SOUTH AFRICA S NEWEST COAL MINER. Paul Miller, Managing Director 2nd BAC Indaba Natural Resources Day October 2008

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1 SOUTH AFRICA S NEWEST COAL MINER Paul Miller, Managing Director 2nd BAC Indaba Natural Resources Day October 2008

2 Disclaimer All statements in this presentation, 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. 2

3 The investment e t case No better time for coal in SA and internationally Designed for SA Strong, established team Fully funded for production Great projects, prospects in the right locations Rapid exploration/development/production trajectory 3

4 Domestic market Rand/ton FOR Steam Coal (Source: DME) 70% - 80% of SA domestic steam coal is bought on long-term contracts the movement in the average price above reflects the influence of spot market prices 4

5 Domestic market, cont d Meanwhile, the price differential between export and local coal price has been increasing drastically. The export price in Feb 08 reached R 850/t and the SASC FOB price on 11 July 2008 was $ /t SA coal production growth has effectively been zero for the past three years - Eskom forced to use discard coal 5 Source: Eskom presentation to the Fossil Fuel Foundation Conference July 2008

6 Export market US$/t FOB Richards Bay 20 0 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 6 South African spot coal index ( Barlow Jonker) Ave monthly achieved export price (DME: Minerals Economics)

7 Market etconditions dto R400 million in treasury at time of listing R100 million private placing at R10 per share at listing 142 million shares in issue Fully funded for production Altx15 Resi20 Alsi Keaton Energy NSJME 7

8 Projects Bela-Bela 29º Mokopane 30º PRETORIA Middleburg South Africa Belfa ast N1 N N14 KLIPFONTEIN WITBANK Duvha 26 º JOHANNESBURG N12 Kendal Hendrina 26 º Delmas DELMAS Matla Kriel N3 Heidelburg STERKFONTEIN Bethal Mbabane 0 30 km Secunda ERMELO Piet Retief Grootvlei Tutuka Harrismith 29º Standerton Volkrust 30º 8

9 Klipfontein po Bela-Bela 29º Mokopane 30º Witbank coal PRETORIA field Small, near-surface deposit N14 < 0.5Mt N KLIPFONTEIN Mining N1 permit received Sept 08 JOHANNESBURG N12 Kendal Production has started Delmas DELMAS local contractor 26 º open pit up to tpm for 10 months N3 Heidelburg First coal sale expected Oct 08 Objective: early cash flow to bridge the gap until Delmas Grootvlei comes on stream Matla 0 30 km Kriel Middleburg WITBANK Duvha STERKFONTEIN Secunda Tutuka Bethal Hendrina South Africa ERMELO Harrismith 29º Standerton Volkrust 30º Belfa ast 26 º Mbabane Piet Retief 9

10 Delmas Witbank coal PRETORIA field ha property Mining Right application N made in N1 March 08 Bela-Bela 29º Mokopane 30º 200-hole JOHANNESBURG drilling programme 26 º completed in June 08 Feasibility study expected in Oct 08 Mining scheduled to begin early 2009 N3 Heidelburg 178.1Mt mineable in situ resource Open pit operation tpm ROM Grootvlei N14 Delmas N12 KLIPFONTEIN Kendal DELMAS Matla 0 30 km Kriel Middleburg WITBANK Duvha STERKFONTEIN Secunda Tutuka Bethal Hendrina South Africa ERMELO Harrismith 29º Standerton Volkrust 30º Belfa ast 26 º Mbabane Piet Retief 10

11 Sterkfontein Highveld coal field Bela-Bela 29º Mokopane 30º PRETORIA ha property 132 drill holes completed N KLIPFONTEIN N1 34Mt mineable JOHANNESBURG in situ 26 º resource 50% export coal N14 Delmas 33% domestic steam coal Concept study N3 complete Heidelburg Underground operation two shaft complexes N12 Kendal DELMAS Matla 0 30 km Kriel Middleburg WITBANK Duvha STERKFONTEIN Secunda Bethal Hendrina South Africa ERMELO Belfa ast 26 º Mbabane Piet Retief Grootvlei Tutuka Harrismith 29º Standerton Volkrust 30º 11

12 Amalahle aa Ermelo coal field 29º Mokopana 30º Nelspruit Six discrete properties totaling hectares Pretoria N4 Middleburg WITBANK South Africa Prospecting right granted in April 2008 R3.5 million exploration programme in progress Johannesburg 36º Johannesburg N12 Kendal N17 Matla Kriel Duvha Bethal Hendrina Komati Hendrina Arnot BREYTEN CAROLINA N17 36º Mqa abane LEGEND Amalahle prospects (not to scale Towns National Roads Main Roads 29º Tutuka 0 30km ERMELO Standerton 30º Volksrust Camden Piet Retief 12

13 Mafla a Klip River coal field Johannesburg30 E Piet Retief 31 E hectare property Prospecting right granted in July 2008 Targeting anthracite and/or coking coal Memel 28 S Newcastle N 11 Madadeni Dannhauser Osizweni Utrecht MAFLA Kingsley Vryheid Louwsburg 28 S Hattingspruit AFRICA Glencoe Dundee Melmoth N 11 Cape Town km Wasbank 0 30km LEGEND Ladysmith 30 E Greytown 31 E Melmoth Town National Roads Main Road 13

14 Rapid trajectory Founded by Rutendo First exploration rights List on the JSE Mining, Pouroulis family granted Raise seed capital Begin mining Start t exploration drilling Delmas feasibility 18 months from first exploration to production at Klipfontein Delmas to follow similar trajectory 14

15 Action plan Project Project Actions Klipfontein Delmas <0.5M ton.* 4.5 ha 178M MTIS ha Mining has started Mining right application submitted Sterkfontein Amalahle 34M MTIS ha 6 properties ha Concept study complete and mining right application in progress Prospecting right granted, drill rig on site Mafla ha Prospecting right granted Exploration Development Production 15 * Non SAMREC compliant

16 Why buy our share? No better time for coal in SA and internationally robust domestic, export markets fundamentals remain sound Designed for SA - fully compliant with new SA minerals legislation Strong, established team Fully funded to get into production R400m in treasury at listing no need to raise money in current difficult market conditions Great projects, prospects in the right locations good product spread active exploration pipeline Fast-moving - rapid exploration/development/production trajectory 16

17 SOUTH AFRICA S NEWEST COAL MINER Paul Miller, Managing Director 2nd BAC Indaba Natural Resources Day October 2008