WESCOAL HOLDINGS LIMITED - Resumption of mining activities at Vanggatfontein Mine and the acquisition of Neosho Trading 86 Proprietary Limited

Resumption of mining activities at Vanggatfontein Mine and the acquisition of Neosho Trading 86 Proprietary Limited

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

ANNOUNCEMENT REGARDING:
- RESUMPTION OF MINING ACTIVITIES AT VANGGATFONTEIN MINE; AND
- THE ACQUISITION OF ADDITIONAL SHARES IN AND CLAIMS AGAINST NEOSHO TRADING 86
  PROPRIETARY LIMITED

VANGGATFONTEIN MINE

The Company is pleased to advise its shareholders ("Wescoal Shareholders") that all coal mining, handling
and processing activities have resumed at the Vanggatfontein Mine ("VGF") as of 20 May 2019 and,
accordingly, the VGF production downtime has been lifted. This is pursuant to the discussions that have taken
place between the mining contractor and the majority union (collectively, the "Parties") since the last update
provided to Wescoal Shareholders on 6 May 2019. The Parties continue to engage in discussions to ensure
that mining activities are and will remain stable at the mine going forward.

The ramp-up to full production profile, subject to no further disruptions, is anticipated to be achieved in early
June 2019, two (2) weeks ahead of the previously communicated schedule.

ACQUISITION TRANSACTION

1. Introduction

    Wescoal Shareholders are further advised that Wescoal, through its wholly-owned subsidiary, Keaton
    Energy Holdings Limited ("Keaton"), has entered into and executed a sale of shares and claims agreement
    (the "Sale Agreement") with Dan Lucas Sikhosana and Anna Percy Sikhosana (together, the "Sellers"), in
    terms of which Keaton will acquire all of the ordinary shares and claims (the "Sale Shares") held by the
    Sellers against Neosho Trading 86 Proprietary Limited ("Neosho") (the "Acquisition"). Prior to the
    Acquisition, the Sellers held an 18.2% interest in Neosho, which is the owner of the Moabsvelden Project,
    with a 74% interest held by Keaton and the balance by one (1) minority shareholder. The Company is
    currently involved in ongoing discussions with the minority shareholder for the acquisition of the
    remaining 7.8% interest in Neosho.

    The effective date of the Acquisition is anticipated to be by no later than 24 May 2019 (the "Effective
    Date").

2. Overview of Moabsvelden Project

    The Moabsvelden Project is located approximately 16 kilometres southeast of Delmas in Mpumalanga
    Province and is in close proximity to VGF. With a 47.8 million tonne ("mt") resource, it has the potential
    to be developed into a 1.5 to 2 mt per annum run-of-mine ("ROM") operation. The Moabsvelden Project
    is fully permitted and there is capacity for the coal it produces to be processed at facilities at VGF or to
    be sold directly as a crush-and-screen ROM product. Wescoal is currently involved in negotiations with
    potential customers, including Eskom Holdings SOC Limited, in terms of which coal offtake and/or supply
    agreements may be entered into.
3. Details of the Acquisition

   3.1.   Rationale for the Acquisition

          Wescoal's stated intentions are to optimise the asset base of Keaton, any subsidiaries of Keaton,
          any holding company of Keaton and/or any subsidiaries of such holding company ("Keaton
          Group") which includes increasing production from the VGF complex and developing the
          Moabsvelden Project. The Acquisition forms part of that integrated development plan for the VGF
          complex and will result in Wescoal obtaining 92.2% ownership of the Moabsvelden Project.
          Wescoal believes that this is an opportune time for the Acquisition whilst Neosho is in preparation
          for the imminent commencement of development activities, with first coal from the Moabsvelden
          Project expected before the end of the 2019 calendar year. Moabsvelden Project ROM will be
          processed through a dedicated coal handling and processing plant at VGF complex as well as
          through existing processing capacity with the 5 Seam plant.

   3.2.   Purchase consideration

          3.2.1. Keaton will acquire the Sale Shares for a purchase consideration of R24.5 million.

          3.2.2. In addition, Keaton shall pay to the Sellers an amount in cash equal to R24.5 million, which
                 constitutes the proportionate share of the ROM tonnes of coal resources on the
                 Moabsvelden Project multiplied by R4.00 per tonne.

          (together, the "Purchase Consideration").

          3.2.3. Payment of the Purchase Consideration shall be made as follows:

                  3.2.3.1. R10 million within five (5) days from the Effective Date (the "First Payment");
                  3.2.3.2. R10 million within six (6) months after the Effective Date (the "Second
                           Payment"); and
                  3.2.3.3. the remainder of the Purchase Consideration of R29 million will be paid in
                           fourteen (14) monthly instalments of R2 million each and one (1) final
                 instalment of R1 million, commencing sixty (60) days from the Effective Date
                           (the "Remaining Payment").

          3.2.4. Wescoal will pay the First Payment, the Second Payment and the Remaining Payment to
                 the Sellers in proportion to their individual shareholding in Neosho.

          3.2.5. Wescoal will be entitled to withhold a portion of the Second Payment, in the amount of
                 R1.195 million, to pay such amount to Melcofin and Co Limited, being the advisers to the
                 Sellers.

          3.2.6. Wescoal further agrees that six (6) months after the Effective Date or at such later date,
                 it will consider accelerating payment of the Remaining Payment in good faith and
                 accordingly shall be entitled to do so in its discretion.

          3.2.7. All payments for the Purchase Consideration will be made from internal cash generated
                 and/or existing debt facilities.

    3.3.   Conditions precedent
           All conditions precedent in regard to the Acquisition have been fulfilled.

    3.4.   Value of the net assets and profits attributable to the net assets of the Acquisition

           The value of the net liabilities that are the subject of the Acquisition is R 81 046 083 and value of
           the losses attributable to the net liabilities that are the subject of the Acquisition is R 6 496 713
           as extracted from Wescoal's reviewed condensed interim consolidated results for the six (6)
           months ended 30 September 2018, which have been prepared in terms of International Financial
           Reporting Standards.

4.  Categorisation of the Acquisition

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

Shareholders are reminded that Wescoal is currently in a closed period until the release of its results for the
year ended 31 March 2019 which are expected to be released on or about 25 June 2019. A trading statement
in respect of these results will be released during the week commencing 27 May 2019.

21 May 2019

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

Investor Relations
Singular Systems

Date: 21/05/2019 05:45:00 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.