It's been over four months since I joined Exxaro as chief executive officer on 1 April 2025. During this period, we have visited all our operations and engaged directly with our employees, organised labour, government, industry bodies, partners, local and international customers and you, our shareholders. These engagements have deepened my understanding of our stakeholder expectations and their vision for Exxaro.

I have been both encouraged and inspired by the talent, passion, and commitment across Exxaro. Our people are the strength of our organisation, placing responsibility on leadership to inspire, build trust, and enable teams to thrive. I am confident that, together, we are accelerating the delivery of Exxaro's strategy and stakeholder expectations, anchored in our purpose of powering better lives in Africa and beyond.

This great mining industry has shaped my leadership approach, with safety as the foundation, strong relationships at the core, and a focus on delivering exceptional performance through operational efficiency and capital discipline.

Safety and zero harm

I stand for safety and safety is non‑negotiable. While our industry has made significant progress in safety, we are not yet at zero harm, although zero harm is achievable. In April 2025, we launched our refreshed One Voice Safety Strategy at the annual CEO Safety Summit, and we have rolled out the refreshed strategy across the business. Anchored by five pillars, our refreshed safety strategy focuses on streamlined communication, incredible leadership, leading safe practices, fair play and being a learning organisation. The strategy aims to ensure that our people, systems, and workplaces are integrated to power our goal towards zero harm.

As at 15 August 2025, Exxaro recorded zero work-related fatalities, marking an outstanding 3-year fatality-free milestone. Our LTIFR was 0.05 per two-hundred thousand man-hours worked, compared to 0.06 per two-hundred thousand man-hours worked in the second half of 2024.

Delivering our Sustainable Growth and Impact strategy

Our Sustainable Growth and Impact Strategy remains intact and aims to transform Exxaro into a diversified natural resources group. Our coal portfolio remains well capitalised, and we have invested significantly in building high-quality infrastructure, with enhanced safety, efficiency, and reliability. These investments are anchored on Exxaro's substantial coal resources to sustain long LoM profiles, providing a solid foundation to create value well into the future. We have challenged all our operations to review farm boundaries in search of high-value LoM extension opportunities, in line with our high-value strategy as the coal demand is forecasted to remain resilient for longer and even beyond 2050.

Supported by this strong coal base, quality investments in iron ore and base metals, we are prudently scaling our energy solutions business, Cennergi. The commissioning of LSP has been delayed and we expect the first electrons in the first half of 2026.

On 17 February 2025, we took a significant step forward with the financial close of the Karreebosch project. This will add 140MW gross capacity to Cennergi's existing 297MW, accelerating our clean and reliable energy delivery solutions to our customers, Exxaro's scope 3 emissions decarbonisation plan, and contributes meaningfully to South Africa's just energy transition. The project has broken ground and is expected to generate green electrons in 2027.

The acquisition of the manganese assets marks a strategic deployment of capital aligned with our articulated growth strategy. In that regard, I am pleased that on 13 May 2025, we announced that Exxaro entered into two separate agreements to acquire select manganese assets from Ntsimbintle Holdings Proprietary Limited and OMH (Mauritius) Corporation. The purchase consideration is estimated to range between R9.0 billion and R14.64 billion, subject to pre-emptive and tag-along rights, and final adjustments at closing date. All short-dated conditions precedent have been fulfilled. Regulatory approvals and other conditions precedent remain in progress, with completion still targeted for early 2026. As a result of this acquisition the previously maintained cash retention buffer of R12 billion to R15 billion will not be needed after the manganese acquisition. In that regard, we are reviewing our capital allocation framework to ensure it continues to deliver competitive and sustainable shareholder returns.

I am pleased with our invigorated pace in delivering our diversification strategy.

Leeuwpan turnaround

As a result of ongoing operational and market challenges that have severely impacted the sustainability of the mine for a few years, Leeuwpan formally initiated a Section 189 consultation process in terms of the Labour Relations Act, 66 of 1995 in June 2025. The consultation process has been successfully concluded well within the legislated timeframe of 60 days. This milestone reflects the strong collaboration between Exxaro, organised labour stakeholders, our employees and their representatives.

We are pursuing a turnaround plan that prioritises long-term employment, contributes to local development, and ensures the well-being of our employees and surrounding communities. Only thriving businesses can sustainably reduce unemployment, poverty and inequality.

Executive leadership

The announcement of our manganese transaction adds to our coal operations, and iron ore and zinc investments, positioning Exxaro well as a diversified natural resources champion. I am therefore pleased to announce an executive leadership team, fit for the future incorporating our expanded portfolio, to stabilise the business, enhance agility and collaboration, and enable more responsive decision making. Please refer to our SENS announcement on Exxaro Group Management Structure Changes.

With deep industry expertise, a shared commitment to responsible growth, operational efficiency, capital discipline and delivering stakeholder value, our leadership team is ready to take Exxaro into its next growth phase.

Business and financial performance

In the first half of 2025, Exxaro delivered a robust performance, underpinned by operational and marketing efficiency, despite a challenging macro‑economic environment, offtake and ongoing logistics constraints.

Group revenue for the six-month period ended 30 June 2025 (1H25) increased by 8% to R20.6 billion compared to R19 billion in the six-months ended 30 June 2024 (1H24).

Group EBITDA rose by 10% to R5.6 billion (1H24: R5.1 billion), maintaining an EBITDA margin of 27% (1H24: 27%), mainly driven by the strong performance of our coal business. The coal business EBITDA increased by 10% year‑on‑year to R5.6 billion (1H24: R5.1 billion) on the back of higher export and domestic sales volumes, coupled with a 96% price realisation achieved by our marketing team in a softer commodity price environment. Our Cennergi business continues to provide annuity‑type contributions to group earnings, with long‑term power purchase agreements and consistent performance of our operating wind assets achieving an Operational EBITDA margin of 80% (1H24: 79%). This has contributed to the energy EBITDA of R432 million (1H24: R470 million).

Adjusted income from our equity-accounted investments increased by 21% year-on-year to R2.3 billion from R1.9 billion. The increase in adjusted equity-accounted income from Black Mountain of R372 million from R83 million equity-accounted loss in 1H24 was driven by increased production and sales volumes due to more favourable mining conditions, as well as interest income on project funding received with the first capital repayment date scheduled in June 2026. These investments continue to provide Exxaro with meaningful diversification and enhance the quality of our earnings.

Headline earnings increased by 14% to R4.2 billion from R3.7 billion in 1H24 while HEPS rose 13% to 1 724 cents per share from 1 528 cents per share in 1H24.

As part of our ongoing commitment to drive shareholder returns, our share repurchase programme valued at R1.2 billion, announced at our 2024 annual financial results presentation in March 2025, is currently in progress and 50% complete. This initiative was implemented alongside the final cash dividend of 866 cents per share.

Exxaro's portfolio of high‑quality, well capitalised assets, supported by disciplined operational execution and effective working capital management continues to deliver strong and consistent cash generation. During the period, cash generated by our operations increased by 10% to R5.3 billion from R4.8 billion in 1H24. In addition, dividends received from our equity‑accounted investments, primarily SIOC, contributed R1.7 billion.

These cashflows enable us to reinvest in the business, pursue value-accretive growth opportunities, and return capital to our shareholders. Total capex increased to R2 billion from R1.1 billion in 1H24, comprising R0.9 billion sustaining capex and R1.1 billion expansion capex which was largely utilised in the initial construction of the 140MW Karreebosch project.

Our balance sheet remains strong and flexible, underpinned by robust cash generation and prudent capital allocation. We closed the period in a net cash position of R18.3 billion (excluding energy's net debt of R5.8 billion).

Operational efficiency remains central to driving our financial resilience and long-term value creation.

Overall coal production (excluding buy-ins) increased by 1% year-on-year to 19.4Mt from 19.3Mt in 1H24, supported by strong contributions from our Mpumalanga operations. Mafube, Leeuwpan and Belfast collectively supported a 14% year-on-year production increase within the region on the back of improved plant performance, equipment availability, as well as benefits from the introduction of a modified mining sequence at Leeuwpan. However, this performance was partially offset by modest reductions in the Waterberg region, primarily due to reduced offtake, and at Matla, following the planned decommissioning of the short wall section. Since then, the Matla ramp-up project is on schedule, to scope and within budget.

Total coal sales volumes for the period increased by 1% to 19.1Mt in 1H25 compared to 18.9Mt in 1H24, due to improved domestic sales and stronger export performance, only partially offset by the reduced offtake in the Waterberg region.

Export sales volumes rose by 3% year-on-year to 3.4Mt from 3.3Mt in 1H24, due to improved TFR performance and the effective use of alternative distribution channels.

Our export destinations for the period included other Asia (42%), India (33%), Africa (18%) and Europe (7%). We achieved an average realised export price of US$88 per tonne, which represents 96% of the average API4 RBCT benchmark price of US$92 per tonne in the first half of 2025. Our product mix optimisation initiatives remain a key lever in driving value and supporting strong price outcomes.

In line with our disciplined approach to cost management, we continue to implement targeted initiatives to mitigate against cost pressures and protect our margins. Coal cash cost per tonne increased by 4% to R651 per tonne from R624 per tonne year‑on‑year, in line with coal mining inflation. In absolute terms, coal production cash costs increased by 6% to R10.1 billion from R9.5 billion in the comparable period, reflecting the volume increase as well as the associated inflationary impacts.

Cennergi's operating wind energy assets delivered a steady performance, generating 337GWh of electricity in 1H25 compared to 339GWh in 1H24. Average availability during the period was 98%, which is above contractual targets.

In line with our dividend policy which targets a pass through of our SIOC dividend and a payout of between 2.5 to 3.5 times Adjusted Group Earnings, the board has declared an interim cash dividend of R8.43 per share, reflecting our continued confidence in the business and commitment to disciplined capital returns. This is Exxaro's 45th consecutive dividend declaration since listing on the Johannesburg Stock Exchange 19 years ago, in 2006 – a clear testament to the strength of our business model and our commitment to delivering consistent and sustainable shareholder returns.

Conclusion

As I reflect on my first few months at Exxaro, I am inspired by the strength of our foundation, the clarity of our strategy, the dedication of our people, and our strong stakeholder relations. We have remained focused and delivered operationally amid a challenging environment, while progressing boldly on our journey to become a diversified natural resources champion with a strong coal base and growing presence in energy solutions and transition metals. We are focused on decisive strategy execution.

Together with my re‑organised leadership team, we are focused on Exxaro's new dawn, as we prudently accelerate sustainable growth, value creation and social impact.

This re‑organised leadership team is infusing new energy to the whole organisation to empower all employees to do the best work of their lives, safely.

Thank you for the opportunity to lead this great organisation.

Ben Magara

Chief executive officer