Exxaro Resource limited Report Selector 2018

Report Selector

Exxaro Resources Limited Mineral Resources Report


Figure 18: Thabametsi project

Project overview

The Thabametsi project is 22km west of the town of Lephalale and adjacent to Exxaro's Grootegeluk mine. The project area is divided into a northern opencastable portion, and a southern underground area. The northern portion aims to produce power station coal for an on-site independent power producer (IPP) as part of phase 1. A feasibility study on phase 1 was successfully concluded in 2016 and studies on extending the phase and the southern project area are ongoing. In October 2016, the South African Minister of Energy announced that the Thabametsi power project, for which Thabametsi project has a 30-year coal-supply agreement, had been selected as a preferred bidder in the first bid window of South Africa's coal-baseload IPP procurement programme. A mining right (10013MR) for a period of 30 years was granted and executed in June 2016. A section 102 of the MPRDA submitted to include several additional minerals to coal, to correct an administrative error, was granted in July 2017 and executed in November 2017.

Project history

Drilling on the Thabametsi project area began in 1979 during Iscor's regional exploration of the Waterberg. This investigation was prompted by positive results on adjacent farms where Grootegeluk mine began production in 1980.

As part of this exploration, one borehole was drilled on all farms of interest. On farms where results were promising, follow-up drilling was conducted in 1980/81. During this time, eight boreholes were drilled on four of the five Thabametsi farms: McCabesvley, Jackalsvley, Zaagput and Vaalpensloop. Two boreholes were drilled in 1988 on the remaining farm, Van der Waltspan, to complete regional exploration of the Thabametsi project area. All regional exploration during this time, except the boreholes on Van der Waltspan, was conducted through rotary core diamond drilling using an NQ-sized (47.6mm) core barrel. The boreholes on Van der Waltspan used a T6-146-sized (123mm) core barrel.

Exploration activities began in earnest on the project area in 2008. Since the start of the latest drilling programme, 61 boreholes have been drilled on Thabametsi at a cost of around R50 million. All boreholes completed on the project site since 2008 were undertaken using a T6-146-sized core barrel to produce a 123mm diameter core.

Figure 20: Cross-section through 2015 Thabametsi geological model

Table 33: Thabametsi project history

  Date range       Company       Material notes
  1979 - 1988       Iscor - Iscor Mining - Kumba Resources       Exploration drilling commenced
  2007 - 2012       Exxaro Resources       Prospecting right, exploration activities specifically on the project area
  2016 - current       Exxaro Resources       Mining right registered in 2016, valid for 30 years

Project geology

The geology is similar to Grootegeluk's geology, but increased weathering and deteriorating coal qualities required a different bench configuration. In the north, the full succession of the Volksrust and Vryheid formations is present. Further south, however, the Volksrust formation thins out and eventually disappears. A pertinent channel sandstone in the northern portion of the project area affects benches 9A and 9B. A cross-section through the geological model is presented in figure 19.

Project resource evaluation

Logging and sampling follow the same protocols as at Grootegeluk mine. Controls in the work procedure ensure that mistakes are omitted from the process, initially from the placement of borehole survey data in the field to the point of delivery of samples to the laboratory, and after that from receiving analyses back from the lab to the point where data is used for geological modelling. These procedures include controls to ensure the drill core is correctly correlated, sampled, relative densities determined, and material recoveries validated to stipulated standards.

Prior to dispatching, coal and shale samples are reweighed in air to check that they have been correctly labelled and that the initial weights recorded are correct (for subsequent relative density (RD) calculation). When samples arrive at the Bureau Veritas laboratory in Pretoria, they are reweighed and checked against the recorded RDs on the sample list supplied with the samples by the geology department. The geology personnel are notified of any discrepancy, which is rectified without delay.

The senior geologist in the geodata subsection at Grootegeluk mine is responsible for maintaining a system to ensure that all exploration borehole data is verified, and all geological information is correctly entered into the borehole database (Sable Data Warehouse). The individual is also responsible for tracking borehole samples in the analytical process, accepting analytical data from Bureau Veritas, electronic transfer of analytical data to the borehole database and validation of the data.


Figure 19: A generalised profile of the Grootegeluk and Thabametsi geological profile

Table 34: Thabametsi Coal Resource reporting criteria

  Thickness cut-off
(thickness and extraction height considerations)
      Quality cut-offs (adb)       Geological loss (%)
  <0.5m       Ash content of >65%       5%

Table 35: Thabametsi Coal Resource estimation criteria

          Item       Description
  Database       Drillhole database       Sable Data Warehouse
        Data datum       LO27 WGS 84
        No drillholes used for resource estimation       116
        Validation       Conducted using queries in Sable and Excel
          Data compositing and weighting       Sable Data Warehouse
  Model       Previous model date       2014
      Last model update     2015
        Geological modelling software       Geovia Minex
        Estimation technique       Growth algorithm
          Grid mesh size       45m x 45m
          Scan distance       1 000m
        Data boundary       300m
          Model build limits       Limit of weathering
        Model outputs       Roof, floor and thickness grids generated for structure. Coal washability quality grids
          Changes to modelling process       None

Resource estimation and data-compositing methods are aligned to the methodology applied at Grootegeluk. In recent years, five geological models have been built for the Thabametsi project area, accounting for alternate interpretations and compositing scenarios.

Resource classification, throughout the Volksrust and Vryheid formations, is fundamentally based on SANS 10320:2004 guidelines for multiseam deposits. The approach is recognised as more conservative than applying guidelines for thick interbedded-type deposits and was chosen to remain conservative during current studies. The classification methodology will be reviewed (as with Grootegeluk) in 2019. Some 112 boreholes were used for resource estimation, all of which contain coal-washability data.

The resource classification methodology although fundamentally based on SANS 10320 is based on a matrix approach that incorporates drillhole spacing, type of drillholes and structural complexity in the resource.

Table 36: Thabametsi Coal Resource classification criteria

  Resource category       Type of boreholes       Borehole spacing (Volksrust Formation and Vryheid Formation)     Structurally complex areas
  Measured       Cored boreholes with applicable coal qualities       0 - 350m       (Matrix) Additional geophysically logged boreholes needed
  Indicated       Cored boreholes with applicable coal qualities       350m - 500m       (Matrix) Additional geophysically logged boreholes needed
  Inferred       Cored boreholes with applicable coal qualities       500m - 1 000m       (Matrix) Additional geophysically logged boreholes needed

Table 37: Thabametsi Resource and Reserve statement

Category  2018 (Mt)      2017 (Mt)   Differencein tonnes (Mt) Difference (%)   
Measured  270     270    
Indicated  749     749        
Inferred  2 916     2 916        
Total resource  3 935     3 935    
Proved  109     109        
Probable  21     21        
Total reserves  130     130    

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

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 38: Thabametsi RPEEE considerations

  Item       Criteria       Considered       Comment
  Geological data       Data has been validated and signed off by competent person       Yes    
  Geological model       Geological model was considered and signed off       Yes       Geological structure and depositional extent, seam thickness >0.5m, <65% Ash
  Structural model       Structure model was considered and signed off       Yes    
  Mining       Mining assumptions considered and defined       Yes       opencast and underground
  Assurance       Minimum tier 1 assurance (Exxaro governance)       Yes       2015
  Economic evaluation       A concept-level exploitation with economic and mining assumptions, including geotechnical and geohydrological assumptions       Yes       Studies that underpin the IPP study and mining right mine works programme
  Environmental       Reasonable demonstration that environmental approvals can be obtained within the context of local, regional and national governmental legislation       Yes       Approvals and land ownership in place
  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 (30 years)
  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       IPP and current Grootegeluk steam coal market

Project reserve estimation

For the phase 1 feasibility study (IPCC Pit), XPAC mine-scheduling software is used to derive remaining saleable reserves from run-of-mine reserves in the approved pit layout. After converting the geological model's grids to the appropriate format, the floor, roof and thickness data as well as the quality data for each bench is imported into the XPAC model. With this model, validations are performed to evaluate the data for possible mistakes, such as incremental yields for each bench rising with increases in relative float densities.

The resource category areas are also loaded into the XPAC model for reserve categorisation. Indicated Resources are converted to Probable Reserves and Measured Resources converted to Proved Reserves. The Coal Reserve is based on a bankable feasibility project level of investigation.

Known risks

Some assumptions regarding the highwall mining method need to be confirmed at the start of the operation.

Table 39: Thabametsi modifying factors considered in converting Coal Resources to Coal Reserves

  Modifying factors       Value  
  Geological loss       5%  
  Average thickness cut-off       <1m  
  Quality cut-offs (adb)       Raw CV >11Mj/kg  
  Mining loss       *T1 - 0.5m losses to overburden
*T2 - 0.25% of coal left in pit bottom
  Boundary pillar       N/A  
  Dilution       Applied to in-situ mineable reserves due to inter-layered composition of deposit  
  Contamination       T2 - 0.3m  
  Mining recovery efficiency       No additional losses due to proposed mining method. Coal transfer between benches T1 and T2 will balance out over time as both go to same plant  
  Planned average slope angles       35 degrees  
  Practical plant yield       Crushing and screening process 98%  
  Strip ratio cut-off       Energy strip ratio >7Gj/ex-pit tonnes
Strip ratio < 0.3m3/tonne
  Environmentally sensitive areas       No sensitive areas in pit layout  
  Legal       The layout is within the mining right boundary  
  Social       There are no socially sensitive areas in the pit layout (eg graveyards, dwellings)  
  Geohydrological       No areas identified in the mining area  

*T1, T2 - Mining Benches (figure 19)