WESCOAL HOLDINGS LIMITED - Announcement regarding the disposal of Leeuw Braakfontein Colliery and withdrawal of cautionary announcement

Announcement regarding the disposal of Leeuw Braakfontein Colliery and withdrawal of cautionary announcement

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”)

ANNOUNCEMENT REGARDING THE DISPOSAL OF LEEUW BRAAKFONTEIN COLLIERY AND
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

1. INTRODUCTION

   Wescoal shareholders are advised that Wescoal, through its wholly-owned subsidiary, Leeuw
   Braakfontein Colliery Proprietary Limited (“LBC”) has entered into a sale of assets agreement (the
   “Agreement”) with Sitatunga Resources Proprietary Limited (the “Purchaser” or “Sitatunga”), in
   terms of which LBC will dispose of its LBC assets located in KwaZulu-Natal (the “Disposal”).

   The Disposal will become effective once all the conditions precedent set out in paragraph 3.4
   below have been fulfilled.

2. OVERVIEW OF LBC

   LBC is an advanced-stage exploration property situated on the Klip River Coalfield, which is located
   approximately 10 km from Newcastle, KwaZulu-Natal. Wescoal has declared no coal reserves for
   LBC, with shallow coal on the flanks of the resource area having potential to be extracted using
   opencast methods and the balance of the coal being mined using underground mining methods.

3. THE DISPOSAL

   3.1. Rationale for the Disposal

        LBC is a non-core asset of Wescoal and the Disposal is in line with the Company’s strategy of
        realising value for shareholders and building a scalable, sustainable business.

   3.2. Consideration for the Disposal

        The total consideration for the Disposal is R103 million (excluding VAT) (the “Consideration”).
        The Consideration will be paid in cash from funds within the Sitatunga group. Payment of the
        Consideration will be split into:

        -    R20 million payable within five days of signature of the Agreement, being 7 August 2018
             (the “Signature Date”); and

        -    R83 million and the VAT on the Consideration payable on fulfilment of the conditions
             precedent set out in paragraph 3.4 below.

   3.3. Application of sale proceeds

        The Consideration will be utilised to reduce short term borrowings of the Group and to fund
        strategic growth options.

   3.4. Conditions precedent
        The Disposal is subject to the fulfilment or waiver of regulatory consents from the
        Department of Mineral Resources and Competition Commission as well as procedural
        matters standard for this type of transaction.

        Fulfilment of the conditions precedent will have to take place within 365 days from the
        Signature Date unless the Parties agree to extend the period.

   3.5. Value of the net assets and profits attributable to the net assets of the Disposal

        The value of the net assets that are the subject of the Disposal is R92 million and being non-
        operational there are no profits attributable to the net assets that are the subject of the
        Disposal for the year ended 31 March 2018, as extracted from Wescoal’s audited results for
        the year ended 31 March 2018 which have been prepared in terms of International Financial
        Reporting Standards.

4. CATEGORISATION OF THE DISPOSAL

   The Disposal is classified as a Category 2 transaction in terms of the JSE Limited Listings
   Requirements, and accordingly no shareholder approval is required.

5. WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT

   Wescoal shareholders are advised that the cautionary announcement first published on SENS on
   29 May 2018 and renewed on SENS on 28 June 2018, has now been withdrawn and that
   shareholders are no longer required to exercise caution when dealing in the Company’s securities.


7 August 2018

Investment bank, corporate advisor and sponsor
Nedbank Corporate and Investment Banking

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