WESCOAL HOLDINGS LIMITED - Acquisition of the farm Vanggatfontein 251, Mpumalanga

Acquisition of the farm Vanggatfontein 251, Mpumalanga

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

ACQUISITION OF THE FARM VANGGATFONTEIN 251, MPUMALANGA

1. Introduction

    Shareholders of Wescoal (“Shareholders”) are advised that Wescoal, through its wholly-owned subsidiary, Keaton
    Mining Proprietary Limited (“Keaton Mining”), has entered into two indivisible memoranda of agreement for the
    purchase of immovable property (the “Agreements”) from Johan Louis Venter Testamentere Trust (“JLV
    Testamentere Trust”) and Andries Schoeman Brakfontein Boerdery (Pty) Limited (“ASB Boerdery”) (collectively
    the “Sellers”), in terms of which Keaton Mining will acquire the remaining extent of Portion 8 of the Farm
    Vanggatfontein 251, Mpumalanga and the remaining extent of the Farm Vanggatfontein 251, Mpumalanga
    respectively (collectively “Farm Vanggatfontein” or the “Properties”) (the “Acquisitions”).

    The effective date of the Acquisitions is anticipated to be no later than 30 June 2019 (the “Effective Date”).

2. Overview of Farm Vanggatfontein

    The Properties are approximately 14km from Delmas, Mpumalanga with the R555 highway as the South Western
    boundary and some 10km from grain storage and handling facilities. They consist of a well-managed farm portion
    (300 hectares), which includes grazing, drylands and 107 hectares of fixed centre pivot irrigation. The structures
    include barns and storage for implements.

3. Details of the Acquisitions

    3.1.    Rationale for the Acquisitions

            Wescoal currently owns the mineral rights of Farm Vanggatfontein and these Acquisitions will result in
            Wescoal acquiring the surface rights of Farm Vanggatfontein. Wescoal does not intend to continue the
            farming operations on the Farm Vanggatfontein but will utilise the Properties to expand its Vanggatfontein
            colliery’ mining operations. The Acquisitions allow Wescoal access to additional mining faces for the
            Vanggatfontein colliery, which enables the opportunity for improved consistency of coal qualities. This is
            in line with Wescoal's stated intentions to extend and optimise its asset base and the Acquisitions form
            part of the integrated development plan for the Vanggatfontein complex.

    3.2.    Purchase consideration

            3.2.1. Keaton Mining will acquire the immovable property of the Farm Vanggatfontein from the Sellers
                   for a total purchase consideration of R63.25 million, including VAT, as follows:

                     3.2.1.1. R36.80 million payable to JLV Testamentere Trust; and
                     3.2.1.2. R26.45 million payable to ASB Boerdery,

                     (collectively the “Purchase Consideration”).
              3.2.2. Keaton Mining shall furnish Odendaal & Kruger Attorneys, being the attorneys of the Sellers (the
                     “Attorneys”) with bank guarantees reasonably acceptable to the Attorneys for payment of the
                     Purchase Consideration by no later than 15 July 2019.

              3.2.3. Transfer of the Farm Vanggatfontein shall be passed by the Attorneys to Keaton Mining as soon as
                     reasonably possible after the bank guarantees referred to in paragraph 3.2.2 have been delivered
                     and Keaton Mining and the Sellers have signed and provided all documents required by the
                     Attorneys for purposes of such registration.

              3.2.4. Payment of the Purchase Consideration will be made from internal cash generated and existing
                     debt facilities.

    3.3.      Conditions precedent

              The Acquisitions are subject to Wescoal finalising the refinance of its existing credit facilities by 30 June
              2019.

    3.4.      Value of the net assets and profits attributable to the net assets of the Acquisitions

              The value of the net assets that are the subject of the Acquisitions is R63.25 million. The profits attributable
              to the net assets that are the subject of the Acquisitions are not relevant as Wescoal will discontinue current
              farming operations and will utilise the Properties to expand its mining activities.

4. Categorisation of the Acquisitions

    The Acquisitions are classified as a Category 2 transaction in terms of JSE Listings Requirements. Accordingly, no
    shareholder approval is required.

Shareholders are reminded that Wescoal is currently in a closed period until the release of its results for the
year ended 31 March 2019, which are expected to be released on or about 25 June 2019.

10 June 2019

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

IR advisor
Singular IR

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