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KEH - Keaton Energy Holdings Limited - Business update and changes to the board of directors Keaton Energy Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 2006/011090/06) JSE code: KEH ISIN code: ZAE000117420 ("Keaton Energy" or "the company") Business update and changes to the board of directors Business update Interim results Keaton Energy`s six-month, interim reporting period ended on 30 September 2011. The company expects to release its interim financial results early in December 2011. Project update: Vanggatfontein Project During the period, 99 233 tonnes of 5-Seam coal were sold to the domestic metallurgical industry and thermal coal customers. Demand was negatively affected during the winter months when customers traditionally shut down their furnaces for maintenance as electricity tariffs are at their highest. The production of 5-Seam run-of-mine coal was also affected by geological washouts and weathered coal at the boundaries of the coal reserve. The monthly sales target for 5-Seam coal remains 20 000 tonnes. Following the failure of a surge bin support structure in the 2- & 4-Seam plant on 27 May 2011, the ramp-up to full production of 2- & 4-Seam coal contracted to Eskom was affected. An interim solution was found, using mobile conveyors to by-pass the damaged area, and 29 981 tonnes were delivered to Eskom in July 2011. The damage was fully repaired by the end of July 2011, and 79 494 tonnes were delivered to Eskom in August 2011 and 120 566 tonnes in September 2011. The ramp-up is expected to continue until steady-state production of between 175 000 and 210 000 tonnes per month is achieved. Production in excess of 175 000 tonnes per month is required to reduce the backlog of under-delivered coal to Eskom. Legal advice has been sought relating to the liability for damage caused as a result of the support structure failure, and an announcement will be made once legal certainty has been achieved. The project is currently at its peak cash requirement, with the expected increase in production seeing the project break even in the next few months. Rollover mining has been initiated in Pit 1, with Pit 2 following in November 2011. The contractor will also now move to 24/6 operations to ensure that the required run-of-mine production can be achieved. Leeuw Mining and Exploration transaction ("the transaction") While the conclusion of the transaction remains dependent on regulatory approval, operations at the Vaalkrantz Colliery have improved dramatically following the support provided by Keaton Energy. Some 205 715 tonnes of anthracite were produced in the period, with 91 374 tonnes exported and 114 341 tonnes sold to domestic customers. Changes to the board of directors Resignation of the Financial Director and appointment of a Financial Director Designate Johan Schonfeldt has given notice of his intention to resign his position as Financial Director of Keaton Energy with effect from 30 November 2011. He intends relocating to Australia with his family. The Board would like to thank Johan for the invaluable contribution he has made to the establishment and on-going success of the company and wish him and his family all the best. Jacques Rossouw has been appointed Financial Director Designate and will take up the position from 1 November 2011. Jacques is a CA (SA), having completed his articles with PricewaterhouseCoopers, and subsequently worked in both the high technology and mining industries, most recently as Manager: Corporate Reporting at Harmony Gold Mining Company Limited. Change in executive director responsibilities Mandi Glad, currently Executive Director: Marketing and New Business Development will assume responsibility for the company`s operations as Executive Director: Operations. She will continue to have responsibility for coal marketing and regulatory matters. Paul Miller, Managing Director, will assume responsibility for New Business Development. Bryanston 12 October 2011 Sponsor Nedbank Capital Date: 12/10/2011 13:07:23 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.
