Heads of agreement signed with Dangote Industries Limited and further cautionary

1 June 2010

  1. IntroductionShareholders are referred to the cautionary announcements dated 20 November 2009, 7 January 2010, 15 March 2010 and 30 April 2010 and to the announcement dated 1 February 2010 which included information relating to the funding of the cement project held by the company’s 80.2%-held subsidiary, Sephaku Cement (Pty) Limited (“Sephaku Cement”) (“the Cement Project”).
  2. Agreement with DangoteThe board is pleased to announce that a heads of agreement has been signed with Dangote in relation to the funding of the Cement Project (“the Dangote agreement”).Dangote is one of Nigeria’s largest manufacturing conglomerates with interests in cement, sugar, salt and flour. Dangote, who currently holds a 19.8% interest in Sephaku Cement, will be the the largest producer of cement in sub-Saharan Africa by 2011.
    • 2.1 Equity fundingIn terms of the Dangote agreement and subject to, inter alia, shareholder approval and the approval of the JSE Limited and any other requisite regulatory bodies, Sephaku Cement will undertake an issue of additional shares to Dangote in order to raise R779 million (“the Dangote issue”). This will result in Dangote holding a 64% interest in Sephaku Cement. The implementation of the Dangote issue will provide the entire equity requirements for the Cement Project.
    • 2.2 Debt funding
    • In terms of the Dangote agreement, Dangote has also agreed to:
      • provide the necessary guarantees required for Sephaku Cement to secure the debt funding required for the Cement Project;
      • fund any overruns on the Cement Project with a loan on commercial terms up to an amount of R265 million; and
      • fund Sephaku Cement’s limestone exploration programme relating to its assets in the Western Cape and Limpopo Province with a loan on commercial terms up to an amount of R35 million.
  3. Further cautionary

Further announcements providing additional details relating to the funding for the Cement Project, including the relevant financial effects, will be released as soon as possible. Until such time, shareholders should continue to exercise caution when dealing in their Sephaku Holdings shares.

Pretoria
1 June 2010

Sponsor:
QuestCo Sponsors (Pty) Limited

Corporate advisor to Sephaku Cement:
Capital Hill