IPSA.L Regulatory News (IPSA)

22 October, 2010

IPSA Group PLC

("IPSA" or "the Company")

Termination of Coal Contract

The Board of IPSA Group PLC announces that it has today authorised the termination of the coal agreement between IPSA's wholly owned subsidiary, Indwe Power (Pty) Limited ("IPPL"), and Elitheni Coal (Pty) Limited ("Elitheni"), a subsidiary of Strategic Natural Resources PLC. The original agreement, which was announced on 28th October 2008, envisaged that IPPL would purchase approximately 1,000,000 tonnes of coal per annum for a period of 20 years (20 million tonnes) for use at its power projects under development in the Eastern Cape. There have, however, been significant delays in Eskom's Multi-site Baseload IPP Programme, which in turn have led to delays in achieving off-take contracts for power from IPSA's proposed mine mouth power plant at Indwe. Accordingly, the Board of IPSA has decided that IPPL cannot proceed with the current coal contract.

IPSA continues to hold an option over a mine mouth site for a coal-fired power plant at Indwe and intends to pursue power plant development based on clean coal in the Eastern Cape. Such developments will, however, have to be backed by bankable off-take agreements. In the meantime IPSA's decision leaves Elitheni free to explore other options for the sale of coal for power generation.

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