Exxaro Resource limited Report Selector 2018

Report Selector

Exxaro Resources Limited Mineral Resources Report


Operation overview

Figure 13: Belfast mine

The Belfast mine is located some 10km south-west of the town of Belfast in Mpumalanga, South Africa, on the far eastern edge of the Witbank coalfield. The coalfield extends about 190km east-west between the towns of Springs
and Belfast, and about 60km in a north-south direction between the towns of Middelburg and Ermelo. The mineral tenure areas of Umsimbithi Mining and Universal Coal (Paardeplaats) are
to the north of Belfast, with the Umsimbithi Mining, Wonderfontein coal mine to the far west.

The Belfast mine is adjacent to the N4 highway connecting Pretoria and Maputo and
can be accessed from the N4 via two district roads, namely D1110 and D1770. The mine
is also adjacent to the railway line to Maputo. There are nearby loading facilities that link to the railway line to Richards Bay. Once fully developed, the mine will have seven opencast pits. There are prospects for additional opencast pits and an underground mining section.

Thermal coal will be beneficiated in a two-stage dense medium separation plant (currently under construction that will handle ROM at 500t/hr) to produce a primary product of 6 000kcal/kg net as received (NAR) and a secondary product of 21.6Mj/kg. Both products are suitable for the export market, but the secondary product can also
be sold in the domestic market. Mobile crush-and-screen plants may be brought on site as needed. There are existing Eskom power lines on the property for electricity supply.
The mining right has been approved and all environmental appeals have been favourably addressed. Mining operations will start in Q1, 2019.

Operation history

Belfast Coal has an approved mining right that covers 7 198 hectares. The geological model incorporates 387 drillholes.

Table 18: Belfast operation history

Date range       Company       Material notes
1967       Fuel Research Institute of South Africa (FRI)       25 drillholes
1969       Trans-Natal Steenkoolkorporasie Beperk (TNS)       10 drillholes
1975 — 1983       Gold Fields Mining and Development (GFM&D)       43 drillholes
2001 — 2003       Eyesizwe       155 drillholes
2008 — 2009       Exxaro       153 drillholes, to refine classification and potential box-cut positions

Operation geology

The Witbank coalfield, which has up to five coal seams contained in the middle Ecca group sediments of the Karoo supergroup. The Karoo sequence in the area is represented by the Dwyka formation and the middle Ecca, with little or no lower Ecca development. The middle Ecca sequence of coal horizons interbedded with sediments is highly truncated due to erosion, with only very minor areas where the full sequence is developed. The no 2 seam dips gently to the south. Locally, there are mainly three seams, seams 2, 3 and 4. Seam 5 was intersected in only two drillholes in the northern part of the project area. The target seams, with seam 2 being most prevalent, make up 86% of the Coal Resource. The seam is consistently developed, except in areas where it has been eroded, and has an average thickness of 2.8m. Seam 3 is also sporadically developed due to erosion and has an average thickness of 0.6m at an average depth of 60m. Due to the proximity of the northern edge of the Witbank Basin, the primary control of the coal development is the current weathering surface. The deposit is therefore divided by a perennial stream into two resource blocks under two distinct spurs in the surface topography. There is no indication of pertinent faulting from the borehole information, but potential intrusions of dolerite dykes are outlined by regional airborne magnetics, indicating the possible occurrence of regional north-south trending dykes.

There are no known geological structures that may affect the geology or coal seam continuity.

Figure 14: Belfast west-east cross section

Operation resource evaluation

The geologist in charge supervises all borehole drilling and is responsible for logging and sampling, aligned and in compliance to logging and sampling standards and standard operating procedures (SOPs). Sampling of boreholes is only conducted after the stratigraphy has been correlated. All samples collected and bagged are registered in a sample sheet which is also used as a dispatch sheet. The dispatch sheet is signed by the receiving laboratory personnel after ensuring that the number and sample ID on the dispatch sheet matches that of the actual samples to be analysed. The analysis required is clearly explained in the sample dispatch sheet. The turnaround time is calculated as the time from which the laboratory receives the samples to the time when the last batch of analysis is reported. Once the laboratory receives and signed the dispatch sheet, the safekeeping and storage of that batch of samples lies with the laboratory.

All coal analysis was conducted at Bureau Veritas and is ISO/IEC 17025:2005 accredited. Due to the nature of coal, quality assurance and control procedures are limited as matrix-matched blanks and coal material standards are not commonly available or used. Great emphasis is, however, placed on ensuring data integrity though rigorous procedures and supervision during processing. As part of the assurance and control process, audits are performed internally and externally. Internal audits are periodically done by the laboratory accreditation department using SANAS F48 and F49, which cover management and technical requirements as per ISO 17025. Customer audits are performed by clients to ensure they receive quality service.

No changes in the Coal Resources or Coal Reserves are reported.

Table 19: Belfast Coal Resource reporting criteria

Thickness cut-off (thickness and extraction height considerations) Quality cut-offs (adb) Geological loss
<1.0m Ash >50% 5%

Table 20: Belfast Coal Resource estimation criteria

Item     Description  
Database Drillhole database     acQuire  
Data datum Cape LO29
No drillholes used for resource estimation 387
Validation Conducted using queries in acQuire Excel
Data compositing and weighting Minex
Model Previous model date     2012  
Last model update 2009
Geological modelling software Geovia Minex
Estimation technique Growth algorithm
Grid mesh size 25m x 25m
Scan distance 2 000m
Data boundary 200m
Model build limits Upper: limit of weathering and topography/collar Lower: basement/Dwyka
Model outputs Roof, floor and thickness grids generated for structure. Raw quality grids
Changes to modelling process None

Table 21: Belfast Coal Resource classification criteria

  Category Type of boreholes Borehole spacing Structurally complex areas BH/ha
  Measured Cored boreholes with applicable coal qualities 0 – 350m RODA 0.08
  Indicated Cored boreholes with applicable coal qualities 350 – 500m RODA 0.04
  Inferred Cored boreholes with applicable coal qualities 500 – 1 000m RODA 0.01

Table 22: Belfast Resource and Reserve statement

Category 2018 (Mt)
  2017 (Mt)
Measured 81.1    81.1  –   
Indicated 22.4    22.4  –   
Inferred 34.4    34.4  –   
Total Resources 137.8    137.8  –   
Proved 45.7    45.7  –   
Probable –   
Total Reserves 45.7    45.7  –   
Rounding of figures may cause computational discrepancies
All changes more than 10% are explained
Mining method: OC — opencast
Figures are reported at 100% irrespective of percentage attributable to Exxaro
The tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt. Coal Resources are quoted as minable tonnes in-situ and refer to remaining resources after 31 December 2018 and 31 December 2017
Coal Resources are reported on a mineable in-situ (MTIS) basis
Coal Resources are quoted inclusive of Coal Reserves

Table 23: Belfast RPEEE considerations

  Item Criteria Criteria
  Geological data Data has been validated and signed-off by competent person Yes Geological structures and depositional extent, seam thickness <1.0m (OC), >50% ash content. Coal qualities reported on an air-dry basis
  Geological model Geological model has been considered and signed off Yes
  Structural model Structural model was considered and signed off Yes 2017
  Mining Mining assumptions considered and defined Yes Opencast
  Assurance Exxaro internal audits and external audit conducted Yes External audit conducted in 2015
  Economic Evaluation Exploitation study with economic and mining assumptions, including geotechnical and geohydrological assumptions Yes Belfast exploitation strategy over mining right
  Environmental Reasonable demonstration that environmental approvals can be obtained within the context of local, regional and national governmental legislation Yes EMP, IWUL and NEMA licences in place and compliant
  Tenure Formal tenure must be demonstrated. Reasonable demonstration that a mining right approval can be obtained within the context of local, regional and national governmental legislation Yes Mining right in place

Land acquisitions will be done with expansions
  Infrastructure Assumptions used should be reasonable and within known/assumed tolerances or have examples of precedence Yes Existing infrastructure adequate or can be upgraded. New required infrastructure under construction
  Market A potential market for the product with a reasonable assumption that this market is sustainable Yes Primary product qualities suitable for A-grade export market and middlings suitable for domestic power generation

Operation reserve estimation

Scheduling of the reserve is determined using mining scheduling applications from XPAC. This is the same software used to develop the LoMP schedule. The geological 3D model used for the resource statement is referred to as the reserve geological 3D model. This reserve model differs from the resource model. The resource model uses the full coal seam while the reserve model uses a select mining height from the drillhole profile.

The geological model has been created by Exxaro geosciences, using Minex software, and this is then supplied to mining processes in the form of Minex grids. The grids and DXF files were converted by mining processes to Surpac files. The methodology used by mining processes is to initially validate the geological information received, check the integrity of the structure, and that quality and wash-table values are consistent.

Indicated Resources are generally converted to Probable Reserves and Measured Resources to Proved Reserves except if one of the modifying factors have not been fulfilled, where the Measured Resource is either not converted or the Measured Resource is converted but downgraded to Probable and the risk is clearly stated. Inferred Resources are not converted to Coal Reserves.

Some 0.5Mt of Inferred Resources are included in the life-of-mine plan and are not considered material. The area with Inferred Resources, on the western edge of the pit will only be reached towards the end of life-of-mine. This is a new mine, yet to be exploited, and there are thus no production figures.

Table 24: Belfast modifying factors in the conversion of Coal Resources to Coal Reserves

  Modifying factors Value
  Geological loss 5%
  Average thickness cut-off 1.0m
  Quality cut-offs No quality cut-offs, economic cut-offs
  Mining loss 5%
  Boundary pillar
  Dilution 0%
  Contamination 0.1m (8.94%)
  Mining recovery efficiency 100% (already accounted in mining loss)
  Planned average slope angles
  Practical plant yield 88.11%
  Strip ratio cut-off
  Environmentally sensitive areas Environmentally sensitive areas excluded, or applications made
  Legal Applicable mining right considered
  Social Applicable communities considered
  Geohydrological Applicable surface and groundwater models considered

Known risks

Modifying factors are currently theoretical and will be reviewed after actual mining has started and reconciliation data is available. Risk of weathered material in the proposed box-cuts has been investigated through drilling and box-cut outlines adjusted. We do not know of any pertinent risks or other material conditions that may impact on the company's ability to mine or explore, including technical, environmental, social, economic, political and other key risks.

Operational excellence

Early cash-generating mining activities have started, which will see mining operations begin in 2019. Further expansion for both opencast and underground potential towards the north of the current LoMP area is under investigation.