Trading Statement KEATON ENERGY HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 2006/011090/06) JSE code: KEH ISIN: ZAE000117420 ("Keaton Energy" or "the company") TRADING STATEMENT The company's reviewed results for the year ended 31 March 2016 are expected to be published on or about 27 June 2016. Shareholders are advised that the company expects, with reasonable certainty, that earnings per share and headline earnings per share are to vary by the amounts included in the table below: 31 March 2016 31 March 2015 (variance) (re-stated) Continuing operations Headline earnings per (16.0) and (17.0) 12.5 share (cents) Earnings per share (cents) (61.7) and (62.7) 12.6 Total operations Headline earnings per (26.4) and (27.4) 0.4 share (cents) Earnings per share (cents) (99.2) and (100.2) (13.8) The decrease in earnings per share is mainly attributable to a once-off impairment recognised on the Leeuw Braakfontein Colliery (LBC) project of R159.2 million and a once-off loss on the initial recognition of a financial liability of R61.5 million owing to Gunvor SA (Gunvor), the latter also contributed to the decrease in headline earnings per share. The LBC project was planned as a combined export and domestic thermal coal operation. Continued depressed export pricing and a bleak medium-term outlook on the Richards Bay API4 Index has had a material impact on the economics of the project. We continue to evaluate alternative options around an exclusively domestic supply project. The group entered into a pre-offtake finance arrangement with Gunvor, a wholly owned subsidiary of Gunvor Group Limited and fellow subsidiary of the group’s largest shareholder Plusbay Limited, for the supply of 600 000 tonnes of coal to be delivered from the group’s Moabsvelden project over a 22-month period from 1 January 2015 to 31 October 2016 in return for a prepayment of USD4 million. In terms of the agreement the group had to deliver the first coal to Gunvor by 31 December 2015. The group was unable to achieve this target as the development of Moabsvelden is still being delayed by the award of an integrated water use licence (IWUL) by the Department of Water and Sanitation despite every effort by the group to obtain same. The group applied for the IWUL in 2014 when it acquired the project through the acquisition of Xceed Resources Limited. As a result of not being able to supply first coal by 31 December 2015 to Gunvor, this breach resulted in the recognition of the financial liability. The comparative information has been re-stated to account for discontinued operations separately. As a result of the decision taken by the board of directors during September 2015 to dispose of the Vaalkrantz operation, the Balgray project and the Koudelager project (all part of Leeuw Mining and Exploration Proprietary Limited) as well as the Mooiklip Coal project (part of Amalahle Exploration Proprietary Limited) these segments were classified as held-for-sale and discontinued operations. Shareholders are advised that this information has not been reviewed or reported on by the company's auditors. This trading statement is issued in terms of the JSE Limited's Listings Requirements. Bryanston 23 June 2016 Sponsor: Investec Bank Limited Date: 23/06/2016 04:54:00 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.