Ann: Execution of non-binding Term Sheets for Project funding, page-16

Hi all,

Firstly, this was never going to be a binding term sheet! So to expect this is pretty ignorant.

They need to be approved by boards and shareholders to become binding. Once documentation finalised and boards and shareholders approved (at EGM) then it becomes binding and subject to CPs which will be:

• Eskom offtake
• Port allocation
• Rail link funding
• Working Capital funding
• Approval at EGM
  

Then we achieve FC and drawdown in March 2020.

The ann was significant news and market response is quite surprising.

My interpretation of the market response was either:

• Bad day overall (unlikely)
• Market was expecting binding terms (possible)
• Market doesn't like the EQUITY component (most likely). This element has never been mentioned before and comes as a complete surprise, however when you consider the market for lending thermal coal projects and you are able to maintain control (51%), the deal is somewhat palatable. It also secures us another $23MM interest free.

I would rather have 51% of a world class project, than 74% of nothing!

It will be interesting to see what the independent report states about the deal, particularly this element.

Overall, we are making progress, so I stick with my prediction that we will see increase in SP back into the teens once the market has had time to digest and understand the information released today.

Thats my 2c!

What do others think of the actual deal itself?

Cheers