Keaton Energy Holdings Limited
(A company incorporated in the Republic of South Africa with Registration number: 2006/011090/06) ISIN: ZAE000117420
JSE Share Code: KEH ("Keaton")
Xceed Resources Limited
(A company incorporated in Western Australia with ABN79009181006) ASX Share Code: XCD
("Xceed")

JOINT ANNOUNCEMENT: KEATON MAKES A CASH OFFER OF A$0.14 PER SHARE TO ACQUIRE THE ENTIRE ISSUED SHARE CAPITAL OF XCEED BY WAY OF A SCHEME OF ARRANGEMENT 1. INTRODUCTION

Keaton and Xceed wish to announce that Keaton has made a cash offer to acquire the entire issued share capital of Xceed (the "Offer"). Pursuant to a scheme implementation deed (the "Scheme Implementation Deed") dated 23 August 2013 between Keaton and Xceed, the Offer will be implemented by way of a scheme of arrangement (the "Scheme") in accordance with Part 5.1 of the Australian Corporations Act of 2001, as amended (the "Act") between Xceed and its shareholders. Following implementation of the Scheme, Xceed will become a wholly owned subsidiary of Keaton and will be delisted from the Official List of the Australian Securities Exchange ("ASX").
Due to Xceed not being a company that is registered in the Republic of South Africa ("South Africa") and instead having its place of central management and control in Australia, Xceed is not subject to the provisions of the South African Companies Act of 2008 and the Takeover Regulations. Xceed is, however, subject to the provisions of the Act, the regulation of the Australian Securities and Investments Commission ("ASIC") and the Australian Takeovers Panel.

2. RATIONALE

The Scheme forms part of Keaton's strategy to grow into a 5+ million tonnes per annum producer of diversified coal products. Xceed has an interest in three coal projects, the ore reserves and mineral resources of which are set out below, estimated in accordance with the JORC Code:

Project

Xceed interest in project

Proved Reserves tonnes

Probable

Reserves tonnes

Total Reserves

Tones

Moabsvelden1

74%

30 708 330

13 160 713

43 869 043

The Measured and Indicated Mineral Resources are inclusive of those Mineral Resources modified to produce the Ore Reserves.
The coal projects fit naturally within the existing Keaton portfolio of operating mines and development projects.
Moabsvelden, an open pit thermal coal project (Xceed's key asset) being located in close proximity to Keaton's Vanggatfontein Colliery in Mpumalanga, South Africa, will create significant operational synergies and Keaton will use its experience in opencast mining and coal processing to develop and operate this asset. At the end of May 2013 Xceed received notification from the Department: Mineral Resources (the "DMR") of the issue of a Mining Right for Moabsvelden and has signed a project finance term sheet with Standard Bank to develop the colliery. A positive for Moabsvelden is that it will be entirely open castable, with a low stripping ratio and a mine life in excess of 15 years.

1- Competent Person's Report for the Moabsvelden Project, Project Number GMXP11034 July 2013 prepared by Gemecs (Pty) Limited

2- Competent Person's Report for the Roodepoort Project, Project Number GMXP12025 July 2013 prepared by Gemecs (Pty) Limited

3- Competent Person's Report for the Bankfontein Project, Project Number GMXP12025 July 2013 prepared by Gemecs (Pty) Limited

3. OFFER CONSIDERATION

Pursuant to the Scheme, Keaton will acquire the entire issued share capital of Xceed (being 140,500,435 fully paid ordinary shares) via a cash offer of A$0.14 per share (the "Offer Consideration") held by the Xceed shareholders as at the record date ("Scheme Shareholders"), with the maximum purchase consideration therefore equating to A$19,670,060.90 (the "Purchase Consideration").
The Offer Consideration represents a premium of: