WESCOAL HOLDINGS LIMITED - Announcement regarding the disposal of Intibane Colliery

Announcement regarding the disposal of Intibane Colliery

WESCOAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2005/006913/06)
Share code: WSL
ISIN: ZAE000069639
(“Wescoal” or the “Company”)

ANNOUNCEMENT REGARDING THE DISPOSAL OF INTIBANE COLLIERY

1. INTRODUCTION

    Wescoal shareholders are advised that the Company has entered into sale agreements (the
    “Agreements”) with Tokata Resources Proprietary Limited (“Tokata”) and Banjosign Proprietary Limited
    (“Banjosign”) (collectively the “Purchaser”), in terms of which Wescoal will dispose of its Intibane 1 and
    Intibane 2 collieries located in Mpumalanga (the “Intibane Complex”) (the “Disposal”).

    The Disposal will become effective on or about 1 July 2018 (the “Effective Date”).

2. OVERVIEW OF INTIBANE COMPLEX

    The Intibane Complex comprises opencast coal mining operations at Intibane 1 and Intibane 2 collieries.
    The Intibane Complex is located approximately 14km west of Ogies in Mpumalanga and comprises
    portions of the farm Vlakvarkfontein 213 IR. The Intibane 2 area, which is a continuation from Intibane
    1, is located adjacent and immediately to the north of the mined out Intibane 1. The R555 road passes
    to the north of the property and the Kendal Power Station is situated 13km east of Intibane Complex. At
    Intibane 2, production which commenced during the 2016 financial year has progressed well with the
    crushed ROM being partially upgraded through a XRT plant. Infrastructure from Intibane 1 is currently
    still in place and is utilised by Intibane. 2.

    Mining at Intibane Complex is contracted out to an opencast mining contractor and the crushing,
    screening and XRT plants are operated on contract.

3. THE DISPOSAL

   3.1. Rationale for the Disposal

        The remaining coal reserve at the Intibane Complex being less than the annual production rate, the
        Disposal is in line with the Company’s strategy of realising value for shareholders and building a
        scalable, sustainable business.

   3.2. Consideration for the Disposal

        The total consideration for the Disposal is R57 million (the “Consideration”), payable by 31 August
        2018 in cash. The Consideration is to be settled as follows:

         -    R39 million payable by Tokata for the mining operations and assets of Intibane Complex; and
         -    R18 million payable by Banjosign for the surface rights of Intibane Complex.

   3.3. Application of sale proceeds

        The Consideration will be utilised to reduce short term borrowings of the group and to fund strategic
        growth options.
   
   3.4. Suspensive conditions

        There are no outstanding suspensive conditions to the Disposal.

   3.5. Value of the net assets and profits attributable to the net assets of the Disposal

        The value of the net assets that are the subject of the Disposal is R39 million and the profits
        attributable to the net assets that are the subject of the Disposal, is R37 million for the year ended
        31 March 2018.

4. CATEGORISATION OF THE DISPOSAL

   The Disposal is classified as a Category 2 transaction in terms of the JSE Limited Listings Requirements,
   and accordingly no shareholder approval is required.

5. RENEWAL OF CAUTIONARY ANNOUNCEMENT

   Wescoal shareholders are advised that the Company remains under cautionary for a further offer for the
   disposal of one of its non-core, non-operational assets as published on SENS on 29 May 2018.

   Accordingly, shareholders are advised to continue to exercise caution when dealing in Wescoal’s
   securities until a further announcement is made.


28 June 2018

Investment bank, corporate advisor and sponsor
Nedbank Corporate and Investment Banking

Investor Relations
Singular Systems IR

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