LONDON, UK: Thungela Resources has entered into agreements with Audley Energy Limited and Mayfair Corporations Group in terms of which inter alia Thungela Resources Australia will acquire a majority shareholding interest in Sungela Holdings (a newly incorporated private company with limited liability, registered in accordance with the laws of Australia) and will loan fund a portion of the Co-investors equity contributions.

Sungela Holdings will, in turn, through its wholly owned subsidiary, Sungela Pty Ltd, acquire an 85% interest in the Ensham Joint Venture from Idemitsu Australia Pty Ltd and its subsidiary, Bligh Coal Limited, as well as Idemitsu’s 85% shareholding in Ensham Coal Sales Pty Ltd; its 100% shareholding in Ensham Resources Pty Ltd (the operator of the Ensham coal mine) and its 85% shareholding in Nogoa Pastoral Pty Ltd and Nogoa Pastoral Joint Venture.

The transaction delivers on Thungela’s strategy, by providing geographic diversification through a highly cash generative thermal coal asset, with long-life potential, at an attractive valuation, and puts Thungela in a position to capitalise on the current strong Newcastle coal price environment.

The Ensham coal mine is the primary asset of the Ensham Joint Venture, and comprises several tenements located within the well-established and infrastructure-enabled southern Bowen Basin in Queensland, Australia. The Ensham coal mine is currently 85% owned by Idemitsu, with the remaining 15% owned by LX International (“LXI”), through its subsidiary Bowen Investment (Australia) Pty Ltd (“Bowen”).

Initially established as an open cut mine, the Ensham coal mine has been an underground operation since 2012. The Ensham coal mine produced approximately 3.2 Mt of high-quality, low-ash and low-sulphur thermal coal in 2022, and has the potential for increased production in the future. Subject to extension of the existing mining approvals, the Ensham coal mine has a life of mine through to c. 2039.

Run of mine (“ROM”) coal is produced by bord and pillar underground methods using five continuous miners exploiting two main economical seams.

This mining method is well aligned with Thungela’s operational methodology deployed across its underground mines in South Africa. ROM coal is brought to surface where it is crushed, sized and stockpiled without any washing or further processing.

The coal is then loaded onto trains via a 13 km dedicated rail spur and is transported via the Blackwater rail system (339 km total distance) to the port of Gladstone from where it is exported, predominantly into Asian markets (including Japan, Taiwan, Korea and India).

The Transaction comprises:

· a subscription of AU$267 million by Thungela Australia for an initial 75% shareholding in Sungela Holdings;

· a mezzanine loan of AU$68 million from Thungela to the Co-investors (“Co-investors Mezzanine Loan”) which, in turn, will use such funds and their own capital to subscribe for a 25% shareholding in Sungela Holdings for a total contribution of AU$73 million.