AECI Limited
(Incorporated in the Republic of South Africa)
(Registration number 1924/002590/06)
Share code: AFE
ISIN: ZAE000000220
("AECI" or "the Group" )

African Explosives Limited
Incorporated in the Republic of South Africa
(Registration number 1973/008610/06)
("AEL")

Tiso Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 1999/010875/07)
("Tiso")

The AECI Group is to become the first empowered supplier of explosives, initiating systems and services to South Africa’s mining industry. This is in terms of an agreement that will see an empowerment consortium, led by the Tiso Group, acquiring a 25.1 per cent interest in AECI’s South African and African explosives operations for a cash consideration of about R401 million.

The transaction will be effected via a new company, “EmpCo”, introduced for this purpose. The agreement excludes AECI’s electronic detonator business which is being merged into a global 50:50 joint venture with Dyno Nobel ASA of Norway.

AECI’s explosives and mining solutions activities are consolidated in African Explosives Limited (AEL). AEL’s customer base is dominated by the South African and African mining industry. Locally, this industry recently adopted the Mining Charter and, as a major supplier, AEL wishes to strengthen its relationship with its customers by ensuring compliance with their preferred procurement requirements. The transaction with Tiso will meet this objective.

Owing to the nature of its business, AEL sought an empowerment partner with knowledge of and relationships in the mining industry, and with an understanding of the dynamics of the mining services industry. Tiso has stated its intention to focus on these areas. It already operates in the natural resources, financial services and industrial services sectors. The transaction, therefore, will satisfy the strategies of both parties and provides a stable platform for a long-term partnership. It is expected that the partnership will add considerable value to AEL’s business over time.

The Tiso Group is 20 per cent owned by the Tiso Foundation, a public benefit organisation that aims to ensure broad-based equity participation in Tiso beyond its management and employees. This base will be expanded with the establishment of the AEL Community Development Trust. The Trust will be a 25 per cent shareholder in EmpCo, thereby increasing the effective participation of broad-based shareholders in EmpCo to about 40 per cent. The Trust will receive an interest-free loan of R6.275 million from AECI to enable it to fund its equity investment and it will be managed by a Board of Trustees. The focus will be on deploying income from the AEL investment in support of communities where the majority of AEL’s employees live, principally Tembisa and Alexandra.

For the purposes of the transaction, AEL’s fair value was calculated at R1.6 billion. Of the R401 million that EmpCo will invest in acquiring 25.1 per cent of the business, R25.1 million will be in the form of equity with the balance in the form of shareholder loans. These loans will be repaid to EmpCo over time from AEL’s free cash flow which is expected to be more than adequate for this purpose. It is also expected that AEL will be in a position to borrow in its own right in the longer term.

This structure gives the empowerment consortium a full 25.1 per cent interest in AEL up front and enhances the transaction’s sustainability. It enables the consortium to meet its objective of establishing a long-term and viable partnership with AECI, with benefits accruing across a broad base of shareholders.

The effective date of the transaction will be 1 July 2004.

Enquiries:

AECI Limited
Schalk Engelbrecht, Neale Axelson
Tel. (011)806-8901/3

Tiso Group
Fani Titi, Nkunku Sowazi, David Adamakoh
Tel. (011)549-2400

Date: 21/04/2004 08:31:09 AM Produced by the JSE SENS Department