EXXARO ANNOUNCES OUTCOME OF CURRENT BUSINESS
REVIEW AND TRADING STATEMENT
Diversified
resources group Exxaro Resources Limited (Exxaro) announced today that it has
completed a review of its existing business, commodity portfolio and growth
pipeline.
The review was
undertaken against the background of the current economic climate and the need
to align existing resources and cost structures with a prioritised commodity
strategy best positioned to release optimal value for all stakeholders.
Exxaro and its
subsidiaries (?the Group?) plan to reconfigure the Group?s zinc assets with a
view to ultimately divest from them in a manner that takes into consideration
an optimal timetable allowing for maximum value release for all
stakeholders. The current portfolio of zinc assets includes the Zincor
refinery in Springs, Gauteng, a 50,04% interest in the Rosh Pinah zinc and lead
mine in Namibia, a 26% interest in Black Mountain Mining (Pty) Ltd which owns
the Black Mountain zinc and lead mine and the Gamsberg zinc project in the
Northern Cape, and an effective 22% interest in the Chifeng zinc smelter in
China.
The zinc assets
account for some 2% of the Group?s net assets and 10% of revenue respectively. The
Group has put in place a programme to effect the above and will accordingly
provide regular updates.
As a result of the
impact on the Group brought about by the current economic climate, commitments
to large capital projects as well as the current medium-term outlook of the
mineral sands industry, the Group has decided not to proceed with the planned
development of the Fairbreeze mineral sands mine in KwaZulu-Natal.
The Group will accordingly plan for the closure of the KZN Sands operations
during the next five years while in parallel investigating feedstock
alternatives and the continuation of the business should market conditions improve
substantially.
This decision not to develop the Fairbreeze mine will
necessitate a review of the carrying value of the KZN Sands operation as at 31
December 2009 which will in all probability result in a significant impairment
of the carrying value of the asset by up to R1 500 million. This in turn
will have a negative impact on attributable and headline earnings per share for
the year ending 31 December 2009
which at this stage cannot be quantified with reasonable certainty.
Headline earnings will also be impacted by the reversal of previously raised
deferred tax assets which cannot be added back in the calculation of headline
earnings per share.
The Group?s business strategy remains to focus on
achieving operational excellence as a diversified resources business, to
streamline management and cost structures, maximise cash flow and ensure
availability of sustaining and environmental capital.
?We have undertaken a thorough review and
prioritisation of our capital expenditure and project pipeline to optimally
position the Group in the current economic climate,? said Sipho Nkosi, Exxaro?s
chief executive officer.
The Group will intensify its growth efforts on its
carbon-related project pipeline which includes major projects in the Waterberg
such as the Grootegeluk mine brownfields expansion to supply Eskom?s new Medupi
power station, the Thabametsi greenfields development as well as the Moranbah
South joint venture with Anglo Coal in Australia.
The Group also intends exploring opportunities in the ferrous, energy and
reductants markets.
?The latest measures provide a balance between
our commodity and project portfolios and our longer-term growth aspirations.
Our ongoing review of the business with particular emphasis on cost and balance
sheet structures will ensure that we remain optimally positioned to meet all
stakeholder expectations,? said Nkosi.
The information in the above statement has not been
reviewed nor reported on by Exxaro?s external auditors.
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
1 December 2009
Sponsor
Deutsche
Securities (SA) (Proprietary) Limited