Exxaro Resources (EXX) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition provides a strategic entry into the Kalahari Manganese Field, which holds 80% of the world's known manganese resources, supporting diversification into transition minerals and energy solutions businesses.

• Manganese is essential for steelmaking and has growing demand in battery, green infrastructure, and renewable technology supply chains.

• The deal aligns with the objective to become a diversified resources company, leveraging existing operational expertise in bulk commodities and mining.

• Entry into a well-understood South African jurisdiction with established regulatory and operational familiarity, supporting competitive positioning.

• Acquisition provides a strong platform for further growth and diversification.

Financial terms and conditions

• Unadjusted purchase price is ZAR 11.67 billion, with a maximum consideration of ZAR 14.64 billion if tag-along rights are exercised; minimum could be around ZAR 9 billion if preemptive rights are exercised.

• Transaction is fully funded through existing cash and undrawn bank facilities, and is affordable within available cash reserves.

• Assets are cash generative, well-capitalized, and require no significant post-transaction capex.

• Acquisition will be equity accounted due to joint venture structures, with normalized EBITDA multiple of 8x and PE just over 10x.

• Exxaro expects to maintain a net cash position and consistent dividend payments post-transaction.

Synergies and expected cost savings

• Integration will focus on optimization and leveraging mining and commercial expertise to realize stakeholder value.

• Technical synergies expected due to alignment with core strengths in bulk and open-pit mining methods.

• Assets are well-capitalized, requiring no significant capital expenditure post-acquisition.

• Positioned in the 2nd quartile of the industry cost curve, supporting cost competitiveness and margin protection.

• Backed by long-term contracts and stable customer base, offering strong earnings visibility.