Kumba - The Transport And Handling Of Iron Ore Through The Sishen Saldanha
Export Channel
KUMBA RESOURCES LIMITED
Incorporated in the Republic of South Africa
(Registration Number: 2000/011076/06)
Share Code: KMB
ISIN Number: ZAE000034310
(`Kumba`)
THE TRANSPORT AND HANDLING OF IRON ORE THROUGH THE SISHEN SALDANHA EXPORT
CHANNEL
Shareholders are referred to the announcement on 27 August 2004 of the annual
financial results of Transnet Limited (`Transnet`) for the year ended 31 March
2004, and, in particular, to the negative fair value adjustment of R4 532
million resulting from the current pricing arrangements for the transport and
handling of iron ore from the Northern Cape through the Sishen-Saldanha export
channel. The price payable to Transnet for its services under the agreement
between Transnet and Sishen Iron Ore Company (Proprietary) Limited (`the
agreement`) is determined with reference to two external variables, namely, the
ruling US Dollar-denominated iron ore price and the ruling Rand/US Dollar
exchange rate. The pricing arrangements have been regarded as an embedded
derivative for the purposes of accounting standard AC 133 and accounted for
accordingly by Transnet.
As a result, Transnet and Kumba have agreed to co-operate and jointly review the
contractual pricing mechanism in the agreement in an endeavour to reach a
mutually beneficial solution. At the same time, the parties will progress their
negotiations for an increase in the tonnage of iron ore transported by Transnet
through the Sishen-Saldanha export channel to accommodate Kumba`s iron ore
expansions in the Northern Cape. The transport of Kumba`s current iron ore
tonnage to Saldanha Bay will not be interrupted. Shareholders will be informed
of the outcome of these discussions.
Pretoria
27 August 2004
Sponsor
JPMorgan
Date: 27/08/2004 01:24:58 PM
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