Integrated report 2019
Exxaro Resources Limited
Integrated report 2019
Exxaro continuously strives to enhance the level of estimation and reporting of Coal Resources and Coal Reserves. The group is committed to the principles of transparency, materiality and competency in reporting its Coal Resources and Coal Reserves.
We continuously strive to unlock maximum value in our Coal Resources and Coal Reserves. The drive towards the utilisation of breakthrough technology to improve our process and techniques throughout the value chain is a critical aspect to sustain, grow and optimally exploit our mineral assets. We review, test and implement the applicable technology solutions at operational and functional level as part of our strategy.
Exxaro broke ground on its R3.3 billion, first-of-its-kind digital mine on 5 July 2018. Since then Belfast Coal has made significant progress in its construction programme and is already producing high-grade thermal coal six months ahead of schedule. As a truly digital and connected mine, Belfast will contribute to be a thriving coal business in the region and demonstrate Exxaro’s purpose to power better lives in Africa and beyond.
The ECC Dorstfontein West underground operational life beyond the exhaustion of 2 coal seam is premised on the exploitation of 4 (lower) coal seam. In 2019, the 4 seam was successfully accessed from existing 2 seam underground infrastructure. Two parallel 7m-wide and 2m-high inclines with a slope of six degrees, connected by six crosscuts, were developed by the Dorstfontein drill-and-blast stone development team, allowing for continuous exploitation of the ECC Resource.
The information presented here is an extract from the Consolidated Mineral Resource and Mineral Reserve Report (CMRR) report that encapsulates reporting governance, competence, tenure, risk, liabilities, exploration and assurance as well as comprehensive descriptions of applicable projects, operations and exploration activities in compliance with the JSE Listings Requirements (section 12). The reported Coal Resources and Coal Reserves reported here are therefore summarised versions. The CMRR report is available on the Exxaro website at https://www.exxaro.com/investor/integrated-reports2019/mrr/index.php
The Coal Resource and Coal Reserve strategy is focused on sustaining, developing and growing the mineral asset base through the employment of responsible and innovative technical management. The value extracted from our mineral assets is continuously challenged through mine planning, considering evolving knowledge of the mineral asset's geological complexities and the opportunities it holds. As our competent persons are the custodians of the mineral asset, they are accountable for ensuring integrity and applying pioneering technology in combination with trusted knowledge to optimise the exploitation.
Our projects, operations and expansion initiatives are built on trusted and assured Coal Resources and Coal Reserves creating the platform for the LoM from which the annual business plans are derived. The Mineral Resource managers of each operation are the custodians of the LoM and ensure the professional execution of the business plans, stimulating profitability and return on investment while guarding against irresponsible exploitation.
The purpose of the LoM planning underlying our Mineral Resource and Mineral Reserve estimation is to unlock maximum value from the coal in the ground for Exxaro, taking margin and net value into consideration. Each ore body has a unique mining methodology, processing parameters and targeted market segment that delivers maximum value to shareholders. This is impacted by updated resource information, developments in mining and processing technology and changes in market dynamics.
Consequently, the optimum exploitation strategy needs to be continually reviewed to ensure applicable resources reach the most lucrative markets (see resource-to-market model below). The relentless drive to reduce the environmental footprint of operations is embedded in the process and the continuous impact of the evolving legislative landscape is reflected in designs.
Exxaro has a world-class Coal Resource portfolio, comprising fully owned operations and projects, and a number of jointly owned operations and projects in South Africa and Australia. The fully owned operations and projects in South Africa are located in the large and highly prospective Waterberg coalfield in Limpopo and the more mature Highveld and Witbank coalfields in Mpumalanga. Since inception in 2006, Exxaro's total attributable Coal Resource and Coal Reserve figures have been relatively stable. This trend can primarily be ascribed to the relatively large Waterberg coal deposits, particularly the remarkable Grootegeluk complex. Estimated to contain 40% to 50% of South Africa's remaining Coal Resources, the Waterberg is viewed as the future of South African coal mining. Exxaro holds an estimated 3 billion tonnes of Measured and around 1.8 billion tonnes of Indicated Coal Resources in the Waterberg, primarily in Grootegeluk mine and the adjacent mining right of Thabametsi.
Exxaro's portfolio and operations are continuously evolving, illustrated by newly commissioned Belfast coal mine and the large expansion projects at our Grootegeluk, Matla and ECC operations. These initiatives demonstrate the resourcefulness of our people and our ability to implement projects through innovative and breakthrough technology.
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Mineral Resource and Mineral Reserve statements are summarised in the CMRR report, reported as those remaining on 31 December 2019, and compared with the corresponding estimates reported on 31 December 2018. The commodity, ownership, status of project/operation, mining method, Mineral Resource and Mineral Reserve classification categories, and associated tonnage qualities or grade are stated, and any material changes year on year are captured and explained as footnotes.
In 2018, Exxaro cautioned that we were considering options relating to four prospecting rights grouped into two projects, namely Waterberg North and Waterberg South. The projects are located approximately 30km north of Grootegeluk mine and consist of 2147Mt and 869Mt of Inferred Coal Resources respectively. In 2019, the Exxaro total attributable Coal Resource decreased by approximately 22%, primarily due to our decision to relinquish these prospecting rights after careful consideration of their strategic fit. The prospecting rights are in closure and we are conducting all activities in a responsible manner to fulfil the closure requirements. The Total Exxaro attributable Coal Reserves decreased by approximately 3%, primarily due to mining at the various operations. However, the Coal Reserve at the Forzando operation in the ECC complex decreased by approximately 37% in the reporting year. The most significant contributors to the decrease are mining, macro-economic assumptions as well as areas excluded due to unfavourable floor gradients. Changes in Coal Reserves larger than 10% are also reported at the Matla and Leeuwpan operations. The approximate 13% decrease at Leeuwpan is primarily the result of mining whereas the 14% decrease at Matla is due to mining and the disposal of mining areas related to unfavourable stooping conditions in close proximity to surface infrastructure. For all the other operations, other than normal LoM depletion, no material changes to Coal Resource and Coal Reserve estimates are reported.
We report on the following Exxaro-managed operations:
| Exxaro’s attributable Coal Resources and Coal Reserves |
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| Mpumalanga attributable: Witbank and Highveld coalfields (excluding Matla and Arnot) |
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| Notes | |
| • | Estimates reported as at 31 December 2019 are derived by using the actual mining depletion up to the end of October and then using forecast figures for November and December. |
| • | Rounding off of figures quoted may result in minor computational discrepancies although this is not deemed significant. |
We report on the following Exxaro-managed operations:
Grootegeluk coal mine: Exxaro's flagship open-pit coal mine, producing power station coal, variously sized metallurgical coal products as well as semi-soft coking coal for local and international customers. There is no material change in our estimates for the reporting period.
Thabametsi coal project: The Thabametsi mining right, an area adjacent to the Grootegeluk operation, is earmarked to produce power station coal to supply a mine-mouth feed IPP plant. Exxaro is currently ensuring that all compliance actions are executed hence no changes to the Coal Resource or Reserve estimates are reported.
Arnot coal mine: In closure, consent has been received for the cession of the mining right and no changes to the Coal Resources are reported.
Matla coal mine: An Eskom-tied underground mine. Approvals have been received to execute three expansion projects, namely Matla Mine 1, Mine 2 Incline and Mine 3 Decline to access the large remaining 4 seam and 2 seam underground Coal Reserves. A project to replace the shortwalls with continuous miner sections is also underway.
Leeuwpan coal mine: Mining of the OI open pit area is progressing well.
Belfast coal mine: Early coal was produced in the second quarter, commissioning of the coal handling facility in the third quarter and production of the first export coal product in early September of the reporting year.
ECC complex: The Dorstfontein West mine incline to access the large 4 seam Coal Reserve from existing mining infrastructure has been completed and mining is progressing well. The study at the Dorstfontein East mine was also completed successfully to obtain access to the 4 seam lower Coal Reserves through five portals in the current pit 2 open-cut area.
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| See Coal asset base for more information on our coal asset base. |
In 2019, we continued to focus on unlocking value at our operations. We are acutely aware that our success as a mining company is built on the integrity of our Coal Resources and the effectiveness with which we convert these resources to Coal Reserves, and then the exploitation and extraction of these Reserves.
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Considering mining, metallurgical, processing, infrastructural, economic, marketing, legal, environmental, social and governmental modifying factors | |||||
Coal Resources Executing integrated exploration plans at the Dorstfontein, Forzando, Matla, Belfast, Grootegeluk and Leeuwpan mines Update of geological and structural models at the Matla, Grootegeluk and Leeuwpan mines Consideration of geological risk in conditional-based mine planning at Matla and ECC |
UNLOCKING VALUE
Modifying factors and our ability to extract our Mineral Resources. Increasing extraction through innovation and knowledge Application of a geometallurgical approach to multi-bench mining at Grootegeluk Implementation of the autonomous drilling strategy at Grootegeluk |
Coal Reserves Update of LoM for Matla, Belfast and Leeuwpan mines Initiation of Matla north-west access incline and decline projects |
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| INNOVATION | ||||||
| Optimising centrally managed geological and hydrogeological databases Pit scanning for the use of geotechnical and structural interpretations Surveying holes using optical televiewer (OTV), acoustic televiewer (ATV) and sonic to obtain geotechnical information on the rock mass |
Continuous radar scanning for slope stability monitoring Terrestrial lidar scanning of pit faces to enhance reconciliation and Resource use |
Implementation of the opencast coal solution (OCCS) and the underground coal solution (UGCS) for the development of mine layouts and mine schedules | ||||
| GOVERNANCE | ||||||
From 2017, we aligned our reporting with SAMREC 2016 and JSE 2016 amendments for minimum contents of annual reports and have subsequently updated our LoM mineral assets policies and estimation procedures. We have updated our internal competent persons reports (CPRs) for 2017, 2018 and 2019 to accommodate the SAMREC 2016 “if not, why not” principle. We have also reviewed and updated our functional procedures and created an overarching exploration standard for all operations and projects under Exxaro management. |
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| ASSURANCE | ||||||
We have conducted tier 1 Resource reviews at Grootegeluk (in process), Matla and Leeuwpan resulting in optimised LoM plans, for Matla, Belfast and Leeuwpan. On tier 2 technical reviews were conducted on Matla Mine 1 Relocation, Matla Mine 2 Incline, Matla Mine 3 Decline and the Dorstfontein East underground projects. We have conducted tier 3 (third-party) reviews at corporate centre and Matla mine. The outstanding external 2018 findings were resolved, and corporate centre and Matla received no findings in 2019. The CMRR report was peer reviewed for reporting compliance. |
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Exxaro has embarked on establishing a centralised geological systems (acQuire) to ensure the integrity and security of our geoscientific data. The solution offers improved integration between the various geoscientific disciplines (geology, geotechnical and geophysical information) and the potential to have almost real-time information. Similarly, EQuIS software has been implemented successfully for the monitoring and management of geohydrological information, and it will be fully autonomous. Both systems are Cloud-based with web integration and the capability of direct field capturing. The majority of the validations are at the point of capture to ensure compliance with established business rules. The principle is that the databases form a single source for all business decisions relating to geoscientific information going forward.
ECC operations are characterised by areas that have been greatly affected by dolerite activity, which present in the form of dykes and sills. In addition, floor undulations and steep gradients present challenges, especially in the underground operations. These features tend to be more prevalent along paleo highs and near dolerite structures, and pose a risk to safety and effective coal extraction. ECC employs an exploration strategy to proactively and accurately predict the extent of these challenging geological features. The exploration strategy adopts an integrated approach with the investigation, identification and delineation of possible challenging features associated with the future exploitation of Coal Reserves.
Identified features applicable to Resource accessibility, mine-ability (roof/floor conditions) and Coal Resource characterisation (coal seam thickness and quality variability) are captured in our risk and opportunity domain analysis (RODA). Areas are identified and assigned higher geological loss through the application of querying and modelling techniques within the GIS-based RODA. The RODA is then considered during mine planning, influencing the orientation of mining layouts, mining tempos, production volumes, cutting rates, and associated mining and rehabilitation costs aligned with the identified risks or restricted zones. Areas perceived as low risk, if not already defined as Reserves, are highlighted and investigated as opportunities for inclusion in the future.
Exxaro's lead competent persons are appointed by the executive management team.
Exxaro's lead Mineral Resource competent person is Henk Lingenfelder, a member of the Geological Society of South Africa and registered (400038/11) with the South African Council for Natural Scientific Professions. He has a BSc (Hons) in geology and 24 years of experience as geologist in coal, iron ore and industrial minerals.
The person in Exxaro designated to take corporate responsibility for Coal Resources, Henk Lingenfelder, the undersigned, has reviewed and endorsed the reported estimates.
| JH Lingenfelder BSc geology (Hons) Pr Sci Nat (400038/11) Group manager: geoscience 263 West Avenue, Die Hoewes Centurion 0163 |
South African Council for Natural Scientific Professions Private Bag X540 Silverton 0127 Gauteng South Africa |
Exxaro's lead Mineral Reserve competent person is Chris Ballot, a mining engineer registered (20060040) with the Engineering Council of South Africa. He has 23 years of experience in iron ore, mineral sands and coal in various technical and management roles.
The person in Exxaro designated to take corporate responsibility for Mineral Reserves, Chris Ballot, the undersigned, has reviewed and endorsed the reported estimates.
| CC Ballot BEng mining ECSA 20060040 Manager: mining processes 263 West Avenue, Die Hoewes Centurion 0163 |
Engineering Council of South Africa Private Bag X691 Bruma 2026 Gauteng South Africa |
