?KEH?)

DETAILED TERMS ANNOUNCEMENT RELATING TO THE DISPOSAL OF LEEUW MINING AND
EXPLORATION PROPRIETARY LIMITED (?LME?) AND AMALAHLE EXPLORATION PROPRIETARY
LIMITED (?AMALAHLE?) BY KEATON ENERGY HOLDINGS LIMITED (?KEH?) TO BAYETE ENERGY
RESOURCES PROPRIETARY LIMITED (?BER?) AND WITHDRAWAL OF CAUTIONARY
ANNOUNCEMENT

Introduction

The Keaton Energy board of directors is pleased to confirm that KEH has concluded an agreement
with BER, whereby KEH will dispose of its wholly owned subsidiary LME by way of a disposal of the
Sale Interest (consisting of the ?Sale Shares? and the ?Sale Claims?) in LME to BER for a consideration
of R24 715 000 (?Transaction?) and, in addition, the sale of its wholly owned subsidiary, Amalahle for
a consideration of R250 000.

The purpose of the Transaction is to dispose of the group?s entire KwaZulu Natal anthracite
operations and/or projects.

Background

The KwaZulu Natal anthracite operations and/or projects consist of the Vaalkrantz Colliery, the
Koudelager project and the Balgray project (?LME Operations?) together with the Mooiklip project
held in Amalahle. The Braakfontein thermal coal project, held by Leeuw Braakfontein Colliery
Proprietary Limited (?LBC?), a wholly owned subsidiary of LME, is specifically excluded from the
Transaction. LBC, which will be unbundled from LME, will become a direct wholly owned subsidiary
of KEH.

The Sale Shares consist of both the ordinary shares held by KEH and the preference shares held
respectively by KEH and the Industrial Development Corporation of South Africa Limited (?IDC?). The
Sale Claims consist of KEH?s claims on loan account against LME, save for an amount of R24 715 000
(?Deferred Amount?), which will be retained by KEH.

The Transaction also provides that KEH disposes of 100% of the ordinary and preference shares held
by KEH in Amalahle, including 100% of KEH?s loan claims against Amalahle (?Amalahle Sale
Agreement?).

Rationale

Vaalkrantz Colliery has experienced challenging geological conditions impacting production volumes
over the past number of years. This coupled with the closure of two production sections as a result
of safety and difficult mining conditions, continued depressed coal prices and uncertainty as to the
timing of recovery, increased costs and lower than expected yields resulted in the Board taking the
decision, in September 2015, to dispose of the group?s entire KwaZulu Natal anthracite assets.

Purchase Consideration

The purchase consideration of R24 715 000, in settlement of the Deferred Amount, is payable in the
form of a royalty of R20 per saleable ton produced by the LME Operations or bought in and sold
and/or beneficiated by the LME Operations with effect from the first business day after all the
suspensive conditions have been fulfilled or waived (?Effective date?).

The Amalahle Sale Agreement will be for a consideration of R250 000 payable in cash on the first
business day after all the suspensive conditions have been fulfilled or waived.

The proceeds of the disposal will be utilized within the Keaton Energy group for working capital
purposes and the advancing of its project pipeline.

As per the 30 September 2015 interim group results, the net asset value of LME was
R3 836 305 and the net losses R104 505 879.

Conditions Precedent

The Transaction is subject to the following suspensive conditions:

    -   The entering into of the Amalahle Sale Agreement and the agreement becoming
        unconditional;
    -   KEH being satisfied that BER meets the equity ownership requirements of the Broad Based
        Socio-Economic Empowerment Charter of the South African Mining Industry;
    -   Completion of the acquisition by KEH of the IDC preference shares such that KEH is the
        holder of such shares;
    -   Written consent from Investec Bank Limited for the disposal of the Sale Interest;
    -   KEH being satisfied in its sole and absolute discretion that following the section 11 consent
        in terms of the Mineral and Petroleum Resources Development Act 28 of 2002 (?MPRDA?)
        it shall bear no further responsibility in respect of the rehabilitation liability;
    -   The implementation of the LBC unbundling;
    -   All necessary regulatory approvals and compliance with Applicable Laws having been
        obtained including but not limited to:
             o Granting by the Minister of consent in terms of section 11 of the MPRDA regarding
                  change of control in LME and registration thereof at the Mineral and Petroleum
                  Titles Registration Office;
             o To the extent required, the unconditional approval in writing from the Relevant
                  Competition Authorities in terms of the Competition Act 89 of 1998 in respect of
                  the Transaction;
             o The approval of the JSE and shareholders of KEH to the extent required.

Categorisation

The transaction has been categorised as a Category 2 transaction in terms of the JSE Listings
Requirements.

Withdrawal of Cautionary Announcement

Following the release of this announcement caution is no longer required to be exercised by KEH
shareholders when dealing in KEH shares.

By order of the Board
Bryanston

15 February 2016
Sponsor
Investec Bank Limited

Date: 15/02/2016 04:00:00 Supplied by www.sharenet.co.za                     
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