Pro Forma financial effects relating to the disposal of certain Gold and Nickel assets and preliminary funding of Sephaku Cement

1 February 2010

Disposal of certain gold and nickel assets1.1 BackgroundShareholders are referred to the announcement dated 7 January 2010 concerning an agreement dated 20 December 2009 (“the gold and nickel agreement”) relating to the sale by the company of its 100% holding in Sephaku Gold Holdings (Pty) Limited (“Sephaku Gold”) (which holds a 26% interest in Taung Gold Limited) and its 26% interest in African Nickel Holdings (Pty) Limited to Mr. Mong Seng Wu, Mandra Capital and/or their nominees (jointly referred to as “the Wu Group”) for a total cash consideration of R80 million, to be settled in four equal tranches over the next 12 months (“the gold and nickel sale”).In an addendum to the agreement, it was agreed that

a) the gold and nickel sale would include the disposal of the claims of Sephaku Holdings against Sephaku Gold for an unchanged purchase consideration and that such purchase consideration would be settled in five tranches instead of four; and

b) the date by which all conditions precedent relating to the gold and nickel sale had to be fulfilled would be extended from 20 January 2010 to 27 January 2010.

All conditions precedent have now been fulfilled and the gold and nickel sale is accordingly unconditional.

1.2 Pro forma financial effects

The unaudited pro forma financial effects of the gold and nickel sale are presented below. Such pro forma financial effects are the responsibility of the board of directors of Sephaku Holdings and are presented for illustrative purposes only to provide information on how the gold and nickel sale may have impacted on the reported financial information of the company if it had been implemented in the six months ended 31 August 2009. Because of their nature, the pro forma financial effects may not give a fair indication of the company’s financial position at 31 August 2009 or its future earnings.

	Before the gold and nickel sale ⁽ⁱ⁾	After the gold and nickel sale ⁽ⁱⁱ⁾	% age change
Attributable loss per ordinary share for the six months ended 31 August 2009 (cents) ⁽ⁱⁱⁱ⁾	(50.65)	(26.17)	48
Headline loss per ordinary share for the six months ended 31 August 2009 (cents) ⁽ⁱⁱⁱ⁾	(45.08)	(45.08)	0
Net asset value per ordinary share at 31 August 2009 (cents) ^(iv)	235.57	259.86	10
Net tangible asset value per ordinary share at 31 August 2009 (cents) ^(iv)	197.54	221.83	12
Weighted average number of ordinary shares in issue for the period	154 623 671	154 623 671	0
Number of ordinary shares in issue at the end of the period	155 804 561	155 804 561	0

Notes:

⁽ⁱ⁾ The figures in this column are extracted from the unaudited interim financial results of the company for the six months ended 31 August 2009.

⁽ⁱⁱ⁾ The figures in this column are based on the figures set out in the previous column, having adjusted for the effects of the gold and nickel sale.

⁽ⁱⁱⁱ⁾ For purposes of the pro forma attributable and headline loss per ordinary share, it was assumed that the gold and nickel sale was implemented and the entire purchase consideration settled with effect from 1 March 2009.

^(iv) For purposes of the pro forma net asset value and net tangible asset value per ordinary share, it was assumed that the gold and nickel sale was implemented and the entire purchase consideration settled on 31 August 2009.

1.3 Withdrawal of cautionary announcement

As the pro forma financial effects relating to the gold and nickel sale have now been announced, shareholders need no longer exercise caution in this regard when trading in the company’s securities.

Restructuring of the group
The board has resolved that the Sephaku group will be restructured such that all of the company’s exploration rights, other than those related to Cement and Fluorspar, are held by a single subsidiary and that various alternatives are to be investigated in order to realise the maximum value for the group from the unbundling and/or disposal of such assets. This will further enhance the focus of the group on its core projects in Cement and Fluorspar.
Funding of the Sephaku Cement Project
3.1 Background
For the past two years, the company has been involved in various capital raising exercises in order to provide funding for its mineral exploration and development projects. With the implementation of the gold and nickel sale, together with the group restructuring referred to above, the company will now be able to focus primarily on assisting its 80.2% held subsidiary, Sephaku Cement (Pty) Limited (“Sephaku Cement”), to raise finance for the development of its cement manufacturing project in Itsoseng and cement grinding plant in Delmas (“the Sephaku Cement Project”).3.2 Funding arrangements
The global financial crisis has delayed the raising of equity and debt for the Sephaku Cement Project. The directors are therefore very pleased to be able to announce that Sephaku Cement is in advanced negotiations with a major global financial institution regarding an equity investment by that institution of USD40 million (approximately R300 million) into Sephaku Cement. The institution has already received preliminary investment committee approval to proceed with the transaction, and has completed an extensive technical, financial and legal due diligence review of Sephaku Cement and the Sephaku Cement Project. The transaction is subject to the fulfillment of certain conditions precedent including, inter alia, the signature of the relevant legal agreements between the parties.

In addition, in terms of the gold and nickel agreement, the Wu Group has agreed to subscribe for shares in Sephaku Holdings in an amount of between R70 and R170 million (bringing its total investment to a maximum of R250m), conditional upon the Sephaku Cement Project being fully funded. Management is in discussions with a number of other parties with a view to securing the balance of the equity and debt funding required.

3.3 Further cautionary announcement

Shareholders are referred to the cautionary announcements dated 20 November 2009 and 7 January 2010 and the information presented above relating to the funding of the Sephaku Cement Project and are advised that they should continue to exercise caution when dealing in their Sephaku Holdings shares until a full announcement relating to such funding arrangements can be made. The attention of shareholders is also drawn to the announcement released on SENS on Friday 29 January 2010 which provides an update on the company’s Fluorspar Project.

Pretoria

1 February 2010

Sponsor:
QuestCo Sponsors (Pty) Limited

Corporate advisor to Sephaku Cement:
Capital Hill Corporate Finance (Pty) Limited