DORSTFONTEIN COMPLEX

Operation overview

Dorstfontein (DCM) complex forms part of Exxaro Coal Central (ECC) and is on the northern margin of the Highveld coalfield along the boundary of the Smithfield Ridge, the boundary between the Highveld and Witbank coalfields.

DCM complex is 36km south of the town of eMalahleni and, to the south-west, the property borders the town of Kriel. It is in the Highveld magisterial district, under the jurisdiction of the eMalahleni local council, Mpumalanga, South Africa. DCM operations can be reached via the hard-topped R544/R547 roads linking the towns of Witbank and Kriel. DCM is surrounded by mineral right tenure owned by Kusile Mining to the west, the Universal Coal NCC operation to the north, the Kriel-East operation to the south and Mbuyelo Coal to the east.

Figure 21: Dorstfontein complex

The complex covers a total rights area of 7 892 hectares comprising the underground Dorstfontein West Mine (DCMW) and opencast Dorstfontein East Mine (DCME). DCMW is currently exploiting the no S2 through underground bord-and-pillar method. The operation is supported by four continuous miner (CM) sections and one drill-and-blast section. With the S2 reserves coming to an end, the operation is moving upwards to exploit the S4L through an incline development from the current S2 working. DCME is the only opencast mine in the ECC stable. Seams being exploited are mainly no S4 (S4U and S4L) and no S2 (S2U and S2L). However, where thicker than 1.0m, the no S5, S3 and S1 are also extracted. Mining activities use a truck-and-shovel method to expose and extract coal. The LoMP entails the introduction of underground extraction of S4L via an adit from one of its pits' highwalls.

A major high-tension power line from the Komati power station crosses the property, in a south-westerly direction, over the northern part of the farm Fentonia 54IS and then swings westward over portions 1, 2 and 9 of the farm Dorstfontein 71IS. A secondary high-tension power line runs along the southern boundary of the farm Welstand 55 IS and continues over portions 2 and 3 of the farm Fentonia 54IS.

DCMW mining infrastructure extends over a portion of the farm Rietkuil 558 IS and portion RE 3 of the farm Dorstfontein 71IS, while DCME mining infrastructure lies on portion 11 of the farm Welstand 55 IS. Surface infrastructure consists of mine buildings (offices, workshops and change houses), a box-cut to access the coal seams, conveyor belt systems, coal-washing plant, pollution-control dams, coal stockpile areas, truck-loading facilities with weighbridges, discard dumps and a rapid coal-loading facility (rapid loading terminal) linked to the main Richards Bay coal terminal. DCMW mainly supports the inland market (ferrochrome and charring plants). However, screened product from DCMW is trucked to DCME, forming part of its export product. Historically, DCME has always catered only for the export market but, in 2019, it will support both the domestic Eskom and export markets. DCMW run-of-mine (ROM) is beneficiated in a heavy medium coal-washing plant for various sizes. Final plant product is screened and classified into large nuts, small nuts, jumbo peas, peas and duff. ROM from DCME is also beneficiated in a heavy medium coal-washing plant to produce a product that depends on the coal characteristics and contractual requirements.

Operation history

DCM complex mining and prospecting rights cover some 7 892 hectares which have been explored from the 1950s. To date, 1 692 boreholes have been drilled. However, the 2017 geological model was built using 1 282 boreholes with wash-quality information and excluding the remaining boreholes based on a rigorous data-validation process.

Table 40: Dorstfontein operation history

Operation geology

Coal measures of the Highveld and Witbank coalfields are hosted in the Ecca group, which includes the Vryheid and Volksrust coal-bearing formations. All coal seams in the ECC area are hosted in the Vryheid formation which ranges in thickness from 80m to 300m. There are five major coal seams present in the area, named from the base upwards as no 1 seam (S1), no 2 seam (S2), no 3 seam (S3), no 4 seam (S4) and no 5 seam (S5).

A granitic basement high, which forms part of the Smithfield Ridge and is referred to below as the Central plateau, divides the DCM complex into two separate geological domains and the Western and Eastern Limbs can be found on either side of this plateau. S1 is only developed in the central portions of the paleo-valleys, ranging in thickness from 0.1 to 2.5m. Underground extraction of this seam is considered uneconomic due to its highly variable thickness, inferior quality, isolated occurrence and coal devolatilisation. In the DCM complex, seam splitting is generally a provenance of detrital material resulting largely from the proximity of the seam to the Smithfield Ridge and, as a result, the S2 and S4 are further subdivided into S2L, S2U and S4L and S4U, respectively.

S2L is thinnest over palaeo-highs and thickest over troughs of palaeo-valleys. Two S2L thickness domains exist in the complex: in the west (DCMW), seam thickness ranges from 0.1m to 5m and, in the east (DCME), from 0.2m to 6.0m. In the north of DCMW, the S2L exists as a single coal horizon, generally devoid of stone partings. To the south of this block, an arenaceous parting splits the seam into an upper and lower subseam. The parting separating S2U and S2L in both the west and east attains a maximum thickness of 4.5m and, in the northern portion, a minimum of 0.2m with an average of 1.5m. S2U is considered uneconomic to mine separately by underground methods but is included for the opencastable blocks. Generally, S2L is the thicker of the two subseams and has better-quality coal. As such, S2L is theoretically the mining target. However, practical mining of S2L is often problematic due to parting between two subseams S2L and S2U.

On the basis of seam thickness and coal quality, S4L is the main underground exploitation target in seam 4. Seam 4 comprises coal and minor in-seam partings and is characteristically banded with alternating dull and bright coal. The seam contains one in-seam parting of significant thickness and lateral extent with a thickness average of 0.2m but can reach 0.5m. Generally, the average thickness of S4L is 3.0m. S4U has an average thickness of 1.7m in the west and, in the east, the thickness is generally more than 1.0m, reaching 3.0m in the centre of the palaeo-valley. Seam S4U has a higher ash content and thus lower CV compared to S4L. Thickness of the S5 is generally over 1.5m. Due to a significant parting, the seam is considered uneconomic for underground extraction but can be considered for selective extraction in opencast.

Numerous Jurassic dolerites (dykes and sills) intrude the Vryheid formation at various stratigraphic levels in the area. These intrusions negatively influence the stratigraphy and coal qualities, in places. The distribution of the lower coal seams is strongly influenced by basement topography while distribution of the upper seams is controlled by present-day topography. Most affected by basement topography are S1 and S2. Seams often thin and sometimes pinch out over and against palaeo-highs. Strata (including coal) are often faulted, although displacements are rarely more than 1m. Structural displacements, resulting from intrusions of dolerite sills through seams, often complicate mining seams.

The DCM complex geology and grade continuity are largely influenced by palaeo-topography, present-day topography, surface weathering, seam thickness variation (mainly between DCMW and DCME), in-seam parting, in-seam washouts, dolerite intrusions in the form of sills and dykes, resulting in minimal to extensive zones of devolatilisation. These geological risks are well managed through extensive drilling in areas of concern, using downhole wireline logging for better definition, underground channel sampling incorporated as points as observation in the short-term model, underground face mapping generally used to track both vertical and lateral variations in the lithology to assist with reconciliations as well as structural interpretation and surface mapping, particularly of basement outcrops. The information collated from the various approaches is incorporated in the structural model, together with additional potential risks from other disciplines and represented in a GIS-based risk and opportunity domain analysis (RODA), allowing for a more integrated approach to risk management.

Figure 22: Typical SW-NE section through Dorstfontein geological model

Operation resource evaluation

All exploration boreholes are logged and sampled by experienced on-site geologists aligned and complying to logging and sampling standards and SOPs. Samples are selected according to seam boundaries, visual variation in the vitrinite content, assisted by density logs, and non-coal material present in the seam boundaries. Each sample submitted to the laboratories is accompanied by a unique sample number for validation and tracking as well as a submission list that serves as a sample advice sheet with instructions for analysis. Three major laboratories have been used over the past ten years: Australian Laboratory Services (ALS), Societe Generale de Surveillance (SGS) and CoalLab (Cotecna), all with SANAS accreditation (T0611, T0815 and T0612 respectively). All three laboratories have committed to assuring the quality of results provided to the customer by ensuring quality assurance, quality control, data validation and proficiency testing procedures are observed.

Table 41: Dorstfontein Coal Resource reporting criteria

*A 10% standard geological loss is applied but may vary based on the consideration of structural complexity (dolerite sill breakthrough – 50% loss within determined spatial extent), seam gradient (>4 degrees – 50% loss), dolerite sill proximity to seam (25% loss).

Table 42: Dorstfontein Coal Resource estimation criteria

Table 43: Dorstfontein Coal Resource classification criteria

Table 44: Dorstfontein Resource and Reserve statement

Rounding of figures may cause computational discrepancies

All changes more than 10% are explained

Mining method: OC - opencast, UG - underground

Figures are reported at 100% irrespective of percentage attributable to Exxaro

Tonnages are quoted in metric tonnes and million tonnes is abbreviated as Mt. Coal resources are quoted as mineable 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 45: Dorstfontein RPEEE considerations

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 reserve statement is referred to as the reserve geological 3D model. This reserve model differs from the resource model as the latter uses the full coal seam (with specific reporting assumptions) while the reserve model uses a select mining height based on practical mining heights and other modifying factors. The process ensures that the model represents practical aspects of the capabilities of production sections and their equipment.

A total of 5.7Mt of Inferred Resource is included in the LoMP, around 6% of total Coal Reserves. The majority is located along main developments that serve as access future reserve blocks well beyond the first five years of life of mine (LoM). The impact of including these Coal Resources is well understood and tested, and exploration activities are planned to upgrade these categories to a higher level.

Table 46: Dorstfontein production figures

Table 47: Dorstfontein modifying factors considered in converting Coal Resources to Coal Reserves

Known risks

DCME pits 1, 2 and 3 and Vlakfontein areas are affected by dolerite activity. Risk in these areas has been accommodated in mine planning by assigning higher geological loss values to areas reasonably expected to incur losses caused by dolerite activity.

The move at DCMW from S2 to S4L will result in changes to coal quality characteristics. These changes were accommodated in mine planning and DCM product and market strategy.

DCM was informed of prospecting rights being granted at Vlakfontein and Rietkuil Vhakoni which overlap with our existing mineral rights. Appeals were timeously submitted, and DCM has reasonable expectations that the conflicts will be favourably resolved.

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

The implementation of the incline at DCMW to access the thicker, although somewhat lower quality, S4L is progressing well. The new development will accommodate three sections and plans to add a fourth section are under review. Expansion studies at DCME to access underground Coal Reserves through the highwall at pit 2 were concluded. The significant change in Coal Reserves reflects this development.