WESCOAL HOLDINGS LIMITED - Acquisition of the Muhanga plant and cautionary announcement

Acquisition of the Muhanga plant and cautionary announcement

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   WESCOAL HOLDINGS LIMITED
   (Incorporated in the Republic of South Africa)
   (Registration number 2005/006913/06)
   JSE Share code: WSL ISIN: ZAE000069639
   ("Wescoal" or "the Company")


   ACQUISITION OF THE MUHANGA PLANT AND CAUTIONARY ANNOUNCEMENT


1. INTRODUCTION

   Shareholders are advised that Wescoal Mining Proprietary Limited (“Wescoal Mining”), a
   wholly owned subsidiary of Wescoal, has entered into a Sale of Asset Agreement dated 23
   June 2014 (“signature date”), to purchase from Muhanga Mines Proprietary Limited
   (“Muhanga” or “the Seller”) certain assets, including the coal processing plant, and certain
   liabilities (“Muhanga Plant”), subject to certain suspensive conditions (“the acquisition”).

2. RATIONALE FOR THE ACQUISITION
   The development of the Elandspruit mineral asset to a fully fledged multi product mine has been
   prioritised by the Wescoal board and the commencment of the establishment of the colliery is
   currently programmed for the last quarter of 2014. The current and expected regulatory
   approvals for the project do not allow for the commissioning of a washing plant at Elandspruit
   and revised applications are required to amend this, which process could take in the region of 24
   to 36 months.

   The acquisition of Muhanga Plant gives Wescoal immediate access to a fully fledged
   beneficiation asset that is currently operational, has all the necessary regulatory approvals and
   extensive infrastructure to allow for a multi-product operation whilst regulatory approvals are
   awaited for the Elandspruit site.

3. DESCRIPTION OF MUHANGA PLANT
   The Muhanga Plant comprises inter alia Portion 6 of the farm Goedenhoop 315 JS (“the Plant
   Area”), the Access Servitude, the coal washing plant situated thereon and the National
   Environmental Management Act (“NEMA”) authorisation and those provisions of the
   Muhanga Water Use License (“WUL”) as defined in the Sale of Asset Agreement and the
   assumed liabilities being inter alia the environmental liabilities and rehabilitation obligation as
   defined in the Sale of Asset Agreement (collectively “the Sale Assets”) .

4. TERMS AND CONDITIONS OF THE ACQUISITION
   4.1 On 23 June 2014, Wescoal Mining entered into an agreement to purchase the Muhanga
       Plant from Muhanga with effect from 1 November 2014 (“effective date”).
   4.2 The total purchase price is R 42,5 million (excluding VAT) , payable as follows:
   4.2.1   a deposit of R 2,5 million payable on the first business day after condition 4.3.1 below
           has been met;
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4.2.2   an amount of R 18,5 million, subject to a set off of the Increased Rehabilitation
        Obligation Quantum of R5 182 516; and
4.2.3   the balance of R 21,5 million plus interest calculated at prime interest rate, payable in
        12 equal tranches commencing on the first business day of the third month after the
        effective date.
4.3 The acquisition is conditional upon inter alia:
4.3.1   the approval of the acquisition by the Seller’s shareholders within 20 business days
        from signature date;
4.3.2   by no later than 31 October 2014:
4.3.2.1 the NEMA Authorisation has been submitted to the Department of Environmental
        Affairs;
4.3.2.2 certain provisions of the WUL which apply to the Sale Assets have been submitted to
       the Department of Water Affairs;
4.3.2.3 written confirmation to cede and transfer the Access Servitude from the Seller to
        Wescoal Mining;
4.3.2.4 a lease agreement between the Seller and Wescoal Mining is concluded over the
        Plant Area; and
4.3.2.5 all the necessary regulatory approvals, to the extent required, including JSE Limited
        (“JSE”) and Competition Commission approvals for the acquisition have been
        obtained.
5   UNAUDITED PRO FORMA FINANCIAL EFFECTS OF THE ACQUISITION
    The unaudited pro forma financial effects will be published in due course.
6   CATEGORISATION OF THE ACQUISITION
    The acquisition is categorised, in terms of the JSE’s Listings Requirements, as a
    Category 2 transaction and does not requires shareholders’ approval.
7   CAUTIONARY ANNOUNCEMENT
    Shareholders are advised to exercise caution in dealing in the company’s securities on
    the JSE until such time as the financial effects of the acquisition are published.
8   FURTHER ANNOUNCEMENT
    Shareholders will be kept up to date on progresswith the acquisition.


Sponsor                                                   Legal advisor to Wescoal
Exchange Sponsors                                         KWA Attorneys

Isando
24 June 2014

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