Wescoal voluntary strategic update – 17 October 2017 WESCOAL HOLDINGS LIMITED Incorporated in the Republic of South Africa (Registration number 2005/006913/06) Share code: WSL ISIN: ZAE000069639 (“Wescoal” or “the Company” or "the Group") Wescoal Voluntary Strategic Update – 17 October 2017 Wescoal seeks to update shareholders on various strategic company matters including the integration of Keaton Energy, BEE ownership, long-term debt funding and operational matters pertaining to the combined enlarged organisation. KEH Integration: The Keaton integration programme is progressing well with the Group restructuring alignments and redeployment process on track and within the regulatory framework. Cost-savings and efficiencies identified around the July acquisition have been implemented and will be reported on during the current financial year. Key technical and mining skills have been retained successfully. Operational and financial performance to date from the Keaton business units are in line with expectations. Production and Performance from the combined operations: The combined Group is well positioned to meet increased demand, both from Eskom as well as other domestic and export customers. The flexibility of the enlarged resource base and associated mine infrastructure, lends itself to increased production capacity and product variations to service the market as and when required. Vanggatfontein’s operations are stable and integration into Wescoal is progressing well. This growth also brings additional revenue certainty and diversification through production of a range of coal qualities, mining and washing/processing options, customer and sales strategies across domestic and export markets, as well as diversification and optionality in contracts and off-take negotiations. Project development work at Moabsvelden is progressing as a short-term objective and is on track to be completed in January 2018. Elandspruit is operating at steady state with an increased ROM production target of 2.5 million tonnes per annum. The underground operation introduced at Elandspruit in H2 FY17 contributes some 0.4 million tonnes per annum towards the increased Elandspruit ROM production. Additional mining faces are being planned and developed in the open cast section of the mine in order to maintain production rates safely and efficiently. Intibane is operating in line with expectations. The Khanyisa joint venture complex was successfully brought into production and is now operating at the targeted ROM production of approximately 100 thousand tonnes per month. Wescoal Trading continues to do well in challenging economic conditions. This is mainly on the back of a better-quality debtors book, focus on customer maintenance, new procurement initiatives and reduced fixed costs. Overall the ROM production target of 8 million tonnes per annum to be achieved in the short to medium term, from the combined operations is on track. The year to date operational performance across the mining and trading business units are in line with expectations. BEE Ownership and Transformation: Wescoal’s minimum 51% BEE ownership has been maintained and will be further entrenched through an employee-centric broad-based ownership scheme in the future. The full BEE Ownership Report is available on the Wescoal company website - www.wescoal.com. The transformation imperative will continue to be a core component of the Group’s strategy. Long-term debt funding Strong cash flows from operations have allowed Wescoal to repay expensive short-term debt and enter into more efficient long-term debt structures while continuing to pay dividends to shareholders. Wescoal has recently concluded a long-term debt funding arrangement with a local bank which facilitates the consolidation and optimisation of various debt instruments. The facility of approximately R440 million strengthens the Group’s liquidity and overall balance sheet position and places the company in a good position to take advantage of acquisition opportunities when they arise. Leadership’s Priorities Wescoal leadership’s top strategic priorities remain to grow the business, to strive for safe production, solid and predictable operational and financial performances. Planning and executing projects in a conservative, risk-based manner is how Wescoal will continue to manage and realise value from its growth plans. Additionally, Wescoal remains intent on playing a significant and active role as a consolidator in the junior coal sector and will continue to consider value enhancing opportunities. The M&A strategy is focussed on acquiring additional resources and strategic interests in key logistics infrastructure. Shareholders and Diary Update: Wescoal is in a ‘closed’ period until interim results are announced on or around 21st November 2017 and there will be several group and individual shareholder engagements scheduled nearer to the time. The Integrated Annual Report was made available to shareholders as announced on 29th September 2017 and is currently available on the company website www.wescoal.com. The Company’s Annual General Meeting is scheduled for 14th November at 10:00am in Woodmead. Management continues to engage with stakeholders in a constructive and positive way. To this end it is arranging an investor site visit to newly acquired assets towards the end of November. Interested investors should contact the Company’s IR advisors at IR@Singular.co.za Sponsor Nedbank Corporate and Investment Banking IR Advisor Singular Systems IR Date: 17/10/2017 01:13:00 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.