Production update for the 6-month period to 30 September 2012 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”) Production update for the 6-month period to 30 September 2012 Keaton Energy is pleased to provide a production update for the six-month period to end September 2012. The company expects to release its interim financial results in late November 2012. Key features; - Focus on safety performance - Improved performance following appointment of a new mining contractor at Vanggatfontein - Productivity improvements at Vaalkrantz, offset by poor geological conditions - Work underway to advance Braakfontein and Sterkfontein projects Keaton Energy’s CEO Mandi Glad commented that while the first half of FY2013 has presented some challenges, these have largely been dealt with. “I remain confident that this will be a year of growth for the company and we continue to actively assess external growth opportunities. Our internal project pipeline is being advanced with work underway to advance the Braakfontein project and to complete the conceptual study on the Sterkfontein Project.” “The current labour relations situation in South Africa is a great cause for concern, especially the road freight strike which is likely to have an impact on our performance in the second 6-months of FY 2013” The group continues to focus on the safety of its employees, contractors and the communities residing near its operations. The Lost Time Injury Frequency Rate at Vanggatfontein Colliery was 0.20 for the 6-months (0.38 for the preceding 6-months) while at the Vaalkrantz Anthracite Colliery the Lost Time Injury Frequency Rate was 0.45 (0.45 for the preceding 6-months). Vanggatfontein Colliery A new opencast mining contractor, Liviero Mining was appointed in June 2012. The underperformance by the previous contractor is expected to have a negative impact on the financial results for the period. The transition to the new contractor has gone exceedingly well and record production months were achieved in July, August and September 2012. This performance and the efforts by mine management to optimise the available mining faces saw significant in-pit and run-of-mine inventories being available at the end of the period, which should deliver benefits in the second half of the financial year. As expected, 5-Seam coal production declined in line with the mine plan, as Pit 1 5- Seam coal was depleted; 5-Seam coal production is expected to increase as Pit 3 is developed during 2H of FY2013. In total, 737 877 tonnes of 4- & 2-Seam coal was delivered to Eskom in the period (1H FY2012: 230 041 tonnes) and 31 272 tonnes of 5-Seam coal was sold into the domestic metallurgical market (1H FY2012: 99 233 tonnes). Vaalkrantz Anthracite Colliery Performance at Vaalkrantz was pleasing with on-going investment in underground mining equipment leading to productivity improvements. However, difficult geological conditions encountered during the period offset much of these gains. In total, 57 904 tonnes of mid-ash export anthracite was produced and sold during the period under review (1H FY2012: 91 374 tonnes), while 93 344 tonnes of premium low-ash anthracite was sold into the domestic metallurgical market (1H FY2012: 114 341 tonnes). Both operations were affected by the road freight industry strike in the last week of September 2012 and into October. The full impact of the strike is not yet clear. Project Pipeline The company continues to actively assess external growth opportunities. In addition, the company’s internal project pipeline is being advanced. Consultants have been appointed and work is underway to advance the Braakfontein project and to complete the conceptual study on the Sterkfontein Project. Bryanston 10 October 2012 Sponsor Nedbank Capital Date: 10/10/2012 01:00:00 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.