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OPT - Optimum Coal Holdings Ltd - Reviewed group financial results for the six

Release Date: 03/02/2011 07:05
Code(s): OPT
Wrap Text

OPT - Optimum Coal Holdings Ltd - Reviewed group financial results for the six months ended 31 december 2010 Optimum Coal Holdings Ltd (Registration number: 2006/007799/06) Share code: OPT ISIN: ZAE000144663 ("Optimum Coal" or the "Group" or the "Company") REVIEWED GROUP FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010 Group highlights for the period ended 31 December 2010 Where applicable comparisons refer to the prior 6 months reporting period to December 2009 - Revenue increased by 79% to R2.69 billion; - EBITDA of R566 million generated during the period; - Headline earnings of R278 million generated during the period; - Group run-of-mine coal production up 35% to 8.789 million tons; - Group saleable coal production up 39% to 7.033 million tons and export coal production up 40% to 3.611 million tons; - R722 million Kwagga North opencast extension at Optimum Collieries on track and scheduled for June 2012 completion; - Koornfontein Mines now fully integrated and delivering ahead of production targets, with high value 2-seam life extension now confirmed; and - Cash on hand of R378 million and net debt of R84 million as at 31 December 2010. Consolidated statement of comprehensive income for the period ended Reviewed Reviewed Audited 6 months 6 months 12 months
31 Dec 31 Dec 30 Jun 2010 2009 2010 R`000 R`000 R`000 Revenue 2 691 217 1 499 954 3 359 324 Expenses (2 439 407) (1 743 895) (3 717 070) Employee related (478 456) (287 321) (709 892) expenses Other expenses (1 960 951) (1 456 574) (3 007 178) Share-based payment (2 450) 3 746 (3 863) (expense)/income Other income 191 787 479 904 773 881 Bargain purchase gain - - 14 734 Gain from business - - 95 359 acquisition achieved in stages Operational income 191 787 391 769 575 653 Profit on disposal of - 88 135 88 135 available-for-sale financial asset Results from operating 441 147 239 709 412 272 activities Net finance cost (77 341) (90 654) (119 350) Finance expenses (144 628) (137 911) (226 051) Finance income 67 287 47 257 106 701 Share of profit from - (791) 2 506 associate Profit before income 363 806 148 264 295 428 tax expense Income tax expense (89 163) (78 600) (65 773) Profit for the period 274 643 69 664 229 655 Other comprehensive income Fair value gain on - 24 313 208 942 available-for-sale financial assets Fair value gain on - (88 135) (88 135) available-for-sale financial assets transferred to profit or loss on disposal Income tax on other - 9 836 (16 913) comprehensive income Other comprehensive - (53 986) 103 894 income for the period, net of income tax Total comprehensive 274 643 15 678 333 549 income for the period Profit/(Loss) attributable to: Equity holders of the 274 643 69 664 215 499 parent Non-controlling * * 14 156 interests 274 643 69 664 229 655 Total comprehensive income attributable to: Equity holders of the 274 643 15 678 319 393 parent Non-controlling * * 14 156 interests Total comprehensive 274 643 15 678 333 549 income for the period Basic earnings per 137.47 47.07 131.75 share (cents) Diluted earnings per 137.02 43.89 127.68 share (cents) Shares in issue (000): Weighted average number of ordinary shares Shares in issue at 251 786 200 000 200 000 beginning of the period Effect of own shares (52 000) (52 000) (52 000) held Issued during the - - 15 566 period Weighted average number 199 786 148 000 163 566 of ordinary shares at end of the period *Nominal amount Note: A share split (200 000 shares: 1 share) took place during the 2010 financial year. Accordingly, basic earnings per share and diluted earnings per share for 2009 have been restated to account for the share split. Headline earnings per 139,22 6,59 28,92 share (cents) Diluted headline 138,76 3,53 25,08 earnings per share (cents) *Nominal amountNote: A share split (200 000 shares: 1 share) took place during the 2010 financial year. Accordingly, headline earnings per share and diluted headline earnings per share for 2009 have been restated to account for the share split and in addition have been restated for the omission of the once- off profit on disposal of the available for sale financial asset in the corresponding period. Reconciliation of headline earnings for the period ended Reviewed Reviewed Audited 6 months 6 months 12 months 31 Dec 31 Dec 30 Jun 2010 2009 2010
R`000 R`000 R`000 Profit attributable to 274 643 69 664 215 499 equity holders of the parent Adjust for: Loss on sale of plant 4 854 22 072 24 566 and equipment Gain from business - - (95 359) acquisition achieved in stages Fair value gain on available-for-sale financial assets transferred to profit or loss on disposal - (88 135) (88 135) Bargain purchase gain - - (14 734) Tax effects of the above (1 359) 6 159 5 460 adjustments 278 138 9 760 47 297 Consolidated statement of financial position as at Reviewed Reviewed Audited 31 Dec 31 Dec 30 Jun 2010 2009 2010
R`000 R`000 R`000 Assets Property, plant and 6 419 886 4 782 853 6 375 205 equipment Intangible assets 919 721 903 782 938 106 Restricted 1 232 398 966 730 1 183 942 rehabilitation investment Available-for-sale 1 272 642 850 494 1 272 643 financial assets Deferred taxation 5 436 13 148 5 436 Disposal group held for - 179 918 43 363 sale Non-current assets 9 850 083 7 696 925 9 818 695 Inventories 433 393 234 196 391 817 Trade and other 234 393 193 176 257 054 receivables Taxation 5 037 781 5 798 Cash and cash 377 748 368 699 750 536 equivalents Disposal group held for 45 534 - - sale Current assets 1 096 105 796 852 1 405 205 Total assets 10 946 188 8 493 777 11 223 900 Equity and liabilities Equity Share capital and 2 519 850 850 001 2 519 850 premium Available-for-sale fair 165 218 6 436 165 218 value reserve Share-based payment 818 058 814 000 818 058 reserve Treasury share reserve * * * Retained earnings 2 983 069 2 548 459 2 708 426 Discount on acquisition 56 045 - 56 045 of non-controlling interest Non-controlling interest * * * Total equity 6 542 240 4 218 896 6 267 597 attributable to equity holders of the Company Loans and borrowings 110 000 600 000 90 284 Finance lease liability 135 446 235 090 233 665 Share appreciation 14 834 8 832 12 384 rights liability Environmental liability 1 786 264 2 008 284 1 899 286 provision Post retirement medical 1 941 2 720 1 941 benefit Deferred taxation 1 306 552 865 662 1 287 726 Non-current liabilities 3 355 038 3 720 588 3 525 286 Loans and borrowings 352 023 42 729 681 Finance lease liability 99 183 95 254 46 804 Trade and other payables 533 016 424 005 611 026 Taxation 64 690 34 992 43 506 Current liabilities 1 048 911 554 293 1 431 017 Total equity and 10 946 188 8 493 777 11 223 900 liabilities Net asset value per 3 275 2 851 3 832 share (cents) Tangible net asset value 2 814 2 240 3 258 per share (cents) *Nominal amount Note: A share split (200 000 shares: 1 share) took place during the 2010 financial year. Accordingly, net asset value per share and tangible net asset value per share for 2009 have been restated to account for the share split. Consolidated statement of changes in equity for the period ended Available-for- Share Share sale fair value capital premium reserve Group R`000 R`000 R`000 Balance at beginning of 1 2 519 849 165 218 the period Total comprehensive income - - - for the period Profit for the period Net change in fair value of available-for-sale financial assets 1 2 519 849 165 218 Transactions with owners, recorded directly in equity Issue of shares - - - Non-controlling interest - - - as a result of business combination Acquisition of non- - - - controlling interest Balance at end of the 1 2 519 849 165 218 period *Nominal amount Consolidated statement of changes in equity (continued) for the period ended Share-based Treasury
payment share Retained reserve reserve earnings Group R`000 R`000 R`000 Balance at beginning of the 818 058 * 2 708 426 period Total comprehensive income - - 274 643 for the period Profit for the period 274 643 Net change in fair value of - available-for-sale financial assets
818 058 * 2 983 069 Transactions with owners, recorded directly in equity Issue of shares - - - Non-controlling interest as a - - - result of business combination Acquisition of non- - - - controlling interest Balance at end of the period 818 058 * 2 983 069 *Nominal amount Consolidated statement of changes in equity (continued) for the period ended Discount on acquisition of Non- non-controlling controlling
interest Total interest Group R`000 R`000 R`000 Balance at beginning 56 045 6 267 597 * of the period Total comprehensive 274 643 * income for the period Profit for the period 274 643 * Net change in fair - value of available-for- sale financial assets 56 045 6 542 240
Transactions with owners, recorded directly in equity Issue of shares - - - Non-controlling - - - interest as a result of business combination Acquisition of non- - - - controlling interest Balance at end of the 56 045 6 542 240 * period *Nominal amount Consolidated statement of changes in equity (continued) for the period ended Reviewed Reviewed Audited
Total equity Total equity Total equity 31 Dec 31 Dec 30 Jun 2010 2009 2010 Group R`000 R`000 R`000 Balance at beginning of 6 267 597 4 203 218 4 203 194 the period Total comprehensive 274 643 15 678 333 549 income for the period Profit for the period 274 643 69 664 229 655 Net change in fair - (53 986) 103 894 value of available-for- sale financial assets 6 542 240 4 218 896 4 536 743 Transactions with owners, recorded directly in equity Issue of shares - - 1 673 907 Non-controlling - - 733 640 interest as a result of business combination Acquisition of non- - - (676 693) controlling interest Balance at end of the 6 542 240 4 218 896 6 267 597 period *Nominal amount The following table reconciles EBITDA to profit for the period: for the period ended Reviewed Reviewed Audited 6 months 6 months 12 months 31 Dec 31 Dec 30 Jun 2010 2009 2010
R`000 R`000 R`000 Results from operating 441 147 239 709 412 272 activities Other income (191 787) (479 904) (773 881) Bargain purchase gain - - (14 734) Gain from business - - (95 359) acquisition in stages Net release from (191 787) (391 769) (575 653) rehabilitation provision Profit on disposal of shares - (88 135) (88 135) Share-based payment expense 2 450 (3 746) 3 863 Depreciation and amortisation 314 130 218 217 502 143 EBITDA 565 940 (25 724) 144 397 Operating segments Group The Group has three reportable segments as described below, which are the Group`s strategic business units. The business units offer different products and services and are managed separately because of their different business strategies. The following summary describes the operations in each of the Group`s reportable segments: Coal mining: includes the production of coal for both local and export market. Logistics: involves the process to route coal to Richards Bay Coal Terminal (RBCT). Coal exploration: includes coal exploration through several subsidiary companies. Information regarding the results of each reportable segment is included below. The basis of measurement of reportable segment items are in terms of IFRS. Performance is measured based on segment profit before tax. These measures are used as management believes that such information is the most relevant in evaluating the results of certain segments operating within these industries and for comparability. Inter-segment pricing is determined on an arm`s length basis. Information about reportable segments Coal Reviewed mining Logistics 31 December 2010 R`000 R`000 External revenues 2 690 335 882 Inter-segment revenues - 445 031 Finance income 65 602 1 685 Finance expenses (144 628) - Depreciation and amortisation (314 130) - Other operating expense (1 573 511) (336 164) Total profit or loss for reportable 723 669 111 434 segments Other corporate profit or loss Inter-segment revenues Share-based payment expense Elimination of inter-segment profits Consolidated profit before income tax Capital expenditure (354 127) - Reportable segment assets 7 619 409 1 372 795 Other corporate assets Elimination of inter-segment assets Consolidated total assets Reportable segment liabilities (5 121 499) (372 539) Other corporate liabilities Elimination of inter-segment liabilities Consolidated total liabilities Coal Reviewed mining Logistics 31 December 2009 R`000 R`000 External revenues 1 476 308 23 647 Inter-segment revenues - 339 496 Finance income 37 145 91 Finance expenses (137 786) (108) Depreciation and amortisation (218 217) - Other operating expense (1 169 194) (265 306) Total profit or loss for reportable (11 744) 97 820 segments Other corporate profit or loss Inter-segment revenues Share of profit from associate Share-based payment expense Elimination of inter-segment profits Consolidated profit before income tax Capital expenditure (705 836) - Reportable segment assets 6 119 633 930 189 Other corporate assets Elimination of inter-segment assets Consolidated total assets Reportable segment liabilities (4 157 868) (207 984) Other corporate liabilities Elimination of inter-segment liabilities Consolidated total liabilities Information about reportable segments (continued) Coal Reviewed exploration Total 31 December 2010 R`000 R`000 External revenues - 2 691 217 Inter-segment revenues - 445 031 Finance income 67 287 Finance expenses - (144 628) Depreciation and amortisation - (314 130) Other operating expense - (1 909 675) Total profit or loss for reportable - 835 102 segments Other corporate profit or loss (23 815) Inter-segment revenues 54 151 Share-based payment expense (2 450) Elimination of inter-segment profits (499 181) Consolidated profit before income tax 363 806 Capital expenditure (2 205) (356 332) Reportable segment assets - 8 992 204 Other corporate assets 4 335 355 Elimination of inter-segment assets (2 381 370) Consolidated total assets 10 946 188 Reportable segment liabilities - (5 494 038) Other corporate liabilities (1 291 281) Elimination of inter-segment liabilities 2 381 370 Consolidated total liabilities (4 403 949) Coal Reviewed exploration Total 31 December 2009 R`000 R`000 External revenues - 1 499 955 Inter-segment revenues - 339 496 Finance income 4 37 240 Finance expenses - (137 894) Depreciation and amortisation - (218 217) Other operating expense (32 241) (1 466 741) Total profit or loss for reportable (32 237) 53 839 segments Other corporate profit or loss 430 966 Inter-segment revenues 22 754 Share of profit from associate (791) Share-based payment expense 3 746 Elimination of inter-segment profits (362 250) Consolidated profit before income tax 148 264 Capital expenditure (4 564) (710 400) Reportable segment assets 103 173 7 152 995 Other corporate assets 1 608 664 Elimination of inter-segment assets (267 882) Consolidated total assets 8 493 777 Reportable segment liabilities (20 173) (4 386 025) Other corporate liabilities (156 738) Elimination of inter-segment liabilities 267 882 Consolidated total liabilities (4 274 881) Consolidated statements of cash flow for the period ended Reviewed Reviewed Audited 6 months 6 months 12 months
31 Dec 31 Dec 30 Jun 2010 2009 2010 R`000 R`000 R`000 CASH FLOWS FROM OPERATING ACTIVITIES Cash generated/(utilised) by 443 205 8 178 (6 628) operations Interest received 18 831 10 112 35 765 Interest paid (42 047) (29 078) (96 479) Taxation paid (43 712) (4 013) (69 253) Net cash flows from 376 277 (14 801) (136 595) operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, (354 127) (600 762) (881 568) plant and equipment Proceeds from sale of 11 049 4 607 2 595 property, plant and equipment Acquisition of capitalised (2 205) (4 564) (9 604) exploration costs Acquisition of other - (11 585) - investments Acquisition of subsidiary, - - (196 494) net of cash acquired Disposal of available-for- - 227 728 227 776 sale financial assets Dividend from equity - 2 490 - accounted investee Long-term loan provided - (35 003) (42 160) Net cash outflows from (345 283) (417 089) (899 455) investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share - - 1 669 850 capital Acquisition of non- - - (691 751) controlling interest Borrowings raised 50 000 600 000 688 307 Repayment of borrowings (407 942) (150 000) (180 535) Finance lease liability (45 840) (51 843) (101 717) repayment Net cash (outflows)/inflows (403 782) 398 157 1 384 154 from financing activities Net (decrease)/increase in (372 788) (33 733) 348 104 cash and cash equivalents Cash and cash equivalents at 750 536 402 432 402 432 the beginning of the period Cash and cash equivalents at 377 748 368 699 750 536 the end of the period Commentary Group financial highlights During the first six months of FY2011 (the "reporting period") we produced 7.033 million tons of saleable coal, generated revenue of R2.691 billion and earnings before interest, tax and depreciation and amortisation ("EBITDA1") of R566 million, with profit for the period of R275 million. This is a significant improvement from the first six months of FY2010 (the "corresponding period"), during which we produced 5.072 million tons of saleable coal, generated revenue of R1.500 billion, with profit for the period of R70 million and negative EBITDA of R26 million. During the reporting period, our operating profit increased by R201 million from R240 million to R441 million primarily as a result of improved production volumes from both opencast and underground operations at Optimum Collieries and attributable underground production at Koornfontein Mines which was not consolidated during the period ended 31 December 2009. Additionally, the export coal price has strengthened in rand terms over the period. Higher profitability resulted in cash generated from operations having increased by R435 million from cash generated of R8 million to cash generated of R443 million in the reporting period. Our statement of financial position remains strong, with low gearing at 6,6% and net debt at R84 million as at 31 December 2010. Strategic review and objectives Our vision is to become the country`s benchmark South African owned and controlled coal mining and exploration group. Our mission is to enhance commercial prosperity by supplying both local and international coal consumers. Optimum Coal has demonstrated that it is a robust coal operator and the Company is well-positioned to further develop its coal producing capabilities by optimising resource life at current operations and by progressing its existing development projects. However, the Company remains ready to take advantage of any value generating acquisition opportunities by maximising our exposure to the export coal market and by pursuing opportunities with Eskom. We continue to be a significant supplier of coal to South Africa`s power grid and are continuously exploring opportunities together with Eskom to increase our coal supply to them. The arbitration process in respect of Optimum Coal`s coal supply agreement to supply coal from its Optimum Collieries operations to Eskom`s Hendrina Power Station, continues and the Company expects to complete the process by the end of April 2011. As the fourth largest coal exporter out of Richards Bay Coal Terminal where we own 8.44 million tons per annum of export entitlement, we have the ability to export coal efficiently providing us with direct exposure to international thermal coal markets. We continue to evaluate further opportunities to increase our access and exposure to international coal markets. As at 31 December 2010, we have 318kt of export coal at our operations. We are working closely with Transnet Freight Rail ("TFR") to ensure that this coal is timeously railed to RBCT. We are in the process of disposing of our platinum exploration assets and this will allow us to continue focusing on our core business of producing coal. Our empowerment credentials remain excellent, with more than 60% of Optimum Coal`s shares being held by HDSA shareholders. We currently enjoy an empowerment rating of 3 at Optimum Collieries and 4 at Koornfontein Mines. Safety Zero Harm to anyone at our operations is the top priority for us and we continue to work diligently to ensure that our operations are safe at all times. Our various safety initiatives implemented during the period have raised safety awareness across our operations and we are pleased to report no fatal accidents during the period. Furthermore, our safety rates continue to improve compared to industry benchmarks. Operational review Optimum Coal is a diversified coal operator of significant scale with two wholly-owned operations, Optimum Collieries and Koornfontein Mines. Through significant efforts to optimise our operations mainly by maximising the utilisation of our mining and infrastructure assets, we have significantly increased our production performance across the group. Optimum Collieries, the third largest opencast coal mine in South Africa comprises three opencast mines and one underground mine, with estimated coal resources of 710.7 million tons and an estimated reserve base of 250.2 million tons of run-of-mine coal, of which 175.7 million tons are classified as saleable as at 31 December 2010. A total of 5.39 million tons of saleable coal was produced at Optimum Collieries during the reporting period, with a total of 2.64 million tons of saleable export coal and 2.75 million tons of Eskom sales tons produced. Koornfontein Mines, a large underground mine, with estimated coal resources of 175.1 million tons and an estimated reserve base of 68.7 million tons of run- of-mine coal, of which 44.1 million tons were classified as saleable as at 31 December 2010. A total of 1.64 million tons of saleable coal was produced during the first six months of FY2011, with a total of 0.97 million tons of saleable export coal and 0.67 million tons of Eskom saleable tons produced. Opencast mines Our opencast mines performed well during the reporting period, despite the effects of heavy rain as well as contractor under-performance. We anticipated unusually heavy summer rainfall and spent a significant amount of time and capital to install additional in-pit water management infrastructure, which was effective in mitigating the various effects of rain in the reporting period. Under-performance of a pre-stripping contractor resulted in our primary coal exposure process being affected. As a consequence, the scope of the contractor was scaled down and another contractor was brought in to assist in fulfilling the role. Another performance enhancing initiative is the re- evaluation of mining methodologies, an optimisation project which we recently commenced with. Underground mines Koornfontein Mines performed on target and we are pleased that we were able to extend the life of the 2-seam reserve at Koornfontein Mines while work on the 4-seam project continues. We experienced protracted wage negotiations, now resolved, and challenging geological conditions at Boschmanspoort Mine. Boschmanspoort is in its development phase and we anticipate the geological challenges will be overcome as the mine reaches maturity in the next year. To expedite the process, we are in the process of implementing various operational initiatives, which includes the recent acquisition of a Sandvik road header. Capital expenditure/development and exploration During the period we spent a total of R354 million of capital expenditure on our operations and project development. Capital spent on our existing operations comprised R254 million at Optimum Collieries and R90 million at Koornfontein Mines. Project development capital of R10 million was spent on our greenfield development projects. The Boschmanspoort Underground- and Water Reclamation Plant Projects costing a total of R1.13 billion have been completed at Optimum Collieries, and the development of the R722 million Kwagga North Opencast Mine is progressing well. Scheduled for completion in mid-2012, we remain on track with this key life of mine expansion project and continue to deliver progress within timeframes and budgets. Work on our brownfield projects, specifically the Schoonoord Project at Optimum Collieries and our 4-seam Development Project at Koornfontein Mines has also progressed during the reporting period. Schoonoord has a new order mining right and we have commenced discussions with Eskom for the sale of product to be mined from the reserve. The timing of the development of the Koornfontein 4-seam reserve will depend on the Koornfontein Life of Mine Optimisation currently being performed. We have been able to extend the mineable high value 2-seam reserve life by two to three years at current production rates, enabling us to continue producing high value exports at Koornfontein Mines at a competitive cost and also enabling the deferral of the 4-seam Development Project. Our greenfield developments projects, Overvaal, Vlakfontein and Mpefu provide the group with substantial additional growth optionality. Feasibility work continues on these projects and stakeholder engagement is well underway. The timing of these developments will also depend on the results of the Koornfontein Life of Mine Optimisation, where we have already confirmed the mineability of additional high value 2-seam resource. Our development strategy is to deliver incremental coal volume growth to both Eskom and the export markets in a capital and margin efficient manner. Projects will continue to be evaluated on a quarterly basis, and the board will continue to adopt a robust and prudent approach to project approvals to ensure that shareholder value is maximised and project risk is suitably addressed. Outlook The outlook for thermal coal remains robust on the back of strong international demand coupled with supply constraints across key coal producing regions. Global demand has been supported by the cold European winter combined with increased power generation and continued growth in Asian countries. Extreme weather conditions experienced since November 2010 have materially impacted local and international thermal coal supply and this supply tightness has caused a 45% rise in API#4 dollar thermal coal prices out of Richard Bay since October 2010. We believe that global supply constraints will take some time to resolve and that international thermal coal demand remains robust and sustainable. Optimum Coal is well placed to take advantage of these current market conditions, and will continue to grow the Company by optimising resource life at current operations and developing our brownfield and greenfield projects and by seeking value-generating acquisition opportunities during the next six months. Local coal transport logistics have been challenging and we continue to work with TFR to address these logistics challenges. With diversified operations in our group, we have the ability to better manage overall operational and production risk, as and when this arises. We remain focused on delivering group production targets for FY11 and we believe that the successful implementation of operational initiatives especially at our Boschmanspoort underground section and in our opencast sections, will enable us to meet group targets. Our successfully implemented water management initiatives at our opencast sections continue to mitigate various excess rain effects which are still being experienced. Board and Corporate Governance Optimum Coal Holdings Limited is fully compliant with the King III Code of Good Governance in terms of the board of directors following the appointment of Mr. Bobby Godsell as chairman and Mr. Paul Nkuna as deputy chairman, both of them being independent non-executive directors. The audit committee now consists of three independent non-executive directors and the majority of the board of directors are independent. Basis of presentation These condensed consolidated interim financial statements are prepared in accordance with International Financial Reporting Standards, including IAS34 and the AC 500 series issued by the Accounting Practices Board ("APB") and the requirements of the Companies Act of South Africa. The same accounting policies and methods of computation were followed in these financial statements as compared with the consolidated annual financial statements for the year ended 30 June 2010. Review opinion This media release has been reviewed by the Company`s auditors, KPMG Inc. Their unqualified review report is available for inspection at the Company`s registered office. Forward looking information Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. In some cases, forward looking information can be identified by the use of such terms such as "may", "will", "should", "expect", "believe", "plan", "scheduled", "intend", "estimate", "forecast", "predict", "potential", "continue", "anticipate" or other similar expressions concerning matters that are not historical facts. Forward looking information may relate to management`s future outlook and anticipated events or results, and may include statements or information regarding the future plans or prospects of the Company. You should not place undue importance on forward looking information and should not rely upon this information as of any other date. The Company undertakes no obligation to update publicly or release any revisions of these forward looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events except where required by applicable laws. Dividend No dividend has been declared by the board in respect of the six months ended 31 December 2010. On behalf of the board Bobby Godsell Mike Teke Chairman Chief Executive Officer Johannesburg 2 February 2011 Note 1: We define EBITDA as results from operating activities, excluding other income, share-based payment income, depreciation and amortisation and releases from the environmental provision. First Floor, Marlborough Gate, Hyde Lane, Hyde Park, Sandton 2196. PO Box 411333 Craighall 2024 Tel: +27 (0) 11 325 0403 Fax: +27 (0) 11 325 0392 Directors Non-Executive Independent Chairman: Mr Bobby Godsell Executive Directors: Mike Teke, Douglas Gain, Henry White Non-Executive Directors: Tom Borman, Peter Gain, Eliphus Monkoe, Dr Mlungisi Kwini Non-Executive Independent Directors: Nomavuso Mnxasana, Loutjie Smit, Lulu Letlape, Deon Dhlomo, Paul Nkuna www.optimumcoal.com Sponsor RAND MERCHANT BANK (a division of FirstRand Bank Limited) Date: 03/02/2011 07:05:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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