Cash takeover offer by Exxaro for African Iron

Thursday, 12 Jan 2012

Exxaro Resources Limited and African Iron Limited announced that African Iron and a wholly owned subsidiary of Exxaro Resources Limited, Exxaro Australia Iron Investments Pty Ltd have signed a Takeover Bid Implementation Agreement for an off market, cash takeover for all of the shares and listed options in African Iron.

Key points

1. Exxaro is offering AUD 0.51 cash base consideration for each African Iron share

2. Exxaro will increase the consideration to AUD 0.57 cash where Exxaro has a relevant interest in 75% or more of African Iron shares

3. In addition, Exxaro is offering AUD 0.31 cash base consideration for each listed African Iron option. Exxaro will increase the consideration to AUD 0.37 cash where Exxaro has a relevant interest in 75% or more of African Iron shares

4. African Iron largest shareholder, Cape Lambert Resources has entered into a pre bid acceptance agreement with Exxaro in respect of 19.99% of African Iron current shares on issue

5. The African Iron board unanimously recommends that shareholders and option holders accept the Exxaro takeover offer in the absence of a superior proposal

6. Each African Iron director intends to accept the offer with respect to all shares and listed options owned or controlled by them within 6 business days of the offer opening, in the absence of a superior proposal,

7. The offer is subject to only a small number of conditions, namely more than 50% minimum acceptance, no regulatory action, no material adverse change and no prescribed occurrences

8. The base consideration of AUD 0.51 per share represents a 49% premium to African Iron 30 day VWAP of AUD 0.343 and a 76% premium to African Iron 90 day VWAP of AUD 0.289. The increased consideration of AUD 0.57 per share represents a 66% premium to African Iron 30 day VWAP of AUD 0.343 and a 97% premium to African Iron 90 day VWAP of AUD 0.289

9. The base consideration of AUD 0.31 per option represents a 73% premium to the 30 day VWAP of listed African Iron options of AUD 0.179 and a 121% premium to the 90 day VWAP of listed African Iron options of AUD 0.140. The increased consideration of AUD 0.37 per option represents a 107% premium to the 30 day VWAP of African Iron listed options of AUD 0.179 and a 164% premium to the 90 day VWAP of African Iron listed options of AUD 0.140

10. Exxaro will fund the takeover from cash reserves and existing debt facilities, and has already obtained Foreign Investment Review Board and all necessary South African regulatory approvals for the takeover,

11. The offer at the increased consideration of AUD 0.57 per share values African Iron at approximately AUD 338 million on a fully diluted basis

12. The offer will be open for acceptances until 5pm Perth time on 14 February 2012

Dr Ian Burston Independent, Non-Executive Chairman of African Iron said the African Iron Board of Directors has carefully considered the offer by Exxaro and in the absence of a superior proposal, the Board unanimously recommends that shareholders and listed option holders should accept the offer.

Mr Mr Sipho Nkosi CEO of Exxaro Resources Limited said “We are very excited about African Iron’s projects in the Republic of Congo, as they will provide Exxaro with the opportunity to realise its stated ambitions of developing a significant iron ore asset in this rapidly emerging and prospective region.”

Mr Nkosi further added “The African Iron acquisition will enable Exxaro to leverage its bulk commodity and iron ore expertise into the development of the Mayoko project. We have invested a significant amount of time and resources in due diligence on this acquisition including several site visits and meetings with senior members of the Republic of Congo government.”