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KEH - Keaton Energy - Operational update for the six months ended 31 March 2011 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 "the company") OPERATIONAL UPDATE FOR THE SIX MONTHS ENDED 31 MARCH 2011 Keaton Energy has released the following operational update on its Vanggatfontein Project near Delmas ("Vangatfontein" or "the Project") for the six months ended 31 March 2011, ahead of the release towards the end of May 2011 of the company`s year-end financial results. SAFETY Safety performance at Vanggatfontein has been excellent, with 651 645 hours worked and no lost time injuries during the period. At the end of March 2011, there were 239 mining staff and contractors and 330 construction contractors on site. OPERATIONS Since mobilisation of the mining contractor in July 2010, 3.2 million cubic meters of waste have been removed and some 145 107 metric tonnes of 5-Seam run- of-mine ("ROM") coal has been produced. The 5-Seam plant was handed over to the processing contractor at the beginning of December 2010 and sales started immediately. After a slow start in December 2010 some 48 397 metric tonnes of 5-seam nuts, peas and duff has been sold. The product has performed well in testing, resulting in good customer acceptance. No 4-Seam coal has been exposed and coaling has begun to support the completion and commissioning of the No 4 & No 2 Seam plant, on schedule, during April 2011. The 11kV Eskom overhead transmission line went live at the mine on 5 April 2011, which was a critical milestone for the successful commissioning of the No 4 & No 2 Seam plant and will also mean that the use of a generator to power the No 5 Seam plant can be discontinued. First deliveries of coal to Eskom are planned for the second half of May 2011. ESKOM CONTRACT EXTENDED The final Eskom contract terms have changed from those announced on 20 July 2010. The quality specification has changed with a concomitant price adjustment, but importantly so has the contract period. Initially some 16.5 million metric tonnes were to be supplied over seven years; now, some 20.8 million metric tonnes will be supplied over ten years. Eskom has requested slightly better quality coal which will mean that, while much the same ROM volume will be mined on a monthly basis, it will be washed to a higher specification with 175 000 metric tonnes of washed coal being delivered to Eskom every month. Vanggatfontein`s coal washing capability means that coal can be produced according to varying customer requirements. Production ramp-up will begin at 50 000 tonnes per month in May 2011, rising to 175 000 tonnes per month four months later. NEDBANK CAPITAL PROJECT FINANCE The offer of the R255 million project financing from Nedbank Capital announced on 6 December 2010 has reached financial close in record time following an intensive due diligence of the Project and completion of the legal documentation. First draw-down of R138.5 million took place on 1 April 2011. Bryanston 7 April 2011 Sponsor Nedbank Capital Date: 07/04/2011 12:30:01 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.
