SACOIL HOLDINGS LIMITED

(Formerly SA Mineral Resources Corporation Limited)

(Incorporated in the Republic of South Africa)

(Registration number 1993/000460/06)

Share code: SCL and ISIN: ZAE000127460

(“SacOil”)

SacOil agrees first Nigerian short term Oil and Gas production deal and Cautionary Announcement

The board of SacOil is pleased to announce that the joint venture between SacOil and Equity Energy Resources Limited (“EER”) (collectively the “Joint Venture”) has concluded its first near production deal. The highlights being:

• SacOil acquires a 20 per cent direct interest in Nigerian oil and gas field OPL 233.
• Production is expected to commence mid 2013 at a potential rate of 10,000 bbls oil per day.
• The Joint Venture will receive an inflated economic interest allowing the recovery of exploration costs until 100 mmbbls of cumulative crude oil production.
• As its entry cost, the Joint Venture will pay a farm-in fee of US$8.0 million and carry the recoverable cost commitment to fund the minimum work programme.
• This agreement is the first significant oil and gas deal entered into by the Joint Venture.

Introduction

SacOil is pleased to announce that it has signed a farm-in agreement with Nigdel United Oil Company Limited (“NIGDEL”) to acquire a 20 per cent working interest in the OPL233 licence located immediately off the coast of the central delta region of Nigeria and adjacent to the giant Apoi field (>600mmbbls).

SacOil’s Nigerian partner, EER 233 Nigeria Limited, a wholly owned Nigerian subsidiary of EER, has farmed into an additional 20 per cent of the OPL233 licence, with NIGDEL retaining the remaining 60 per cent. SacOil’s interest will be held directly through a wholly owned Nigerian subsidiary. SacOil and EER’s collective 40 per cent interest is referred to as the Acquisition.

Background to OPL 233

OPL 233 was awarded to NIGDEL during the Federal Government of Nigeria bid round in 2006 and a Production Sharing Contract was executed with Nigerian National Petroleum Corporation on the 7th May 2007 with an exploration period of 5 years.

Previous operator, Royal Dutch Shell, acquired a sparse grid of 2D seismic and drilled one exploration well (Olobia-1) in 1986. Evaluation of the well logs indicated 124ft of net oil and 90ft of gas and condensate in the Olobia-1 well. As the licence area is only 125 sq.km, only one phase of 3D acquisition will be required.

Rationale for the Acquisition

SacOil commissioned an independent competent person report by TRACS International which analysed the Olobia-1 discovery well on OPL233 and attributed to SacOil’s direct interest, a P50 contingent resource valuation of 4.1 mmBOE and a net present valuation (using a 10 per cent. discount rate) to SacOil at an assumed market price of US$70 per barrel of US$53.4 million. Significant exploration upside has been identified on existing 2D seismic data.

However, the planned 3D OBC seismic survey will be performed over zones of interest to better quantify resource sizes.

Condition precedent to the Acquisition

The Acquisition is subject to consent to the farm-in agreement by the Federal Government of Nigeria.

Consideration

A farm-in fee of US$8.0 million, in respect of the Acquisition, will be paid by the Joint Venture in 2 tranches – US$0.3 million upon execution of agreements with NIGDEL and US$7.8 million upon receipt of Federal Government of Nigeria consent for the farm in. The Joint Venture will carry 100 per cent of the minimum work programme cost until First Oil production and will have control on financial, technical and operational decision making. The estimated cost of 100 per cent of the minimum work programme is approximately US$50.0 million.

The Joint Venture will recover all costs from cost oil and:

• during the cost recovery period have 80:20 of profit oil split;
• will receive 50:50 profit oil split after cost recovery and until 100mmbbls cumulative crude oil production; and
• Will receive 40:60 profit oil split after 100mmbbls cumulative crude oil production.

First Oil production is estimated to commence mid 2013 at a production rate of 7,200 bbls per day building up to 10,000 bbls per day (given facilities which are constrained) for the P90 and P10 cases respectively.

The effective date of the Acquisition is 30 November 2010.

Pro forma financial effects of the Acquisition

The table below sets out the unaudited pro forma financial effects of the Acquisition on SacOil’s basic earnings per share, headline earnings per share, net asset value per share and tangible net asset value per SacOil share.

The unaudited pro forma financial effects have been prepared to illustrate the impact of the Acquisition on the unaudited, published financial information of SacOil for the six months ended 31 August 2010, had the Acquisition occurred on 1 March 2010 for income statement purposes and on 31 August 2010 for balance sheet purposes.

The pro forma financial effects have been prepared using accounting policies that comply with International Financial Reporting Standards and that are consistent with those applied in the audited, published financial statements of SacOil for the year ended 28 February 2010.

The unaudited pro forma financial effects set out below are the responsibility of the directors of SacOil and have been prepared for illustrative purposes only and because of their nature may not fairly present the financial position, changes in equity, and results of operations or cash flows of SacOil after the Acquisition.

	Before (1) Actual	After (Squared) Pro forma	% Change
Earnings per share (cents)	(2.21)	(2.30)	(4.07)
Headline loss per share (cents)	(2.21)	(2.30)	(4.07)
Net asset value per share (cents)	13.39	13.30	(0.67)
Net tangible asset value per share (cents)	13.39	(16.48)	(223.08)
Weighted average number of shares in issue (’000)	314 800		314 800
Number of shares in issue (’000)	321 635		321 635

Notes:

1. The “Before” loss, headline loss, net asset value and net tangible asset value per share has been extracted without adjustment from the unaudited, published results of SacOil for the six months ended 31 August 2010. No adjustments have been made for transactions and share issues concluded after 31 August 2010 as announced on 20 September 2010.

2. The “After” column assumes:

a) Payment by SacOil of 50 per cent. of the US$0.3 million upon execution of the farm-in agreement, converted at R6.87 to US$1, being the closing rate on 3 December 2010, which has been capitalised in terms of IFRS 6: Exploration for and Evaluation of Mineral Resources;

b) A short-term obligation of 50 per cent. of US$7.8 million, converted at R6.87 to US$1, in respect of that portion of the farm-in fee payable upon receipt of consent from the Federal Government of Nigeria for the farm-in and which have been capitalised in terms of IFRS 6: Exploration for and Evaluation of Mineral Resources;

c) A long-term obligation of US$10.0 million, converted at R6.87 to US$1, in respect of SacOil’s 20 per cent. share of the costs of the minimum work programme and which have been capitalised in terms of IFRS 6: Exploration for and Evaluation of Mineral Resources; and

d) The payment of transaction costs of R300 000.

Future prospects for SacOil in Nigeria

This agreement is the first for the Joint Venture and marks a significant milestone in the development of SacOil. The Joint Venture is actively pursuing other short term production situations in Nigeria with the view to progressing it’s near term production strategy.

JSE requirements

The Acquisition is classified as a Category 2 transaction in terms of the JSE Listings Requirements and, accordingly, no further documentation or shareholder approval is required for implementation of the Acquisition.

Cautionary announcement

Further to announcements made on 25 June, 26 July, 3 September and 30 September 2010, the Company is also considering various proposals and potential transactions. SacOil shareholders are advised to exercise caution when dealing in their SacOil securities until a further announcement is made in this regard.

Midrand

7 December 2010

Sponsor

BDO Corporate Finance

Contacts

SacOil

Robin Vela, Chief Executive Officer

Tel: +27 (0) 11 312 9330

Conduit PR (Public Relations)

Jonathan Charles / Jos Simson

Tel: +44 (0) 20 7429 6666

The Riverbed Agency

Raphala Mogase

Tel: +27 (0) 11 783 7903

About SacOil

SacOil is intent on becoming a leading independent indigenous upstream oil & gas company with a balanced portfolio of Pan-African assets. SacOil’s assets are in all phases of the upstream cycle – exploration, appraisal and near production and are currently in the Democratic Republic of the Congo and Nigeria.

The Company is listed on the JSE Limited under the Oil and Gas subsector and has a current market capitalisation of approximately R1.2 billion (some GBP100m). The Company and is also seeking to dual list on the AIM market of the London Stock Exchange early 2011.