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Thabametsi mine development to coincide with 600 MW coal fired IPP in SA

29 August 2013 – Development of the Thabametsi project by Exxaro Resources, a prospective greenfields opencast coal mine adjacent to the company’s Grootegeluk colliery is expected to coincide with a planned 600 MW coal-fired base load independent power producer (IPP) in South Africa. The Thabametsi mine will supply about 3.8 million tonnes a year of coal to the 600 MW Waterberg IPP post ramp-up.

The period of the coal supply agreement will be determined by the duration of the power purchase agreement signed with Eskom. It is estimated to extend up to 25 years. The pre-feasibility study for the Thabametsi mine has commenced and is anticipated to be completed by the end of 2013, whilst the bankable feasibility study will commence at the beginning of 2014.

The mining right application process is in progress and the first coal production is expected to be achieved by 2016/17, subject to the 600 MW Waterberg IPP and water supply development schedules. Stakeholder engagement for the crucial integrated infrastructure plans of the Waterberg coalfields development, which will include the supply of water, rail, road and housing requirements, continues.

In addition to the coal supply to the prospective coal fired IPP, Exxaro continues to explore other opportunities in the energy markets. Cennergi, a 50/50 joint venture with Tata Power, achieved financial closure on both its Amakhala Emoyeni wind farm and Tsitsikamma community development wind farm projects in the second quarter of 2013 under Window 2 of the South African department of energy’s rolling renewable energy IPP procurement programme. These two wind projects, with a combined 229 MW capacity, represent 35% of the total wind allocation of the Window 2 renewable energy programme.

Exxaro is also active in underground coal gasification opportunities. Exxaro and Linc Energy concluded formal agreements in May 2013, and the parties will implement a business model, which combines Exxaro’s strategic interests to expand its coal beneficiation opportunities with Linc Energy’s position as a world leader in underground coal gasification and downstream process integration know-how. This milestone allows Exxaro to extract the inherent value contained in clean coal technology. A Botswana gas exploration programme is nearing completion, with on-going gas content testing. The pilot programme is scheduled for completion in the third quarter of 2013.