Good day,

 

Please note SENS announcement and News Release below. Note the teleconference being held at 13h00 today. Details below.

Enquiries to Wim de Klerk, Finance Director, Tel: + 27 12 307 4848. Email: wim.deklerk@exxaro.com

 

Kind regards,

 

 

 

 

Exxaro Resources Limited

(Incorporated in the Republic of South Africa)

(Registration number 2000/011076/06)

Issuer Code: EXX

ISIN: ZAE000084992

(?Exxaro?)

 

PROPOSED TRANSACTION WITH TRONOX INCORPORATED AND CAUTIONARY ANNOUNCEMENT

 

INTRODUCTION

 

Exxaro shareholders are advised that Exxaro and Tronox Incorporated (?Tronox?), a leading international pigment company based in the United States and Exxaro?s joint venture partner at Tiwest in Australia, have reached agreement in respect of a proposed transaction, which entails the combination of Exxaro?s mineral sands operations (the ?Exxaro Mineral Sands Operations?) with the businesses of Tronox under a newly-formed Australian holding company (?New Tronox?). Exxaro will dispose of the Exxaro Mineral Sands Operations in exchange for approximately 38.5% of the shares in New Tronox (the ?Proposed Transaction?). This will result in Exxaro becoming the largest single shareholder in New Tronox.

 

The Exxaro Mineral Sands Operations that will form the subject of the Proposed Transaction comprise:

 

(i) 74% of the shares and intercompany debt in Exxaro?s South African mineral sands operations (the Namakwa Sands and KZN Sands mines and smelters) (collectively the ?South African Operations?); and

 

(ii) Exxaro?s 50% interest in the Tiwest Joint Venture in Australia (?Tiwest?).

 

Exxaro will retain a direct 26% shareholding in each of the South African Operations in order to comply with the requirements of the Mineral and Petroleum Resources Development Act, 28 of 2002 (?MPRDA?) and the Broad-Based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry (?the Mining Charter?). The 26% interests in the South African Operations will be held until the earlier of the 10th anniversary of the completion of the Proposed Transaction and the date when the Department of Mineral Resources determines that ownership requirements are no longer required under existing Black Economic Empowerment (?BEE?) legislation (?the Empowerment Period?). At the end of the Empowerment Period, Exxaro has the right to exchange the shares in the South African Operations for approximately 3.2% in additional shares in New Tronox (based on the number of New Tronox shares in issue on implementation of the Proposed Transaction), resulting in Exxaro holding approximately 41.7% of New Tronox after such exchange (the ?Flip-Up?).

 

The purchase price will be settled by the issue of 9 950 856 New Tronox Class ?B? shares, which excludes 1 449 207 Class ?B? shares to be issued to Exxaro in the event of the exercise of the Flip-Up (?Flip-Up Shares?).

 

The Proposed Transaction, which is subject to the fulfilment or waiver, where applicable, of the conditions precedent referred to below, will create a leading global integrated mine-to-processing-to-pigment producer and is in pursuance of Exxaro?s stated mineral sands strategy described in more detail below. The pro forma equity value of New Tronox is estimated at R27.8 billion (R29.3 billion including the Flip-up Shares), based on the volume weighted average price at which Tronox?s shares traded for the 30 trading days to 23 September 2011 (?30 day VWAP?), being USD130.42 (R1,078.95 using a ZAR/USD exchange rate of 8.27 on 23 September 2011). This implies an Exxaro?s Mineral Sands Operations equity value of R10.7 billion (R12.3 billion including the Flip-Up Shares).

 

Upon completion of the Proposed Transaction, it is intended that New Tronox will list its Class ?A? shares on a major exchange, such as the New York Stock Exchange (?NYSE?).

 

The Proposed Transaction constitutes a Category 2 Transaction for the purposes of the JSE Limited Listings Requirements. Exxaro shareholder approval will therefore not be required for the implementation of the Proposed Transaction.

 

RATIONALE

 

Exxaro believes that its mineral sands business is best configured as an integrated mining-to-processing-to-pigment business and has been evaluating various opportunities over the past four years. The benefits of an integrated mine-to-processing-to-pigment producer include:

 

?         further efficiencies as demonstrated in the integrated model at Tiwest, where Exxaro and Tronox are joint venture partners as described below;

?         reduction in risk due to involvement in two key value creating segments of the mineral sands value chain (mining/processing and pigment manufacturing);

?         providing a consistent grade of quality feedstock supply to the New Tronox pigment plants; and

?         providing a stable earnings base that mitigates the cyclical nature of feedstock demand.

 

The Proposed Transaction will create a global leader in this industry with a significant asset base that is expandable and low on the cost curve.

 

The Proposed Transaction will continue to position the Exxaro group as an international resources leader with geographical and commodity diversification.

 

OVERVIEW OF THE EXXARO MINERAL SANDS OPERATIONS

 

KZN Sands

 

Exxaro?s KZN Sands operation is located on the East Coast of South Africa, around the Esikhawini area near Richards Bay, and consists of four operational phases, namely: mining, mineral separation, smelting and bulk terminal. The current mine at KZN Sands, known as Hillendale, is near the end of its useful life, and is scheduled to be replaced by a new mine at Fairbreeze, which is adjacent to the existing mine.

 

It is expected that the Fairbreeze expansion will increase KZN Sands? life-of-mine by at least 12 years. KZN Sands produces ilmenite, rutile, zircon, slag, slag fines and pig iron. Ilmenite, rutile, slag and slag fines are used as feedstocks in the production of titanium dioxide pigment. Zircon is mainly consumed as an opacifier in the decorative ceramics industry and pig iron is used mainly in the production of steel.

 

Namakwa Sands

 

The heavy mineral resources mined by Namakwa Sands are found on the coastal plain along the West Coast of South Africa. Namakwa Sands is comprised of three operational phases, namely: mining at Brand-se-Baai (approximately 400km from Cape Town), mineral separation at Koekenaap (approximately 350km from Cape Town) and smelting at Saldanha (approximately 150km from Cape Town). Like KZN Sands, Namakwa Sands produces ilmenite, rutile, zircon, slag, and pig iron, but it also produces tiokwa and zirkwa. These mineral sands (with the exception of zircon, zirkwa and pig iron) are used as feedstocks in the production of titanium dioxide pigment.

 

Exxaro?s 50% joint venture interest in Tiwest

 

Tiwest, a 50/50 joint venture between Exxaro and Tronox, is situated in Western Australia and is an integrated mineral sands and titanium dioxide pigment producer. Tiwest?s operations include mining and dry separation of titanium minerals and zircon, upgrading ilmenite into synthetic rutile and producing titanium dioxide pigment. Tiwest consists of the Cooljarloo mine (170km north of Perth), the Chandala mineral separation and synthetic rutile plants (70 km north of Perth) and the Kwinana pigment facility (just south of Perth).

 

OVERVIEW OF TRONOX

 

Tronox emerged from bankruptcy on 14 February 2011, two years after it filed for Chapter 11 protection in the United States. The filing was primarily due to certain historical environmental liabilities which were related to its former corporate parent, and from which Tronox has since been relieved. Tronox emerged after the Chapter 11 bankruptcy proceedings, with a total enterprise value of approximately USD1.1 billion.

 

Hamilton

 

The Hamilton titanium dioxide pigment facility is Tronox's largest manufacturing facility, one of Mississippi's biggest industrial operations and the third-largest of its kind in the world. Tronox produces titanium dioxide at Hamilton. Titanium dioxide is a white inorganic pigment primarily used in paints/coatings, plastics and paper industries. It is used primarily for its opacifying strength and brightness. The facility also includes an electrolytic plant that produces sodium chlorate used in an environmentally preferred pulp-bleaching process by the pulp and paper industry.

 

Botlek

 

Tronox's Netherlands plant is based in the Botlek area of Rotterdam. Production of titanium dioxide pigment started at this site in 1960 under the name of "Titaandioxide Fabriek," which later became TDF Tiofine B.V. Tronox acquired the plant in 2000.

 

Henderson

 

Tronox?s Henderson facility, located in southern Nevada, is dedicated to the production of electrolytic chemicals. The facility produces electrolytic manganese dioxide, which is used in the manufacture of alkaline batteries; elemental boron, a component of automotive safety igniters; and boron trichloride, used in the pharmaceutical and semiconductor industries and in the manufacture of high-strength boron fibres for products including sporting equipment and aircraft parts.

 

TERMS OF THE PROPOSED TRANSACTION

 

As stated above, the Proposed Transaction entails the combination of the Exxaro Mineral Sands Operations and the businesses of Tronox under New Tronox in exchange for shares in New Tronox. The parties have agreed on an enterprise value attribution of 61.5% for the Tronox businesses and 38.5% for the Exxaro Mineral Sands Operations, subject to certain net working capital and net debt adjustments in cash on implementation of the Proposed Transaction. In order to comply with the requirements of the MPRDA and the Mining Charter, Exxaro will retain a direct 26% interest in the South African Operations, which Exxaro is entitled to exchange for shares in New Tronox under certain circumstances, including upon the termination of the Empowerment Period. Exxaro will receive an approximately 38.5% shareholding in New Tronox at Closing.

 

Other significant terms of the Proposed Transaction include:

 

?         the Proposed Transaction will become effective on the Closing Date, which will occur following the satisfaction or waiver of the conditions precedent to the implementation of the Proposed Transaction, as set out below (the ?Closing?);

?         in order to easily distinguish/administer Exxaro?s agreed rights and obligations as the major shareholder in New Tronox, a dual class share structure has been agreed by the parties, with Exxaro receiving Class ?B? shares and Tronox's shareholders receiving Class ?A? shares. The Class ?A? shares are anticipated to be publicly traded on the NYSE. The Class ?B? shares will have separate board representation rights and minority protections;

?         Exxaro will receive the right to elect 3 out of 9 directors to New Tronox's board of directors (?the New Tronox Board?). Exxaro?s appointees will be non­executive directors. Exxaro will be entitled to elect 2 non-executive director to the New Tronox Board if its holding in New Tronox reduces to between 20% and 30%, and one non-executive director if its holding reduces to between 10% and 20%;

?         Exxaro will have pre-emptive rights to subscribe for shares in certain instances to avoid dilution of its ownership interest in New Tronox for as long as its holding in Tronox is at least 7.5%;

?         New Tronox?s constitution will include restrictions on the ability of any person or group to acquire an ownership interest greater than 20% without approval by the New Tronox Board or a 75% vote of unaffiliated shareholders (the ?20% Rule?); Exxaro is exempted from this rule in respect of any Class ?A? shares or Class ?B? shares it acquires as permitted under a shareholders? agreement between Exxaro and New Tronox;

?         For 3 years following the Closing, Exxaro has agreed not to (i) purchase New Tronox shares in excess of 45% of the total issued shares of New Tronox; or (ii) sell any of the New Tronox shares it owns, except in limited circumstances (including acceptance by Exxaro of any take over offer made by a non-affiliated shareholder). After expiration of this lockup period, Exxaro may (i) acquire shares in New Tronox in excess of 45% of the total issued shares of New Tronox, but can only increase its stake above 50% either through an agreed transaction with the New Tronox Board or by making an offer for all of the outstanding shares, which offer is accepted by a majority of the unaffiliated shareholders or (ii) sell its shares subject to the 20% Rule (to the extent Exxaro is not exempted from this rule), in accordance with Australian takeover rules and the limitations on an affiliate's ability to acquire and sell shares under the U.S. securities laws; and

?         Exxaro agrees to take all reasonable steps necessary to maintain the BEE status of the South African Operations under current HDSA ownership requirements, including retaining a direct 26% shareholding in the South African Operations until the end of the Empowerment Period.

 

CONDITIONS PRECEDENT

 

The Proposed Transaction will be subject to the fulfilment or waiver, where applicable, of certain conditions precedent by not later than the Closing (which the parties have agreed must occur by not later than 30 June 2012 subject to a one-off extension in limited circumstances to 30 September 2012), including the following:

 

?         all required regulatory approvals (including, inter alia, customary competition (anti-trust) approvals, South African exchange control approval and approval from the Minister of Mineral Resources, and Australian Foreign Investment Review Board approval) having been obtained;

?         no material adverse effect (being, with respect to either Exxaro or Tronox, any change materially adverse to the financial condition, businesses or results of operations of the relevant group) having occurred;

?         certain required third party contractual and finance consents having been obtained;

?         a Registration Statement in respect of the registration of New Tronox?s Class ?A? shares with the U.S. Securities Exchange Commission (the ?SEC?) having been filed by New Tronox and declared effective by the SEC; and

?         Tronox stockholder approval having been obtained.

 

UNAUDITED PRO FORMA FINANCIAL EFFECTS AND CAUTIONARY ANNOUNCEMENT

 

The unaudited pro forma financial effects of the Proposed Transaction on Exxaro are in the process of being finalised and will be released in due course. Pending further announcements, Exxaro shareholders are advised to exercise caution when dealing in Exxaro securities.

 

FORWARD-LOOKING STATEMENTS

This announcement contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (a United States Act).  Forward-looking statements are statements that are not historical facts, including statements concerning the anticipated timing of filings and approvals relating to the Proposed Transaction; the expected timing of the completion of the Proposed Transaction; the expected benefits and costs of the Proposed transaction; management plans relating to the Proposed transaction; the ability to complete the Proposed Transaction in view of the various closing conditions; the possibility that the Proposed Transaction may not be completed; any projections of earnings, revenues, synergies, accretion, margins or other financial items; any statements of operations, including the execution of integration plans; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing.  Any statement in this announcement that expresses or implies Tronox?s, Exxaro's or New Tronox?s intentions, beliefs, expectations or predictions (and the assumptions underlying them) is a forward-looking statement.  Forward-looking statements involve inherent risks, uncertainties and assumptions, including, without limitation, risks related to the timing or ultimate completion of the Proposed Transaction; the possibility that expected benefits may not materialize as expected; that, prior to the completion of the Proposed Transaction, Tronox's business or Exxaro's business may not perform as expected due to uncertainty; that the parties are unable to successfully implement integration strategies or otherwise realize the synergies anticipated for the Proposed Transaction; and other risks and uncertainties that are beyond the parties' control.  If such risks or uncertainties materialize or such assumptions prove incorrect, actual results could differ materially from those expressed or implied by such forward-looking statements and assumptions.  The forward-looking statements contained in this announcement are made as of the date hereof, and Tronox and Exxaro each expressly disclaim any obligation to update or correct any forward-looking statements made herein due to the occurrence of events after the issuance of this announcement.  

 

IMPORTANT ADDITIONAL INFORMATION

 

This announcement is for informational purposes only and is not an offer to sell or the solicitation of an offer to purchase or exchange any securities, nor shall there be any sale of securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.  The publication and distribution of this announcement and any separate documentation regarding the Proposed Transaction, the making of any offer for shares or the issuance and offer to purchase New Tronox's shares may be subject to specific regulations or restrictions in certain jurisdictions.  As a result, persons in possession of this announcement must seek information as to any applicable local restrictions and comply therewith..  None of Tronox, Exxaro, New Tronox or any of their respective affiliates undertakes any liability of any kind for any violation of applicable law.  The solicitation of Tronox shareholder consent for Proposed Transactions and the offer of the New Tronox's shares will only be made pursuant to a solicitation and information statement and related materials that are intended to be filed with the SEC.

 

Tronox and Exxaro intend for New Tronox to file a registration statement and solicitation and information statement, together with other related materials, with the SEC in connection with the Proposed Transaction.  Information regarding the participants in the Proposed Transaction and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the relevant materials to be filed with the SEC when they become available.  TRONOX SHAREHOLDERS ARE URGED TO READ THESE MATERIALS REGARDING THE PROPOSED TRANSACTION CAREFULLY PRIOR TO MAKING ANY DECISIONS WITH RESPECT TO THE PROPOSED TRANSACTION, IF AND WHEN THESE MATERIALS BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING THE TERMS AND CONDITIONS OF THE PROPOSED TRANSACTION. 

 

Exxaro shareholders and Tronox stockholders will be able to obtain a free copy of such materials without charge at the SEC's website (www.sec.gov) or from the information agent named in such materials once they have been filed with the SEC. These materials will also be made available for inspection at Exxaro?s registered offices, Exxaro Corporate Centre, Roger Dyason Road, Pretoria West, 0183, South Africa.

 

For enquiries:

Wim de Klerk

Exxaro Resources Limited

Finance Director

Tel: + 27 12 307 4848

Mobile: +27 82 652 5145

Email: wim.deklerk@exxaro.com

 

 

TELECONFERENCES

For more information, investor and media stakeholders are invited to take part in an Exxaro teleconference taking place today (26 September 2011) from 13h00 ? 14h00 SA time.

To access the teleconference, dial one of the following numbers:

South Africa - Johannesburg: 011 535 3600 / 011 201 6616

South Africa - Cape Town: 021 819 0900

South Africa (Toll-Free): 0 800 200 648

United States (Toll-Free): 1 800 860 2442

Australia (Toll-Free): 1 800 350 100

Other Countries (Intl Toll): +27 11 535 3600

 

A teleconference for international investors will take place on Tuesday, 27 September 2011 from 15h00 ? 16h00 SA time.

To access the teleconference, dial one of the above-mentioned numbers.

 

26 September 2011

 

Pretoria

 

Financial advisor to Exxaro

J.P. Morgan

 

US, European and Asian legal counsel to Exxaro

Orrick, Herrington & Sutcliffe LLP

 

SA legal counsel to Exxaro

Norton Rose South Africa

 

SA legal counsel to Exxaro

CLS Attorneys

 

Australian legal counsel to Exxaro

Freehills

 

Sponsor to Exxaro

Deutsche Securities SA (Proprietary) Limited

 

Financial advisor to Tronox

Goldman, Sachs & Co.

 

Financial advisor to Tronox

Moelis & Company

 

US legal counsel to Tronox

Kirkland and Ellis LLP

 

SA legal counsel to Tronox

Werksmans

 

Australian legal counsel to Tronox

Blake Dawson

 

 

 

 

 

 

Tronox to Acquire exxaro?s Mineral Sands Operations, creating LEADING, VERTICALLY Integrated TITANIUM DIOXIDE Pigment PRODUCER

 

• Exxaro Resources Limited (Exxaro) to Receive 38.5 Percent Equity Stake in Tronox                                  in Exchange for its Mineral Sands Operations

 

• Transaction Brings Together Tronox?s Proprietary Pigment-making Technology with Exxaro?s Mining, Mineral Separation and Smelting Mineral Sands Operations

 

• Combined Company Will Benefit from the Assurance of Feedstock Supply and                      Will Have a Strong Platform for Future Growth

 

Oklahoma City, Oklahoma and Pretoria, South Africa, September 26, 2011 ? Tronox Incorporated (TROX.PK), a leading producer and marketer of titanium dioxide pigment, and Exxaro Resources Limited (JSE:EXX), a leading mineral sands producer of titanium dioxide feedstock and zircon, today announced a definitive agreement under which Tronox will acquire Exxaro?s mineral sands operations, which include Exxaro?s 50 percent interest in the Tiwest Joint Venture with Tronox in Western Australia, along with 74 percent of Exxaro?s KZN Sands and 74 percent of its Namakwa Sands operations in South Africa, in exchange for approximately 38.5 percent of Tronox?s equity.  Exxaro?s mineral sands operations produce the key titanium bearing ore feedstock used in the production of titanium dioxide pigment.

 

The combined entity will have approximately 3,500 total employees in 16 locations around the world.  Combined trailing 12 month revenues were $2.0 billion and EBITDA was $495 million (excluding any synergies).  With the addition of the 50 percent interest in Tiwest, Tronox?s production capacity will increase to approximately 465 thousand tonnes of titanium dioxide pigment and will be backward integrated with production capacity of approximately 95 thousand tonnes of natural rutile, approximately 380 thousand tonnes of slag and approximately 220 thousand tonnes of synthetic rutile all of which are materials that can be used in the production of titanium dioxide.  In addition, Tronox will have the capacity to produce a number of other minerals including approximately 265 thousand tonnes of zircon and approximately 220 thousand tonnes of pig iron.

 

Exxaro?s mineral sands businesses will be contributed on a debt-free and cash-free basis, resulting in a conservative pro forma capital structure with significant financial flexibility to fund growth.  The combined entity will benefit from synergies and an accelerated growth profile.  Operational synergies are estimated to amount to approximately $30 million annually, primarily through the rationalization of administrative and ore logistics costs as well as ore in-use optimization.

 

Dennis L. Wanlass, Tronox?s Chief Executive Officer, said, ?This transaction combines Tronox?s best-in-class pigment production operations and leading proprietary technology with Exxaro?s highly technical expertise and globally competitive mineral sands operations to create a uniquely differentiated platform with the ability to outperform through all points of the business cycle.  This strategically compelling combination provides flexibility and manageability of an important raw material source and firmly positions the combined entity as a highly efficient, vertically integrated pigment company.  Combining this vertically integrated source of ore, along with our existing contracts with other ore producers, ensures Tronox will have the necessary feedstock to support our growth strategies in the years to come.

 

?We are very pleased to expand our footprint into South Africa and have a great deal of confidence in the business environment created by the South African government.  We look forward to working with the highly skilled employees in South Africa who will be joining us as part of this transaction, and to the new growth opportunities that this transaction will offer.

 

?Our two companies already have a strong, well-established 20-year partnership and a proven track record of enhancing production capabilities and implementing technical efficiencies in the integrated pigment process at our Tiwest joint venture operation in Western Australia, and we expect to realize similar enhancements across the combined organization.  The combination of these operations will create a truly global, vertically integrated titanium dioxide pigment producer ? with a strong platform for future growth that is uniquely positioned to capitalize on favorable market dynamics and to serve the needs of our growing pigment and zircon customer base in the Asia Pacific region and around the world.?

 

Sipho Nkosi, Exxaro?s Chief Executive Officer, said, ?An integrated model has always been part of Exxaro?s mineral sands strategy.  Key among the contributions that Exxaro will bring to this transaction are its long life mineral resources, mining and processing expertise, world-class direct current furnace ilmenite smelting technology, strong minerals research and development capabilities and proprietary slimes handling capabilities.

 

?The transaction will add security to the future of the KZN Sands and Namakwa Sands operations as it will, to a large degree, limit market cyclicality and surety of demand and will ensure continued ability to operate these assets and protect jobs.  The combined company should realize significant cost benefits and efficiency improvements and it provides a platform for future global growth in pigment production.?

 

?The transaction will improve the future potential for South Africa to be chosen as a site for a potential new greenfield pigment plant as the demand increases and growth strategies are formulated,? he added.

 

Transaction Structure and Terms

To effectuate the transaction Tronox will form a new Australian-domiciled holding corporation (?New Tronox?) to combine its assets with Exxaro?s mineral sands operations.  Pro forma for the proposed transaction, New Tronox will hold a 100 percent interest in Tiwest in Western Australia (in which Tronox and Exxaro were joint venture partners), all other operations of Tronox and a 74 percent interest in the KZN Sands and Namakwa Sands mineral sands businesses located in South Africa.  New Tronox will take on no material incremental debt as part of the transaction as Exxaro?s assets will be contributed on a debt-free and cash-free basis.  The combined business is expected to continue enjoying significant tax advantages including the use of historical net operating losses and other tax attributes established upon Tronox?s emergence from Chapter 11 bankruptcy protection.  In view of the combined entity?s expected strong cash flow over the coming years, New Tronox intends to adopt a dividend policy similar to other comparable companies at the appropriate time.

 

Existing Tronox shareholders will receive approximately 61.5 percent of New Tronox?s pro forma shares representing all of the Class A ordinary shares which New Tronox intends to list on the NYSE after the closing of the transaction.  Each Tronox shareholder will have the right to elect to receive either (i) one Class A ordinary share in New Tronox and cash consideration of $12.50 per share (a ?Parent Election?) or (ii) a non-transferable exchangeable share in Tronox Inc. (i.e. a subsidiary of New Tronox after closing) (an ?Exchangeable Share Election?).  Each exchangeable share may later be exchanged for one Class A ordinary share of New Tronox and cash of $12.50 per share, without interest.  Tronox will have the right to force such an exchange beginning approximately 13 months from today.  The transaction is expected generally to be taxable to Tronox shareholders, although the Exchangeable Share Election, which is subject to minimum and maximum (with pro-ration) election thresholds, is intended to provide certain Tronox shareholders with a mechanism that may allow them to defer a taxable event until their exchangeable shares are exchanged into New Tronox Class A shares.

 

In exchange for Exxaro?s contribution of its mineral sands businesses to New Tronox, Exxaro will receive approximately 10.0 million Class B ordinary shares in New Tronox, representing approximately 38.5 percent of the pro forma shares outstanding (Class A and Class B).  Exxaro will retain a 26 percent direct ownership interest in the South African assets to comply with the requirements of the Mineral and Petroleum Resources Development Act (?MPRDA?) and the South African Mining Charter.  Exxaro?s direct interest is subject to a put/call agreement whereby the 26 percent direct ownership of the South African operations can be exchanged for 1.4 million of additional Class B shares if the Department of Mineral Resources in South Africa (?DMR?) determines that 26 percent direct ownership is no longer required under existing South African Black Economic Empowerment (BEE) legislation.  Exxaro may accelerate the put/call in connection with a change in control of New Tronox.  On a pro forma basis, Exxaro?s ownership in New Tronox after giving effect to the exercise of the put/call would represent approximately 42 percent of the shares outstanding.

 

The transaction, which has been approved by the Boards of Directors of both companies, is expected to close in the first half of calendar 2012, subject to the SEC registration timeline, Tronox shareholder approval, customary regulatory approvals and other closing conditions.

 

The Board of Directors of New Tronox will have nine members and Exxaro will have the right to name three (non-executive) members.  Tom Casey will remain as Chairman of New Tronox?s Board of Directors and Dennis Wanlass will serve as the Chief Executive Officer and a Director of the combined entity, with key members of Exxaro?s senior management joining New Tronox?s leadership team.

 

Tronox Mineral Sands, a newly established organization within the combined company, will assume responsibility for global mine and feedstock development.  The Tronox Mineral Sands management will be located in South Africa and will assume responsibility for KZN Sands, Namakwa Sands and the Northern Operations of Tiwest.

 

Tronox has obtained committed financing from Goldman Sachs Bank USA to refinance Tronox's existing senior term loan debt at closing.

 

Overview of Exxaro?s South African Mineral Sands Operations

Exxaro?s mineral sands operations include KZN Sands, located on the East Coast of South Africa, consisting of four operational units, namely mining, mineral separation, smelting and bulk terminal (all located near Empangeni).  The other South African mineral sands operation, Namakwa Sands, is located on the country?s West Coast, consisting of three operational units, namely mining (Brand-se-Baai), mineral separation (Koekenaap) and smelting (Saldanha).

 

Overview of the Tiwest Joint Venture

Tiwest is a 50/50 joint venture between Exxaro and Tronox and is situated in Western Australia, near Perth.  It is an integrated mineral sands and titanium dioxide pigment producer.  Tiwest?s operations include mining (Cooljarloo) and dry separation of titanium minerals and zircon, upgrading ilmenite into synthetic rutile (Chandala) ? both sites collectively referred to as the Northern Operations - and producing titanium dioxide pigment (Kwinana).

 

Financial and Legal Advisors

Goldman Sachs & Co. and Moelis & Company served as Tronox?s financial advisors on the transaction, and Kirkland & Ellis LLP, Blake Dawson and Werksmans Inc. served as legal counsel.. J.P. Morgan served as the financial advisor to Exxaro.  Orrick, Herrington & Sutcliffe LLP, Freehills, Norton Rose South Africa and CLS Attorneys served as legal counsel to Exxaro.

 

Tronox Conference Call/Webcast Information

Tronox will conduct a conference call regarding this transaction today at 9a.m. EDT.  Interested parties may listen by calling 1-888-397-5338 in the United States or 1-719-325-2457 outside the United States.  The code for both dial-in numbers will be 6302084..  The call will also be webcast via Tronox?s website at www.tronox.com.  A replay of the call will be available for seven days at 1-888-203-1112 in the United States or 1-719-457-0820 outside the United States.  The code for the replay will be 6302084.  The webcast will be archived for 7 days on the website.

 

Exxaro Conference Call Information

For more information, investor and media stakeholders are invited to take part in an Exxaro teleconference taking place today (26 September 2011) from 13h00 ? 14h00 SA time. To access the teleconference, dial one of the following numbers: South Africa - Johannesburg: 011 535 3600 / 011 201 6616; South Africa - Cape Town: 021 819 0900; South Africa (Toll-Free): 0 800 200 648; Australia (Toll-Free): 1 800 350 100; Other Countries (Intl Toll): +27 11 535 3600.

 

A teleconference for international investors will take place on Tuesday, 27 September 2011 from 15h00 ? 16h00 SA time. To access the teleconference, dial one of the above-mentioned numbers

 

About Tronox

Headquartered in Oklahoma City, Tronox is among the largest producers and marketers of titanium dioxide pigment globally.  Titanium dioxide pigment is an inorganic white pigment used in paint, coatings, plastics, paper and many other everyday products.  The company?s pigment plants, which are located in the United States, Australia and the Netherlands, supply high-performance products to approximately 1,100 customers in 100 countries.  In addition, Tronox produces electrolytic products, including sodium chlorate, electrolytic manganese dioxide, boron trichloride, elemental boron and lithium manganese oxide.  For information on Tronox, visit www.tronox.com.

 

About Exxaro

Exxaro is a South African-based resources group, listed on the JSE Limited, with a market capitalization of approximately US$7.8 billion.  It is among the largest global suppliers of titanium dioxide feedstock and zircon.  The mineral sands operations produced 284 thousand tonnes of slag, 196 thousand tonnes of zircon, 90 thousand tonnes of synthetic rutile and 57 thousand tonnes of pigment in 2010.  Exxaro?s mineral sands operations comprise KZN Sands and Namakwa Sands in South Africa, and Tiwest, an Australian joint venture owned jointly with Tronox.  For more information on Exxaro, visit www.exxaro.com

 

 

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

 

This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as ?may,? ?will,? ?anticipate,? ?estimate,? ?expect,? ?project,? ?intend,? ?plan,? ?believe,? ?target,? ?forecast,? and other words and terms of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Tronox Incorporated and Tronox Limited caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. Such forward-looking statements include, but are not limited to, statements about the benefits of the proposed transaction involving Tronox Incorporated, Tronox Limited and Exxaro Resources Limited (?Exxaro?), including future financial and operating results, Tronox Incorporated?s, Tronox Limited?s or Exxaro?s plans, objectives, expectations and intentions, the expected timing of completion of the transaction, and other statements that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks and uncertainties relating to: the ability to obtain the requisite Tronox Incorporated shareholder approvals; the risk that Tronox Incorporated, Tronox Limited and Exxaro may be unable to obtain governmental and regulatory approvals required for the transaction, or required governmental and regulatory approvals may delay the transaction or result in the imposition of conditions that could cause the parties to abandon the transaction; the risk that a condition to closing of the transaction may not be satisfied; the ability of the combined company to obtain necessary financing to refinance existing indebtedness or modifying existing financing arrangements, and finance the combined business post-closing and the terms on which such financing or modification may be available; the timing to consummate the proposed transaction; the risk that the businesses will not be integrated successfully; the risk that Tronox Limited will not be able to complete registration of its shares with the SEC and/or the listing thereof on a securities exchange, and the timing therefor; the risks to shareholders associated with becoming shareholders of an Australian-domiciled holding company; the risk that the expected cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management time on transaction-related issues; the market value of Tronox Incorporated?s products; demand for consumer products for which Tronox Incorporated?s businesses supply raw materials; the financial resources of competitors; the market for debt and/or equity financing; the ability to achieve favorable tax structuring for the benefit of Tronox Limited and its subsidiaries and shareholders; the ability to respond to challenges in international markets; changes in currency exchange rates; political or economic conditions in areas where Tronox Limited and its subsidiaries will operate; the risk of changes in laws and regulations applicable to the business and assets of Tronox Limited and its subsidiaries will operate; trade and regulatory matters; general economic conditions; and other factors and risks identified in the Risk Factors Section of Tronox Incorporated?s Annual Report on Form 10-K for the year ended December 31, 2007, and subsequent Quarterly Reports on Form 10-Q, as filed with the U.S. Securities and Exchange Commission (SEC), and other SEC filings. These risks, as well as other risks associated with the transaction, will be more fully discussed in the proxy statement/prospectus that will be included in the Registration Statement that will be filed with the SEC in connection with the transaction. Each forward-looking statement speaks only as of the date of the particular statement and neither  Tronox Incorporated nor Tronox Limited undertakes any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

 

ADDITIONAL INFORMATION AND WHERE TO FIND IT

This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In connection with the proposed transaction involving Tronox Incorporated, Tronox Limited and Exxaro, Tronox Limited will file with the SEC a Registration Statement that will include a proxy statement of Tronox Incorporated that also constitutes a prospectus of Tronox Limited. Tronox Incorporated will deliver the proxy statement/prospectus to its shareholders. Tronox Incorporated urges investors and shareholders to read the proxy statement/prospectus regarding the proposed transaction when it becomes available, as well as other documents filed with the SEC, because they will contain important information. You may obtain copies of all documents filed with the SEC regarding this transaction, free of charge, at the SEC?s website (www.sec.gov). You may also obtain these documents, free of charge, from Tronox Incorporated?s website (www.tronox.com) under the heading ?Investor Relations?.

 

Contacts:

 

For Tronox:

Media Contact: Robert Gibney

Direct: 405-775-5105

E-mail: robert.gibney@tronox.com

 

Investor Contact:  Michael Smith

Direct: 405-775-5413

E-mail: michael.smith@tronox.com

 

For Exxaro:

Media & Investor Contact: Wim de Klerk, Finance Director

Tel: + 27 12 307 4848

Mobile: +27 82 652 5145

Email: wim.deklerk@exxaro.com