Press Releases

Anglo American plc (“Anglo American”) announces the demerger of its thermal coal operations in South Africa, subject to the approval of Anglo American’s shareholders on 5 May 2021.

The separation will be implemented through the transfer of Anglo American’s thermal coal operations in South Africa to a new holding company, Thungela Resources Limited (“Thungela”), the demerger of the Thungela shares to Anglo American shareholders and the primary listing of Thungela’s shares on the Johannesburg Stock Exchange (the “JSE”) and standard listing on the London Stock Exchange (the “LSE”).

Mark Cutifani, Chief Executive of Anglo American, said: “Anglo American has been pursuing a responsible transition away from thermal coal for a number of years now. As the world transitions towards a low carbon economy, we must continue to act responsibly – bringing our employees, shareholders, host communities, host governments and customers along with us. Our proposed demerger of what are precious natural resources for South Africa, allows us to do exactly that.

“We are confident that Thungela will be a responsible steward of our thermal coal assets in South Africa, benefiting from an experienced and diverse management team and board. While representing just a small proportion of Anglo American today, we are laying the foundation for South Africa’s leading coal business, setting it up for success to deliver value for all its stakeholders. Looking forward, we believe the prospects for long-term value delivery are greatest as two standalone businesses, each with their own strategy and access to capital.”

July Ndlovu, CEO of Thungela, said: “Thungela is a leading South African producer of high quality, low cost export thermal coal, well positioned to benefit from improved market conditions, and providing a reliable and affordable energy source to our customers mainly in developing economies. We have significantly repositioned and upgraded our portfolio in recent years into a highly competitive producer of export product, with established access to world-class export infrastructure.

“As an independent business we will continue to contribute significantly to our host communities and South Africa’s development objectives. As part of our commitment to creating an enduring positive legacy, we are establishing an employee partnership plan and a community partnership plan, with each holding a 5% interest in the Thungela thermal coal operations in South Africa, thereby enabling employees and communities to share in the financial value that we generate.

“Guided by the high standards set by Anglo American, Thungela is committed to operating sustainably – continuing to drive safety, health, environmental, governance and social programmes for the benefit of our employees, host communities and shareholders. The demerger of Thungela and our listing on the JSE will represent yet another major milestone for Anglo American’s long-running contribution towards transforming South Africa’s mining industry.”

The proposed demerger recognises the diverse range of views held by Anglo American’s shareholders in relation to thermal coal and therefore provides Anglo American’s shareholders, including those with specified investment criteria, with the choice to act on such views and, following the implementation of the proposed demerger, to either retain, increase or decrease their interests in Thungela. The proposal also allows Thungela to attract new shareholders and to access new sources of capital as an independent company offering direct exposure to thermal coal.

Anglo American is committed to setting up Thungela as a sustainable standalone business, including by providing an initial cash injection of ZAR2.5 billion (approximately $170 million) and further contingent capital support until the end of 2022 in the event of thermal coal prices in South African rand (ZAR) falling below a certain threshold.

Following the implementation of the proposed demerger, and in line with Anglo American’s responsible approach, Anglo American’s marketing business will continue to support Thungela in the sale and marketing of its products for a three-year period with an additional six-month transitional period thereafter. This transitionary arrangement ensures that customers receive a consistent service and supply of thermal coal while Thungela concentrates on enhancing the performance of its operations while continuing to receive optimal value for its products in the market. The three-year term, and the additional six-month roll-off period, also provide time for Thungela to build its own global marketing capabilities should it choose to do so.

Proposed demerger process

In order for the proposed demerger to be implemented, Anglo American shareholder approval will be sought at a general meeting and court meeting, both expected to be held on 5 May 2021 following Anglo American’s Annual General Meeting. If it is approved, it is expected that the demerger would be effective on 4 June 2021, with Thungela’s shares being listed and admitted to trading on the JSE and LSE on 7 June 2021.

Following completion of the proposed demerger, 100% of the issued share capital of Thungela will be held by Anglo American shareholders who will each receive one Thungela share for every ten Anglo American shares that they hold. Each Anglo American shareholder will also retain their existing shareholding in Anglo American. Thungela will hold 90% of the thermal coal operations in South Africa with the remaining 10% held collectively by the employee partnership plan and the community partnership plan.

Additional information

A shareholder circular setting out further detail in relation to the demerger, including expected key dates has been published on www.angloamerican.com/products/thermal-coal/demerger.

In respect of the JSE and LSE listing, a Thungela combined pre-listing statement and prospectus is expected to be published on Anglo American’s website (www.angloamerican.com) and Thungela’s website (www.thungela.com) later today.
In accordance with UK Listing Rule 9.6.1, a copy of the circular has been submitted to the Financial Conduct Authority (FCA) and will shortly be available for inspection via the National Storage Mechanism.

Anglo American will host a virtual investor and analyst presentation at 09:00 UK time / 10:00 South Africa time today. Access and registration instructions are available on Anglo American’s website (www.angloamerican.com/investors).

Thungela will host a virtual investor and analyst presentation at 08:00 UK time / 09:00 South Africa time on 6 May 2021. Access and registration details will be provided nearer the time.

ENDS

The ordinary shares of Thungela Resources Limited (the “Company” or “Thungela”) will start trading today following Thungela’s admission to the main board of the Johannesburg Stock Exchange, as a primary listing, under the abbreviated name “Thungela”, Alpha code “TGA”, and the main market of the London Stock Exchange, as a standard listing, under the ticker symbol “TGA” (“Admission”).

Admission follows the completion of the demerger of Thungela from Anglo American plc (“Anglo American”), which became effective at 9:00 p.m. (South African time) / 8:00 p.m. (London time) on 4 June 2021. As a leading South African thermal coal exporter, Thungela offers investors access to a high-quality thermal coal business with low cash cost and high-margin assets and a strong balance sheet, underpinned by a robust environmental, social and governance (“ESG”) framework.

On 8 April 2021, Anglo American published a shareholder circular proposing the separation of its South African thermal coal operations through their transfer to Thungela and the subsequent demerger of Thungela from the Anglo American group. The demerger and the scheme of arrangement to implement the demerger was approved by Anglo American’s shareholders on 5 May 2021 and the scheme of arrangement was sanctioned by the UK Court on 26 May 2021.

Thungela owns interests in, and produces thermal coal predominantly from, seven collieries located in Mpumalanga, South Africa, namely Goedehoop, Greenside, Isibonelo, Khwezela, Zibulo, Mafube and Rietvlei collieries, which consist of both underground and opencast mines. Thungela’s operations are amongst the highest quality thermal coal mines in South Africa by calorific value.
Thungela’s operations provide a wide range of economic and social benefits for their host communities and for South Africa, such as employment, tax revenues, export earnings, and many essential community services.

Commenting on the listings, Thungela Chief Executive Officer, July Ndlovu said:

On listing, all of Thungela's issued shares will be held by Anglo American’s shareholders who will each receive one Thungela share for every 10 Anglo American shares that they hold.

As part of its responsible transition away from thermal coal, Anglo American has injected capital of R2.5-billion into the Thungela group and will provide further contingent capital support until the end of 2022, depending on certain coal price thresholds. Anglo American will also continue to market and sell Thungela’s export products over the next three years, with an additional six- month transitional period, in order to enable the Company to build sufficient marketing capacity of its own.

According to research by the global mining research and consultancy group, Wood Mackenzie, South Africa is the fourth-largest producer of thermal coal globally, catering for the growing demand from India and other developing countries in South Asia, and potentially the Middle East and North Africa (“MENA“). Demand from these regions is expected to grow as power demand increases.

“We expect our portfolio of assets to be cash generative throughout the life of our mines and well into the next decade, with the option for life extension opportunities. In addition to export markets, we produce thermal coal for domestic consumption in South Africa, which provides us with inherent operational flexibility in response to changes in demand and other external factors,” Ndlovu added.

Thungela’s management team is led by July Ndlovu, as Chief Executive Officer, and Deon Smith, as Chief Financial Officer, who are supported by the rest of the board, namely Sango Ntsaluba as chairperson, Kholeka Mzondeki, Ben Kodisang Thero Setiloane, and Seamus French.

The management team has deep experience in driving cost optimisation strategies, productivity improvements, ESG performance and value accretive investments.

As part of its commitment to enhancing ESG factors, Thungela has established an employee partnership plan and a community partnership plan, which each hold a 5% interest in Thungela’s direct subsidiary, South Africa Coal Operations Proprietary Limited. These plans will enable employees and communities to share financially in the value generated by the Company’s thermal coal operations.

“Our ambition is to build Thungela into a highly sustainable and investable enterprise due to its strong cash flow generation, robust balance sheet, credible leadership, dedicated employees, and consistency in meeting and exceeding safety, ESG and production targets. We are igniting real change and are optimistic about a bright future,” Ndlovu concluded.

Total voting rights

In accordance with the Financial Conduct Authority’s Disclosure Guidance and Transparency Rule 5.6.1R, Thungela notifies the market that on Admission, Thungela’s issued share capital consisted of 136,311,808 shares of no par value and all Thungela shares carry voting rights of one vote per share.

Thungela does not hold any shares in treasury.

The total number of voting rights in Thungela is therefore 136,311,808 and this figure may be used by shareholders (and others with notification obligations) as the denominator for the calculations by which they will determine whether they are required to notify their interest in, or a change to their interest in, Thungela under the Financial Conduct Authority's Disclosure Guidance and Transparency Rules.

ENDS

Thungela Resources reports solid performance in first Interim Results since listing.

• Operating profit of R990 million for the reporting period
• Adjusted EBITDA of R1,888 million
• Robust financial position with net cash of R3 billion

Thungela Resources Limited (“Thungela” or the “Company”) today reports a strong set of interim results for the six months ended 30 June 2021. This follows the successful listing on the Johannesburg Stock Exchange and the London Stock Exchange on 7 June 2021.

July Ndlovu, CEO of Thungela, commented:

Regrettably, we had a loss of life at our Goedehoop Colliery. Our condolences go to the family, friends and colleagues of Moeketsi Mabatla. Thungela reaffirms its commitment to achieving a fatality-free business.

Benefitting from higher global thermal coal prices driven by the continued demand from South Asian markets for high quality thermal coal and global supply constraints, Thungela generated operating profit of R990 million and Adjusted EBITDA for the six months ended 30 June 2021 close to R1.9 billion, while the statement of financial position showed a strong net cash position of R3 billion.

Thungela delivered earnings per share of 313 cents and headline earnings per share of 305 cents for the reporting period. This includes the impact of two significant once-off adjustments; the restructuring costs and termination benefits of R386 million, as well as the fair value adjustment of R584 million on the derivative relating to the Capital Support Agreement with Anglo American.
“The majority of Thungela’s coal is exported and its revenue was positively impacted by the benchmark thermal coal price which strengthened by 47% compared to H1 2020, however, the strengthening of the Rand offset some of the gains.

Thungela implemented actions prior to the Demerger which has improved the quality of its portfolio by taking higher cost production out of the business. In particular, the Bokgoni pit of the Khwezela operation was placed on care and maintenance during Q1 of this year.

Export saleable production volumes, on a comparable basis, decreased by 9% to 7.1Mt mainly as a result of the Bokgoni pit being placed on care and maintenance, offset by the ramp up at the Navigation pit at Khwezela. Equity export sales also declined by 8% to 6.6Mt, primarily as a result of the lower saleable production volumes for the six months ended 30 June 2021, and also as a result of lower than planned railings due to the underperformance of Transnet Freight Rail. The rail line operator’s performance challenges are attributable to theft of infrastructure and equipment failures mainly related to locomotives.

Thungela ended the period with a strong net cash position of R3.0 billion. From 1 June 2021, Thungela operated as a standalone business having received an initial cash injection of R2.5 billion.

In a landmark empowerment transaction, Thungela’s Employee and Community Partnership Plans each hold a 5% fully funded interest in Thungela’s coal operations in South Africa and are set to benefit from the financial value that the company will generate.
The first distribution of R6 million to the Community Partnership Plan was made on 30 June 2021. Trustees have been appointed and plans are underway to appoint an administrator to ensure the Trust delivers on its mandate.

Thungela’s results are not directly comparable with the prior period as a result of an internal restructuring process which separated the South African Thermal Coal Operations, and the various non-thermal coal operations within Anglo American in preparation for the Demerger. One mine is included in the comparative period versus the seven mining operations which currently form part of Thungela. This impacts on both the operational and financial performance and hence Thungela also developed pro forma financial information which seeks to compare the current reporting period with the prior period on a like for like basis.

Outlook

We confirm the guidance for Export Saleable Production of between 15Mt and 16Mt and flat FOB cost per export tonne of R830 for the full year.

Capital expenditure is now expected to be on the low end of the range (R2.6 billion to R3 billion) previously provided for the full year.

With continued strong prices as well as improved performance by TFR through the remainder of the year, Thungela is set to achieve a positive adjusted operating free cash flow for the remainder of 2021.

We are committed to the stated dividend policy of paying 30% of the cash flows from operating activities, after funding our sustained capital expenditure and a strong balance sheet coupled with the above paves the way for Thungela to consider the declaration of a maiden dividend at the annual results for 2021.

ENDS

Newly listed Thungela Resources, one of the largest pure-play producers and exporters of thermal coal in South Africa, last week received recognition at the annual COALSAFE Awards. Due to Covid-19, the 2019 awards were postponed so this year’s event recognised the efforts of the coal mining sector for 2019 and 2020.

In the 2020 Environmental Management category, Thungela took first and second place honours for the Isibonelo Colliery Wetland Rehabilitation project and Zibulo Colliery Gumboots Recycling project, respectively. While the Sikhululiwe Clinic at the Mafube Colliery, a joint venture between Thungela and Exxaro, was the winner of the 2019 Community Development category.

“We are humbled to be recognised for our efforts to be a coal miner that genuinely cares about creating value, beyond the bottom-line,” says July Ndlovu, CEO of Thungela. “When we started our journey to independence, I said that each decision and action we take at Thungela must lead to a promising future for the company, our employees, the communities and our country. To receive these accolades at such an early stage of building our new company is an honour and reinforces our resolve to keep looking for solutions to the challenges we face as a society.”

Isibonelo was the first mine in South Africa to initiate an off-set wetland project following its establishment in 2005. Considered to be a world first, a novel approach was adopted that includes, a system of lightweight, interlocking sheets made from recycled UV-resistant plastic, that replaces traditional concrete structures. It can be installed year-round, at a fraction of the time and cost and with minimal environmental impact as no heavy machinery is required. The initiative, which has been broken down into multiple phases, will ultimately restore a total of 119ha of severely degraded wetland systems to pristine, natural condition.

The Sikhululiwe Clinic is a modern facility that provides healthcare services to a population of approximately 5 000 people who live in the rural Sikhululiwe Village in Mpumalanga. Opened in October 2019, the facility has consulting and counselling rooms, includes a dental and emergency ward, as well as a labour ward and pharmacy and operates five days a week. The clinic brings basic health care services to the doorstep of this community thathas many pensioners and unemployed people who would otherwise need to travel long distances to seek health related assistance.

Other highlights for Thungela from the COALSAFE Awards include recognition for more than 10000 fatality free shifts at both Isibonelo Colliery and Mafube Colliery in both years, and 3rdplace in the 2019 Environmental Management category for an irrigation project in the Steve Tshwete Municipality.

Hosted by the South African Colliery Manager’s Association, the COALSAFE Awards recognise the efforts of the coal mining industry to uphold safety standards with specific reference to the people, environment, and the communities in which the companies operate. The awards have been in existence for more than 40 years.

ENDS

Anglo American plc (“Anglo American”) announces the demerger of its thermal coal operations in South Africa, subject to the approval of Anglo American’s shareholders on 5 May 2021.

The separation will be implemented through the transfer of Anglo American’s thermal coal operations in South Africa to a new holding company, Thungela Resources Limited (“Thungela”), the demerger of the Thungela shares to Anglo American shareholders and the primary listing of Thungela’s shares on the Johannesburg Stock Exchange (the “JSE”) and standard listing on the London Stock Exchange (the “LSE”).

Mark Cutifani, Chief Executive of Anglo American, said: “Anglo American has been pursuing a responsible transition away from thermal coal for a number of years now. As the world transitions towards a low carbon economy, we must continue to act responsibly – bringing our employees, shareholders, host communities, host governments and customers along with us. Our proposed demerger of what are precious natural resources for South Africa, allows us to do exactly that.

“We are confident that Thungela will be a responsible steward of our thermal coal assets in South Africa, benefiting from an experienced and diverse management team and board. While representing just a small proportion of Anglo American today, we are laying the foundation for South Africa’s leading coal business, setting it up for success to deliver value for all its stakeholders. Looking forward, we believe the prospects for long-term value delivery are greatest as two standalone businesses, each with their own strategy and access to capital.”

July Ndlovu, CEO of Thungela, said: “Thungela is a leading South African producer of high quality, low cost export thermal coal, well positioned to benefit from improved market conditions, and providing a reliable and affordable energy source to our customers mainly in developing economies. We have significantly repositioned and upgraded our portfolio in recent years into a highly competitive producer of export product, with established access to world-class export infrastructure.

“As an independent business we will continue to contribute significantly to our host communities and South Africa’s development objectives. As part of our commitment to creating an enduring positive legacy, we are establishing an employee partnership plan and a community partnership plan, with each holding a 5% interest in the Thungela thermal coal operations in South Africa, thereby enabling employees and communities to share in the financial value that we generate.

“Guided by the high standards set by Anglo American, Thungela is committed to operating sustainably – continuing to drive safety, health, environmental, governance and social programmes for the benefit of our employees, host communities and shareholders. The demerger of Thungela and our listing on the JSE will represent yet another major milestone for Anglo American’s long-running contribution towards transforming South Africa’s mining industry.”

The proposed demerger recognises the diverse range of views held by Anglo American’s shareholders in relation to thermal coal and therefore provides Anglo American’s shareholders, including those with specified investment criteria, with the choice to act on such views and, following the implementation of the proposed demerger, to either retain, increase or decrease their interests in Thungela. The proposal also allows Thungela to attract new shareholders and to access new sources of capital as an independent company offering direct exposure to thermal coal.

Anglo American is committed to setting up Thungela as a sustainable standalone business, including by providing an initial cash injection of ZAR2.5 billion (approximately $170 million) and further contingent capital support until the end of 2022 in the event of thermal coal prices in South African rand (ZAR) falling below a certain threshold.

Following the implementation of the proposed demerger, and in line with Anglo American’s responsible approach, Anglo American’s marketing business will continue to support Thungela in the sale and marketing of its products for a three-year period with an additional six-month transitional period thereafter. This transitionary arrangement ensures that customers receive a consistent service and supply of thermal coal while Thungela concentrates on enhancing the performance of its operations while continuing to receive optimal value for its products in the market. The three-year term, and the additional six-month roll-off period, also provide time for Thungela to build its own global marketing capabilities should it choose to do so.

Proposed demerger process

In order for the proposed demerger to be implemented, Anglo American shareholder approval will be sought at a general meeting and court meeting, both expected to be held on 5 May 2021 following Anglo American’s Annual General Meeting. If it is approved, it is expected that the demerger would be effective on 4 June 2021, with Thungela’s shares being listed and admitted to trading on the JSE and LSE on 7 June 2021.

Following completion of the proposed demerger, 100% of the issued share capital of Thungela will be held by Anglo American shareholders who will each receive one Thungela share for every ten Anglo American shares that they hold. Each Anglo American shareholder will also retain their existing shareholding in Anglo American. Thungela will hold 90% of the thermal coal operations in South Africa with the remaining 10% held collectively by the employee partnership plan and the community partnership plan.

Additional information

A shareholder circular setting out further detail in relation to the demerger, including expected key dates has been published on www.angloamerican.com/products/thermal-coal/demerger.

In respect of the JSE and LSE listing, a Thungela combined pre-listing statement and prospectus is expected to be published on Anglo American’s website (www.angloamerican.com) and Thungela’s website (www.thungela.com) later today.

In accordance with UK Listing Rule 9.6.1, a copy of the circular has been submitted to the Financial Conduct Authority (FCA) and will shortly be available for inspection via the National Storage Mechanism.

Anglo American will host a virtual investor and analyst presentation at 09:00 UK time / 10:00 South Africa time today. Access and registration instructions are available on Anglo American’s website (www.angloamerican.com/investors).

Thungela will host a virtual investor and analyst presentation at 08:00 UK time / 09:00 South Africa time on 6 May 2021. Access and registration details will be provided nearer the time.

ENDS