Exxaro Resource limited Report Selector 2018

Report Selector

Exxaro Resources Limited Mineral Resources Report


Figure 27: Leeuwpan coal mine

Operation overview

Leeuwpan coal mine is in the Delmas coalfield, on the western border of the Witbank coalfield. Leeuwpan, in the Victor Khanye local municipality in Mpumalanga province,
is 10km south-east of the town of Delmas, 80km east of Johannesburg and 70km south-east of Pretoria. It lies alongside the R50 hard-topped secondary road and is serviced
by a rail track that includes a rapid load-out station.

Leeuwpan is an opencast operation with various reserves, in various pits, mined simultaneously. Current mining operations are on the OJ, OL and OWM reserves with the introduction of OI reserves. OJ was depleted in 2018. The OI box-cut was completed in September 2018, with first coal expected in Q1 2019. The mine uses trucks and shovels for mining-related operations. We estimate that the mine will be in production until 2031, with the mining right lapsing in 2040. Leeuwpan supplies both domestic and export markets. The mine is equipped with a rapid rail load-out station, which is the preferred means of coal offtake, although road transport is accommodated.

Leeuwpan has two dense medium separator (DMS) plants that beneficiate export thermal coal and a crush-and-stack (CS) plant that handles selectively mined thermal coal, mainly for the local market. The second DMS plant, commissioned in 2016, is operated by Fraser Alexander (FA DMS). The original DMS plant produced a 5 700kcal/kg product whose market ended in Q4 2018, necessitating the change to a 5 200kcal/kg product. The FA DMS, on the other hand, was geared to produce a 5 200kcal/kg product. The CS produced a 4 200kcal/kg product. All three plants produce mainly thermal coal.

Operation history

Leeuwpan has 4 152 boreholes in the mining right covering 4 269 hectares, but only 2 215 falls in the resource blocks. These boreholes were drilled in various campaigns and not all boreholes are reliable, so only 871 have been used in geological modelling. All Measured Resources at Leeuwpan are currently at 100m x 100m drill spacing.

Table 64: Leeuwpan operation history

Date range Company       Material notes
Up to 1988     Southern Sphere 262 borehole records exist for this period. Leeuwpan was sold to Kumba in 1988
1988 – 2006 Kumba Resources       Exploration began in 1990. Box-cut commissioned in 1992. Ceded rights to Exxaro Resources in 2006
2006 – 2018 Exxaro Resources       Ongoing exploration campaigns focused mainly on operational de-risking drilling programmes

Operation geology

Two coal seams have been identified at Leeuwpan: top coal seam (TC) and bottom coal seam (BC). BC correlates with the number 2 seam of the Witbank and Highveld coalfields and TC correlates to the number 4 and 5 seams. BC qualities are generally higher than TC qualities.

The coal seams at Leeuwpan are primarily interbedded with sandstone, shale and carbonaceous shale. The coal was deposited on glacial sediments of Dwyka tillite which, in turn, were deposited on dolomite of the Transvaal Supergroup. A significant amount of magma intruded as concordant sills of dolerite in the Karoo strata in the Delmas area. Associated with the dolerite intrusion are numerous thin dolerite dyke structures that transgress the stratigraphy. Factors controlling geological and quality continuity are mainly surface weathering, significant variation in seam thickness due to an undulating tillite floor, faulting associated dolerite activity and dolomitic basement, and devolatilisation and weathering due to dolerite intrusions (sills and dykes).

The average total seam thickness at Leeuwpan is 10.9m, with an average raw calorific value of 20.1MJ/kg, raw volatile matter of 18.7% and raw ash content of 31.4% (adb). These qualities require beneficiation for export-quality products.

Figure 28: Typical cross-section through Leeuwpan geological model (Moabsvelden)

Operation resource evaluation

Samples are named and numbered as per the standard task procedure at Leeuwpan (STP-LP-PO.003) which states that: samples should be numbered on the BH core using a wax marker in a different colour to that of the lithology code. The number of samples is recorded on the log sheet as per STP-LP-PO.002. Numbering of the sample tag is written in the order of reserve BHID/sample number, example, MN971/2.

Samples are split on the lithological contact, if needed, use a chisel and hammer to ensure a clean break. Each sample is put in an individual bag with all contents represented in that interval, ensuring no contamination occurs between materials to be sampled. Should there be any unwanted material in the bag, a comment is made on the sample sheet. Once the sample is in the bag, a tag is attached. Two sample tags are written on plastic sample tags using a permanent marker. One sample tag is placed inside the bag and the second on the outside of the bag when sealed with a cable tie.

In 2014, Bureau Veritas was awarded the coal quality analyses contract for sample preparation and analyses. Raw RD is firstly determined, the sample is then crushed to -12.5mm and the 0.5mm fraction is screened out. Raw analysis is done on the +0.5mm -12.5mm material and float-sink analyses performed at float RD: 1.4, 1.5, 1.6, 1.7 and 1.8. Proximate analysis, CV and Sulphur are performed on each fraction. All sample preparation is done in accordance with ISO 3909 parts 1 to 5.

Bureau Veritas is SANAS-accredited for analytical work and participates in monthly local and international round-robins.

Table 65: Leeuwpan Coal Resource reporting criteria

Thickness cut-off (thickness and extraction height considerations) Quality cut-offs (adb) Geological loss
<2m (2014 model)
<1m (2015 model and onwards)
Ash >50% 5%

Table 66: Leeuwpan resource estimation criteria

Item     Description
  Database Drillhole database     acQuire
Data datum Cape LO29
No drillholes used for resource estimation 2 293 of 4 152 in the database
Validation Conducted using queries in acQuire and Excel
Data compositing and weighting Minex
  Model Previous model date     2016
Last model update 2018
Geological modelling software Geovia Minex
Estimation technique Growth algorithm
Grid mesh size 20m x 20m
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
Wash quality grids
Changes to modelling process None

Table 67: Leeuwpan Coal Resource classification criteria

  Category   Type of boreholes   Borehole spacing   Structurally complex areas   BH/ha
  Measured   Cored boreholes with applicable coal qualities   0 – 100m   Resource blocks limited by faults, dolerite sill breakthrough and devolatisation. Geotechnical risks associated with faulting, dykes, sill and weathering – infill drilling  


  Indicated   Cored boreholes with applicable coal qualities   100 – 200m Resource block limited by devolatisation and coal depth – infill drilling   0.6
  Inferred   Cored boreholes with applicable coal qualities   200 – 1 000m Resource block limited by devolatisation – infill drilling   0.2

Table 68: Leeuwpan Resource and Reserve statement

Category 2018 (Mt) 2017 (Mt) Differencein tonnes (Mt) Difference
  Reason for changes
Measured 101.07 118.19 (17.12) (14.49)   Mining depletion, disposals based on RPEEE and movement of resources from inside to outside LoM

Indicated 2.59 0.00 2.59   New information at OI West
Inferred 3.60 3.69 (0.09) (2.44)  
Total Resources 107.26 121.88 (14.63) (12.00) Reporting methodology due to re-digitalisation of reporting strings
Proved 53.65 61.87 (8.22) (13.29)   Mining depletion
Probable 6.19 3.25 2.94 90.46   New information for OI West
Total Reserves 59.84 65.12 (5.28) (8.11)    
Rounding of figures may cause computational discrepancies
All changes more than 10% are explained
Mining method: OC – underground
Figures reported at 100% irrespective of percentage attributable to Exxaro
Tonnages quoted in metric tonnes and million tonnes is abbreviated as Mt. Coal resources quoted as mineable tonnes in-situ and refer to remaining resources after 31 December 2018 and 31 December 2017
Coal Resources reported on a mineable in-situ (MTIS) basis
Coal Resources quoted inclusive of Coal Reserves

Minex is used to model the coal seams and estimate in-situ Coal Resources at Leeuwpan. Coal resource block sizes vary, and boundaries are determined by farm boundaries, coal qualities, coal thicknesses, infrastructure and geological structures. The model generates grid surfaces for the upper and lower boundaries of the coal seams from borehole intersection points. The grid surfaces of the top of a seam and bottom of the seam are then subtracted from each other to estimate the thickness of the seam. The washability qualities associated with each sample are also converted from point to grid data using the same Minex growth technique. The method gives smooth surfaces which replicate the regional trends of geology, while reflecting local anomalies.

Table 69: Leeuwpan RPEEE considerations

  Item   Criteria   Considered   Comment
  Geological data   Data validated and signed off by competent person   Yes    
  Geological model   Geological model considered and signed off   Yes   Seam depth, seam thickness >1.8m, dry ash-free volatiles >26% air-dried CV >15MJ/kg, ash <50%. Coal qualities reported on an air-dry basis
  Structural model   Structural model considered and signed off   Yes    
  Mining   Mining assumptions considered and defined   Yes   OC
  Assurance   Minimum tier 1 assurance (Exxaro governance)   Yes   2018
  Economic evaluation   Concept-level exploitation with economic and mining assumptions, including geotechnical and geohydrological assumptions   Yes   Life-of-mine exploitation study
  Environmental   Reasonable demonstration that environmental approvals can be obtained within the context of local, regional and national governmental legislation   Yes   Current required approvals in place, except for OI West where IWUL had been granted for infrastructure. Approval for mining is pending
  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 valid to 2040
  Infrastructure   Assumptions used should be reasonable and within known/assumed tolerances or have examples of precedence   Yes   Current infrastructure
  Market   A potential market for the product with a reasonable assumption that this market is sustainable   Yes   Current coal supply agreement

Operation reserve estimation

Scheduling of reserve is determined using mine scheduling applications from XPAC, the same software used to develop the LoMP schedule.

There is no difference between resource grids and reserve grids. Grid validation for Leeuwpan is conducted by checking for negative thicknesses, ensuring contact integrity and checking energy ratios to ensure progressive increase down the wash tables.

At Leeuwpan, the Measured Resources are all converted to Proved Reserves, except for UB, where it is a Probable Reserve because of low volatiles and absence of a market for this quality of coal. Indicated Resources are converted to Probable Reserves as is the case for OI West.

Table 70: Leeuwpan production figures

ROM (Mt) 5.60   6.65   6.87 6.91 6.89

Table 71: Leeuwpan modifying factors in the conversion of Coal Resources to Coal Reserves

  Modifying factors Value
  Geological loss 5%
  Average thickness cut-off 0.5m on all seams except S5, which is 1m
  Quality cut-offs N/A
  Mining loss 25% for S5; 5% for all other seams
  Boundary pillar 100m
  Contamination 5% on DMS plants and 1% on CS plant
  Mining recovery efficiency 5% (CS); 5% (DMS bypass)
  Planned average slope angles 45 degrees. For highwall stability, soft material is mined at least one strip ahead of hard material and coal-mining activities
  Practical plant yield 90% DMS; 90% FA DMS, slimes loss on DMS of 9% and on FA DMS of 15%
  Strip ratio cut-off N/A
  Environmentally sensitive areas OJ (environmentally sensitive areas such as wetlands)
  Legal OWM; OJ
  Social Socially sensitive areas in the mining right (eg graveyards) are excluded from reserves in the reserving process
  Geohydrological Pit floor was taken into consideration to minimise water handling in the pit face

Known risks

The OI west portion of the Coal Reserve is still classified as Probable as Leeuwpan is still awaiting approval of the integrated water use licence (IWUL). Geological challenges (eg seam floor undulation and presence of sill and dykes) are addressed through proactive infill drilling and mine planning.

Operational excellence

DMS bypass project to improve plant throughput on RoM with in-spec raw qualities. Leeuwpan is running a number of operational excellence initiatives to improve productivity, including:

  • Overburden optimisation
  • Improve DMS throughput
  • Frazer Alexander plant RoM circuit improvement (upgrade)
  • Cost reduction
  • Mining fleet improvement
  • Improve equipment availability and reliability.

The Leeuwpan integrated operations centre is intended to increase operational throughput by optimising the value chain. Having an across-the-board view of operations, it will be possible to make timely decisions for better control of interruptions across the value chain.