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EXX - Exxaro Resources Limited - Exxaro plans to cease production of Zinc,

Release Date: 29/07/2011 10:30
Code(s): EXX
Wrap Text

EXX - Exxaro Resources Limited - Exxaro plans to cease production of Zinc, Contemplates Base Metals Retrenchments EXXARO RESOURCES LIMITED (Incorporated in the Republic of South Africa) Registration Number: 2000/011076/06 JSE share code: EXX ISIN: ZAE000084992 ADR code: EXXAY (Exxaro) EXXARO PLANS TO CEASE PRODUCTION OF ZINC, CONTEMPLATES BASE METALS RETRENCHMENTS Diversified South African-based resources group Exxaro announced today that the board of directors of Exxaro as well as the board of directors of Exxaro Base Metals (Pty) Ltd have taken an in-principle decision to permanently cease production of zinc at the Zincor refinery in Springs, Gauteng. As a result, the retrenchment of employees at the operation is contemplated, in the event that no feasible alternative can be found or there not being sufficient suitable vacant positions available for the redeployment of employees to the rest of the Exxaro Group. As previously communicated to stakeholders since 2009, Exxaro has, as part of its strategic plan, been considering options to optimise its zinc assets with a view to ultimately divest from them. The decision was made in context of the difficult conditions of the zinc market, including its cyclical nature, low margins as well as the significant impact of higher electricity prices and the exchange rate. Exxaro`s current portfolio of zinc assets includes the Zincor refinery, a 50,04% interest in the Rosh Pinah zinc and lead mine, a 26% interest in Black Mountain (Pty) Ltd, which owns the Black Mountain zinc and lead mine and the Gamsberg zinc project, as well as an effective 22% interest in the Chifeng zinc smelter in China. "We have been investigating a range of options to find a suitable buyer for our zinc portfolio businesses. We have ideally wanted to sell all the zinc assets to a single buyer, however, to date we have been unsuccessful in attracting investor interest in Zincor," said Sipho Nkosi, Exxaro`s chief executive officer. "Issues that have influenced the decision of the board of directors of Exxaro to take an in-principle decision to permanently cease zinc production at Zincor include the fact that Zincor as a zinc-making operation has proved to be un- saleable to potential investors; continued zinc-making is financially unsustainable with Zincor incurring mounting financial losses; and turn-around and improvement interventions have proved fruitless and are unlikely to get Zincor on to a sustainable financial performance level," added Nkosi. Exxaro has today informed its labour unions of the decision and will start a consultation process in accordance with labour legislation and under the auspices of the CCMA. "We are taking all feasible steps to provide the most suitable options to employees and other stakeholders," said Nkosi. The sale of Exxaro`s shareholding in Rosh Pinah and Chifeng is ongoing and Exxaro is in discussions with interested parties. Stakeholders will be kept updated at the appropriate time. Ends For more information, investor and media stakeholders are invited to take part in an Exxaro teleconference taking place today (29 July 2011) from 12h00 - 13h00 SA time. To access the teleconference, dial one of the following numbers: South Africa - Johannesburg: 011 535 3600 / 011 581 2002 South Africa - Cape Town: 021 819 0900 South Africa (Toll-Free): 0 800 200 648 Australia (Toll-Free): 1 800 350 100 UK (Toll-Free): 0 800 917 7042 USA 1 866 752 6302 (callers to press *0 for Operator) Other Countries (Intl Toll): +27 11 535 3600 A playback will be available for 72 hours. Dial one of the following numbers using Code 18301# South Africa (Telkom): 011 305 2030 UK (Toll-Free): 0 808 234 6771 USA: +1 412 317 0088 Other Countries (Intl Toll): +27 11 305 2030 Editor`s Note: Exxaro is one of the largest South African-based diversified resources groups, with interests in the coal, mineral sands, base metals, industrial minerals and iron ore commodities. www.exxaro.com Enquiries: Wim de Klerk Finance director Tel: + 27 12 307 4848 Mobile: +27 82 652 5145 Email: wim.deklerk@exxaro.com Pretoria 29 July 2011 Sponsor Deutsche Securities (SA) (Proprietary) Limited Date: 29/07/2011 10:30:01 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.

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