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Sasol Announces Conclusion of Ixia Coal Broad Based BEE Transaction with WIPCoal Investments

Sasol logo Sasol Mining today announced the conclusion of the Ixia Coal transaction at a closing ceremony held in Johannesburg. As part of the company's empowerment strategy and its commitment to comply with the objectives of the Mineral and Petroleum Resources Development Act and the Mining Charter, Sasol Mining entered into the Ixia Coal transaction, with WIPCoal Investments as the majority partner.

The shareholders of WIPCoal Investments are WIPHOLD and a new entrant created by WIPHOLD called Mining Women Investments. Mining Women Investments comprises approximately 5000 rural and peri-urban black women who have not previously participated in BEE transactions. The women are drawn from the Free State, Mpumalanga and Limpopo provinces, where Sasol Mining has operations and coal reserves. Mining Women Investments was formed following a series of WIPHOLD workshops with women in the three provinces. The participation of Mining Women Investments has been facilitated by WIPHOLD and Sasol Mining.

The transaction was concluded on 29 September 2010 following the fulfillment of key suspensive conditions. In March 2010, the Department of Mineral Resources (DMR) granted approval for the conversion of Sasol Mining's old order mining rights in respect of the Secunda Complex, as well as those for the Sigma:Mooikraal Operation situated near Sasolburg in the Free State. On 1 September 2010, the Competition Tribunal accepted the recommendation of the Competition Commission to unconditionally approve the Funding Arrangement provided by Nedbank.

In terms of the transaction, Ixia Coal Funding, a subsidiary of Ixia Coal, has acquired a 20% shareholding in Sasol Mining. Shareholder and funding agreements for the transaction were concluded in October 2007 and April 2009, respectively. Sasol Mining Holdings has a 49% shareholding in Ixia Coal and has committed to establish Ixia Coal as a black women controlled operational mining company with operating capacity, operating assets and growth opportunities. WIPCoal Investments is the controlling shareholder of Ixia Coal with 51% shareholding.

The transaction value is R1 845 million and is financed through equity and a combination of third party and Sasol funding. The debt will be repaid from future dividends by Sasol Mining. The transaction is structured in a manner that provides for dividend payments to the shareholders from day one, which means that the shareholders of WIPCoal Investments receive cash dividends from the first year of the investment. The first dividend flow of 30 September 2010 includes approximately R22 million to be distributed to WIPCoal. After repayment of approximately 40% of Mining Women Investments debt, a further R5 million will be distributed by year end amongst the almost 5 000 rural and peri-urban black women members and designated projects of Mining Woman Investments.

Sasol Mining Holdings and WIPCoal Investments have entered into a Memorandum of Understanding (MOU) which outlines the plan to operationalise Ixia Coal. To achieve this objective, Sasol Mining and WIPCoal Investments are currently in process identifying a suitable mining asset to be acquired by Ixia Coal.

Commenting on the transaction, WIPHOLD CEO, Louisa Mojela said:

"When WIPHOLD and Sasol Mining initially conceptualized the Ixia Coal transaction, it was important to us that Ixia Coal should in every respect personify the true spirit of broad-based black economic empowerment. It was in this context that we created Mining Women Investments. In addition to the women being shareholders in Ixia Coal, we will actively seek opportunities for them to participate in employment, procurement and enterprise development opportunities flowing from the mine's operations." Mojela said "the closing represented a significant moment in the drive to truly transform mining in South Africa. It is also an important step for WIPHOLD as it has always been part of our strategy to be operationally involved in mining."

Sasol Mining managing director, Hermann Wenhold said:

"The closing of the Ixia Coal transaction is a key milestone in achieving Sasol's transformation objective. We set out to create one the country's first black women owned and operated mining companies. With the conversion by the DMR of the old order mining rights and the approval of the funding agreement, the focus is now on making Ixia Coal an operational mining company."

Published 07/10/2010

1. To enable the transaction, Sasol Limited has established a new wholly-owned subsidiary, Sasol Mining Holdings (Pty) Limited (Sasol Mining Holdings), which holds 80% of Sasol Mining.

2. Sasol Mining Holdings has a 49% ownership in Ixia Coal. The other 51% is owned by WIPCoal Investments. WIPHOLD is the majority shareholder in WIPCoal Investments, with 60% shareholding. The other 40% shares are owned by Mining Women Investments. Ixia Coal is independently controlled and separate from Sasol Mining.

3. Ixia Coal, through an investment company called Ixia Coal Funding (Pty) Limited (Ixia Coal Funding), holds 20% in the issued share capital of Sasol Mining. Ixia Coal Funding raised the required funding for the transaction. WIPHOLD and Mining Women Investments, through their investment in Ixia Coal, from inception have full voting and economic rights associated with Ixia Coal Funding's interest in the issued share capital of Sasol Mining.

4. Ixia Coal's 20% shareholding in Sasol Mining is valued at R1 845 million, taking into account Sasol Mining's future expected cash flows, capital investment requirements and an appropriate level of debt. The transaction is financed through equity (R47 million) and a combination of third party funding and Sasol facilitation.

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