24 January 2012

Dear African Iron Shareholders and Optionholders

UPDATE FROM THE CHAIRMAN ON THE EXXARO TAKEOVER OFFER

As you would be aware, on 11 January 2012, Exxaro Resources Limited (JSE: EXX) and African Iron jointly announced an off-market, cash takeover offer by Exxaro for all of the shares and listed options in African Iron.

The Exxaro takeover offer has been recommended by the African Iron Board, in the absence of a superior proposal. I can now advise you that on 19 January 2012 each African Iron director accepted the Exxaro offer for all of the African Iron shares and listed options that they owned or controlled.

In summary the Exxaro offer is:

Share Offer: Exxaro is offering A$0.51 cash for each African Iron share, and Exxaro will increase the offer price to A$0.57 cash per share if it acquires a relevant interest in 75% or more of all of the African Iron shares (on a fully diluted basis). Option Offer: Exxaro is offering A$0.31 cash for each African Iron listed option, and Exxaro will increase the offer price to A$0.37 cash per listed option if it acquires a relevant interest in 75% or more of all of the African Iron shares (on a fully diluted basis).

The Exxaro offer will remain open until 5.00pm Perth time on 14 February 2012 (unless extended).
By now you should have received a copy of both Exxaro Australia's Bidder's Statement and African Iron's Target's Statement which outline the details of the offer. I urge you to read both of these documents and if necessary seek independent advice taking account of your individual circumstances.
I would like to also update you on a number of developments since the announcement of the offer: