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Exxaro Resources Limited
Consolidated Mineral Resources and Mineral Reserves Report

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Thabametsi project

Thabametsi 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 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 Minerals and Energy announced that the Thabametsi power project, for which Thabametsi project has a 30-year CSA, 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 Mineral and Petroleum Resources Development Act, submitted to include several additional minerals to coal, to correct an administrative error, was granted in July 2017 and executed in November 2017. Exxaro is currently ensuring that all compliance actions are executed.

Thabametsi 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 1980/1981. 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 17: Thabametsi project

Table 33: Thabametsi project history

Date range Company Material notes
1979 - 1988 Iscor - Iscor Mining Exploration drilling began (7 boreholes drilled)
1989 - 2006 Kumba Resources 51 Boreholes drilled
2007 - 2015 Exxaro Resources Prospecting right and exploration activities specifically on the project area (180 boreholes drilled)
2016 - current Exxaro Resources Mining right registered in 2016 is valid for 30 years (11 boreholes drilled)

Thabametsi 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. However, further south, 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.

Figure 18: Generalised profile of the Grootegeluk and Thabametsi geological profile

Thabametsi 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 laboratory 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.

Resource estimation and data-compositing methods are aligned with 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.

The Resource classification methodology throughout the Volksrust and Vryheid formations, although fundamentally based on SANS 10320 (guidelines for multi-seam deposits), is based on a matrix approach that incorporates borehole spacing, type of boreholes and structural complexity in the Resource. 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 2020. Some 116 boreholes were used for Resource estimation and all contain coal-washability data.

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   Borehole database     Sable Data Warehouse
  Data datum   LO27 WGS 84
  Number of boreholes 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 MinexTM
  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
and coal washability quality grids
  Changes to modelling process   None

Figure 19: Cross-section through 2015 Thabametsi geological model

Table 36: Thabametsi Coal Resource classification criteria

  Type of boreholes   Borehole spacing
Formation and
Vryheid Formation)
  Structurally complex areas
Measured   Cored boreholes with applicable coal qualities   0m – 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 2019
in tonnes
Measured 270   270  
Indicated 749   749  
Inferred 2 916   2 916  
Total Coal Resources 3 935   3 935      
Proved 109   109  
Probable 21   21  
Total Coal Reserves 130   130      

Rounding of figures may cause computational discrepancies.

  • All changes more than 10% are explained.
  • Mining method: opencast (OC).
  • 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 (MTIS) and refer to remaining Resources after 31 December 2019 and 31 December 2018.
  • Coal Resources are reported on a MTIS basis.
  • Cut-offs applied as per Resource reporting criteria table.
  • 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 and <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 with 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

Thabametsi Reserve estimation

For the phase 1 feasibility study (IPCC Pit), XPAC mine-scheduling software is used to derive remaining saleable Reserves from RoM 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 generally converted to Probable Reserves and Measured Resources to Proved Reserves after consideration of all applicable modifying factors. If one or more of the modifying factors have not been fulfilled, Measured Resource is either not converted or the Measured Resource is converted but downgraded to Probable and the associated risk is clearly stated. Inferred Resources are not converted to Coal Reserves. No Inferred Resources are included in the LoM plan.

The Coal Reserve is based on a bankable feasibility project level of investigation.

Thabametsi known risks

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

The IPP financial close has been delayed by a number of regulatory and funding challenges. Exxaro is ensuring that all compliance actions are executed while strategic options are being considered.

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 (for example graveyards and dwellings)
Geohydrological No areas identified in the mining area

* T1 and T2 are mining benches (Figure 19).