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Kumba Resources Limited - Transnet And Kumba Sign Definitive Agreement For New Iron Ore Transport And Handling Contract KUMBA RESOURCES LIMITED Incorporated in the Republic of South Africa (Registration Number: 2000/011076/06) Share Code: KMB ISIN Number: ZAE000034310 (`Kumba`) TRANSNET AND KUMBA SIGN DEFINITIVE AGREEMENT FOR NEW IRON ORE TRANSPORT AND HANDLING CONTRACT National transport company Transnet Limited (Transnet) and diversified metals and mining company Kumba Resources Limited (Kumba) today jointly announced that they have signed a definitive agreement for the transport and handling of iron ore from the Northern Cape through the Sishen- Saldanha export channel. The new contract provides for a new pricing mechanism which will be a Rand-based tariff and caters for Kumba`s growth plans to increase iron ore exports through Saldanha from 23.5Mtpa to 35Mtpa by 2009. It is effective from 1 January 2005 and will run for 23 years, with tariff reviews every five years. The contract will effectively remove the negative effect of the embedded derivative in Transnet`s accounting records as the pricing mechanism in the previous contract was linked to the US dollar iron ore price. The contract will support South Africa`s participation in the growing world demand for iron ore and contribute to the domestic economy with investments and employment associated with major mine expansions and new railway rolling stock and infrastructure. `The new tariff structure will ensure the continued success of iron ore exports from the Northern Cape and is mutually beneficial to both companies. The contract justifies the R4.4 billion investment over the next 5 years that Transnet will make to expand rail and port infrastructure. `The profitability of the Sishen-Saldanha export channel has never been in question and this remains a highly valuable Transnet asset,` said Ms. Maria Ramos, Transnet group chief executive. The contract is in line with Transnet`s plan to restructure its balance sheet as part of the four-point plan turnaround strategy. The contract also demonstrates Transnet`s bid to cut the costs of doing business and increase South Africa`s economic competitiveness. That way, it is hoped the contract will help address the job creation challenge. The first phase of the contract will provide rail and port infrastructure to accommodate production from Kumba`s Sishen Expansion Project, which entails an investment of R2,96 billion, and is expected to reach full production of 10Mtpa in 2008. The contract provides a further 1,5Mtpa capacity to be filled through shorter-term efficiency and product development initiatives at Sishen. Improved resource utilisation enables this incremental growth without shortening Sishen`s current 23 year life of mine. Studies will be also be undertaken to explore the possibility of further rail and port capacity of 17Mtpa for Kumba and other producers to be routed either through Saldanha or the Port of Coega to cater for future expansions in the Northern Cape. `This contract ensures that Kumba`s iron ore business maintains its profitable performance. It supports future growth plans and a sustainable business environment for both parties,` said Dr Con Fauconnier, Kumba`s chief executive. `We appreciate the positive manner in which Transnet approached the contract review and look forward to continuing the strong business relationship we have forged over the past 29 years,` he added. ends Editor`s Note: Kumba Resources Limited, one of the largest South African- based mining companies listed on the JSE Securities Exchange, is a focused metals and mining company with a diverse commodity portfolio consisting of iron ore, heavy minerals, coal, base metals and industrial minerals. www.kumbaresources.com Enquiries: KUMBA RESOURCES Mike Kilbride Executive Director: Business Operations Tel: +27 (0) 12 307 3488; +27 (0) 83 609 1122 Trevor Arran General Manager: Corporate Affairs & Investor Relations Tel: +27 (0) 12 307 3292; +27 (0) 83 609 1444 TRANSNET John Dludlu Group communications GM Tel: +27 (0) 83 676 1881 Charlotte De La Harpe Tel: +27 (0) 11 308 2384; +27 (0) 83 287 7773
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