LME transaction implemented, Keaton Energy operational management team strengthened

LME transaction implemented, Keaton Energy operational management team strengthened 6 January 2012

(Keaton Energy; JSE: KEH) today announced implementation of the transaction in terms of which it acquires a 74% interest in Leeuw Mining and Exploration (Pty) Limited (LME).

Some 16 622 222 shares have been issued by Keaton Energy at R4.50 per share, increasing Keaton Energy's shares in issue from 171 547 644 to 188 169 866, with Plusbay Limited, an affiliate of Gunvor Group Limited, now holding 45 838 866 Keaton Energy shares, which represents 24.4% ownership of the company.

JPI Leeuw and Associates (Pty) Ltd has paid Keaton Energy R10 million in cash pursuant to certain warranty claims.

LME owns and operates the Vaalkrantz Anthracite Colliery near Vryheid in South Africa's KwaZulu-Natal province. Vaalkrantz has been in production since 2003.

In addition, LME has:

• a renewed 200 000tpa participation in Richards Bay Coal Terminal's Quattro export programme and a dedicated railway siding facility near Vaalkrantz;
• • the Koudelager anthracite project, which will provide future run-of-mine anthracite production to the Vaalkrantz plant;
  • the Braakfontein thermal coal project near Newcastle;
  • the Balgray anthracite project near Utrecht; and
  • the Mpati anthracite project near Dundee, which LME has agreed to sell to Slater Coal, subject to the receipt and cession of a mining right.

New appointment

Keaton Energy also announced today the appointment of Hilton Papenfus (52) as General Manager: Operations, responsible for both the Vanggatfontein and Vaalkrantz mines. Papenfus is a mining engineer with more than 30 years' experience in major and junior coal mining companies.

Queries:

James Duncan
Russell and Associates
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Disclaimer

All statements in this media release, other than historical facts, that address exploration activities and mining potential are forward-looking statements. Although Keaton Energy believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements should not in any way be construed as guarantees of future performance.

Factors that could cause developments to differ materially from those expressed include exploration results, technical analysis and lack of availability to the company of necessary capital to progress its projects. The company is subject to specific risks inherent in the exploration and mining business and general economic and business conditions.