Master Drilling Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 2011/008265/06)
JSE share code: MDI
ISIN: ZAE000171948
(“Master Drilling” or the “Company” or “the Group”)




EXERCISE OF CALL OPTION TO ACQUIRE JUST ABOVE 51% OF THE SHARES IN
THE A&R GROUP OF COMPANIES (“A&R GROUP”)



1.    INTRODUCTION


      Shareholders are referred to the announcement released on SENS on 30 July 2021
      which advised that Master Drilling Mining Services (Proprietary) Limited (“MDMS”), a
      wholly owned subsidiary of Master Drilling, had acquired just above 25% interest in
      the A&R Group from the following shareholders: A&R Holdings (Pty) Ltd, Lamproom
      Solutions (Pty) Ltd, Tsimpilo Trading 98 (Pty) Ltd, the JJ van Niekerk Trust, Stellane
      Enterprises (Pty) Ltd, Ryan Mark Seath Lishman and Johann Haarhoff (“the
      Acquisition”). In terms of the Acquisition MDMS had a call option (“the call option”) to
      subsequently increase its shareholding in the A&R Group to just above 51% within a
      period of two years (“the call option exercise”).



2.    EXERCISE OF CALL OPTION AND PURCHASE CONSIDERATION

      Shareholders are advised that MDMS has now exercised the call option and acquired
      further shares taking its shareholding in the A&R Group to just above 51%.


      The purchase consideration for the call option exercise will be determined in
      accordance with an agreed formula on the completion of the audit of the 2022 Annual
      Financial Statements of the A&R Group and is presently estimated to be ZAR129,4
      million based on the existing management accounts of the A&R Group, subject to


                                                                                               1
     any adjustments arising during the audit. The purchase price is capped at a
     maximum of ZAR240,1 million.


     The purchase consideration shall be financed from internal resources.


3.   RATIONALE

     The investment in the A&R Group is aligned with the strategic intent of Master Drilling
     to diversify its range of services to include services that are not necessarily drilling
     related but focused on technology that can improve the safety and operational
     performance of miners globally. This transaction will better diversify overall market
     exposure and add additional revenue streams to the Master Drilling Group.


4.   CONDITIONS PRECEDENT

     All conditions precedent were fulfilled at the time of the initial purchase, other than
     board approvals to exercise the option, which have since been obtained.


5.   EFFECTIVE DATE

     The effective date of the purchase is 29 August 2022.


6.   VALUE OF THE NET ASSETS ACQUIRED AND PROFITS AFTER TAX

     A&R Group comprises capital-light businesses with short return on investment
     cycles, and minimal working capital needed for the deployment of projects. The
     businesses are also highly cash generative and have experienced stable earnings in
     the past five years, making A&R Group a sound investment for Master Drilling.


     The book value of A&R Group’s net assets as at February 2021, being the date of its
     last audited annual financial statements, was ZAR118 million.


     The audited profit after tax attributable to the A&R Group for the period ended
     February 2021, was ZAR26,5 million. This amount is net of interest on shareholder
     loan accounts and payments to shareholders in respect of intellectual property, in all
     of which MDMS is acquiring the 51% plus interest referenced in Paragraph 2 above.




                                                                                                2
7.     CATEGORISATION

       The call option exercise when based on the maximum possible purchase
       consideration is a Category 2 transaction as contemplated in the Listings
       Requirements of the JSE Limited.




Fochville
29 August 2022


Investment Bank and Sponsor
Investec Bank Limited




                                                                                   3