Medupi coal supply and off-take agreement update

Date released: 8 December 2009

Exxaro Coal (Pty) Limited, a wholly owned subsidiary of diversified South African-based resources group Exxaro Resources Limited (“Exxaro”), and Eskom Holdings Limited (“Eskom”), signed the Medupi Coal Supply and Off-take Agreement (“CSA”) on 19 September 2008. In terms of the CSA, Exxaro will supply an average of 14.6 million tonnes per annum of power station grade coal to Eskom’s new Medupi base-load power station, under construction near Lephalale, Limpopo province, from a brownfields expansion project at Exxaro’s Grootegeluk mine (“Grootegeluk Medupi Expansion Project”).

Exxaro’s capital expenditure for the Grootegeluk Medupi Expansion Project is estimated at R9 billion and delivery of first coal was planned to commence in the fourth quarter of 2011 with a ramp-up to full production by 2014.

Exxaro has received notice from Eskom that it is seeking to review certain commercial terms contained in the CSA, including the coal price escalation mechanism and the coal delivery ramp-up. Indications are that the date for first coal delivery to the power station, in terms of the CSA, has been confirmed to be during the first half of 2012, aligned to the commercial start-up of the power station. Exxaro is in separate discussion with Eskom with regard to the delivery of early coal from July 2011, to be used by the power station for pre-commissioning tests and the creation of stock-piles. Pending the outcome of the review process, Exxaro will temporarily suspend its funding programme as well as the placement of additional contracts associated with the Grootegeluk Medupi Expansion Project.

Addenda to the CSA have been signed by the parties to extend the fulfilment of various suspensive conditions. Currently all suspensive conditions are to be fulfilled by 26 February 2010.

Ends
Editor’s Note:
Exxaro is one of the largest South African-based diversified resources groups, with interests in the coal, mineral sands, base metals, industrial minerals and iron ore commodities.
www.exxaro.com

Enquiries:

Wim de Klerk
Financial Director
Tel: + 27 (0) 12 307 4848
Mobile: +27 (0) 82 652 5145
Email: wim.deklerk@exxaro.com

Pretoria
8 December 2009

Sponsor
Deutsche Securities (SA) (Proprietary) Limited

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