Assurance

Assurance is implemented in terms of a three-tier system, aligned with the guidelines of Exxaro's Mineral Resource and Mineral Reserve reporting procedure, summarised as follows.

Tier 1

Mineral Resource and Mineral Reserve estimation is undertaken as per Exxaro's governance framework. Sign-offs are required at each stage and the process is concluded in a formal sign-off session by a panel comprising Exxaro's lead Mineral Resource and Mineral Reserve Competent Persons, Competent Persons, domain experts and technical specialists. Technical assurance is managed in terms of dedicated standards.

In 2021, tier 1 assurance was undertaken for the Leeuwpan and Mafube operations. Geological data validation, data analysis and subsequent updating of geological and structural models were concluded in the reporting period. These models were peer reviewed by geosciences central experts for the two operations and the models were signed off by the applicable Competent Persons and their supporting technical teams.

Findings from the reviews were incorporated during the model update. The investigation of all Resource-related aspects of potentially migrating from a bench to coal sample model to provide us with the benefits of additional flexibility in product scheduling at our Grootegeluk coal mine is in progress. The LoMPs were reviewed at our Belfast and Matla operations as well as our Thabametsi project.

Tier 2

Internal reviews are scheduled and planned for a three-year cycle or when deemed necessary. The focus is on projects, and Resource and associated Reserve compliance with Exxaro's governance framework, while ensuring accountability and consequence management.

Table 6 indicates the tier 2 technical assurances conducted during the reporting year. Where technical findings were identified during reviews that may materially impact the business, remedial actions were recommended to ensure project robustness and shareholder return.

Tier 3

External audits are scheduled in a three-year cycle or at the discretion of the lead Competent Persons and entail a full review of the Mineral Resource and Mineral Reserve estimation process from borehole logging to Mineral Reserve evaluation.

On tier 3, in 2021, process audits were done by EY for the Leeuwpan operation. The audit scope was limited to the following modules:

Module 1: Process audit
Module 2: A high-level review of the 2021 Leeuwpan Resource model (covered in a separate report)

Module 1 conclusion: A satisfactory level of assurance was reported. Although there were four controls found to have some weaknesses, the existing key controls are considered to be generally adequate and effective to ensure that the objective of the process will be achieved. Reliance can therefore be placed on management's assessment and confirmation that key controls are consistently performed. Table 7 indicates the recommendations made.

Module 2 conclusion: The Coal Resource has been prepared and documented in accordance with the SAMREC Code and SANS 102320:2020 requirements, and the process and methodologies are considered fit-for-purpose and within industry norms. The review of the geological model and Coal Resource classification has identified a number of recommendations, which are largely considered to be good housekeeping in nature. These aim to improve future models and, as such, do not materially affect the Coal Resource estimate. Table 8 indicates the recommendations made.

Table 6: Tier 2 technical assurances conducted in the reporting year with general points addressed

PROJECT NAME	PROJECT DESCRIPTION	SUMMARY RESOURCE ACTIONS	SUMMARY RESERVE ACTIONS

Grootegeluk complex (GGC) integrated water management strategy	Development of a water management strategy for GGC	The integrated water and salt balance model was reviewed, and no fatal flaws have been identified.	The inputs used in determining the shape and progression of the pit and backfill areas have been verified. The proposed strategy to prevent flooding and storage of large amounts of water in the pit is supported.


Belfast logistic solution prefeasibility study	Investigate cheaper logistical options to export product from Belfast mine	Farms that may be impacted by the alternative solutions was identified and, depending on the go-forward solution, geotechnical studies might be needed.	No impact is foreseen on current mining activities should any of the alternative logistics solutions be implemented.


Mafube debottlenecking project	Increasing Mafube throughput	Uncertainty about seam parting information was confirmed. Operational risk will be managed through the Mafube short-term model.	The proposed method of mining is consistent with the current operation and deemed appropriate to achieve increased mining volumes. It furthermore enhances Exxaro's early value strategy. The planned increase in the number of dozers and drills is supported to achieve increased production volumes.


Grootegeluk shovels strategy	To update the strategy to replace and refurbish shovels in GGC		The assumptions used in the determination of the shovel requirements were verified and deemed appropriate for the project to proceed to the next phase. The purchase of an additional Letourneau L-1850 FEL to cater for possible downtime (intime capacity demands) is supported.


Grootegeluk trucks strategy	To update the strategy to replace and rebuild trucks within GGC		The assumptions used in the determination of the truck requirements (such as haul routes, pit layouts, latest LoMP, direct operating hours and tempos among others) were verified. The reduction of four trucks to optimise the baseline is noted and deemed appropriate to maintain the LoMP.


Belfast mining contracting options	To study the most optimal mining strategy between owner versus contractor mining for Belfast mine		The study is considered a fair comparison of the contractor and owner options.

Table 7: Tier 3 external audit additional Module 1 recommendations

AREA UNDER REVIEW			CONCLUSION AND RECOMMENDATION*

Governance and reporting			Certain Exxaro standards, policies and procedures must be regularly reviewed and updated to refer to the SANS 10320:2020 edition 2. Procedures to be reviewed.


Coal Reserve estimation			The fact pack must include details of factors used in the conversion of Resources into Reserves (economic parameters and market assumptions).

			The LoM memo detailing the mine design not provided. The parameters were however contained in the Competent Persons' report.
			The financial model is not in line with the signed LoM scheduling memo provided.

*Findings were addressed, and corrective measures audited and closed.

Table 8: Tier 3 external audit additional Module 2 recommendations

AREA UNDER REVIEW			CONCLUSION AND RECOMMENDATION*

Data collection			Core recovery should be recorded in the database for mineralised zones within each drill hole allowing for ease of reference in audits and tracking of adherence to SANS 10320:2020.


Geological modelling			Drill holes with rounded Easting (X), Northing (Y) and Elevation (Z) coordinates should be compared to the original survey certificates to ensure the accuracy of the database entries.


Coal Resource classification			An Ash cut-off should be considered to be in compliance with the definition of coal provided in the SANS code.

* Findings were addressed, and corrective measures were audited and closed.

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Assurance

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