Exxaro Resources limited
Consolidated Mineral Resources and Mineral Reserves report 2021

Resource estimation methodology summary

The estimation process is summarised below and applies to all coal operations and projects under Exxaro's management control. The Resource Competent Person is actively involved throughout the process and no data is included/excluded without consent.

The Resource estimation process for Coal Resources under Exxaro's control is governed by the group's Resource estimation procedure and aligned to the SAMREC Code and SANS 10320:2020 edition 2 standard. The data used for Resource estimation is managed by separate commodity-specific procedures through which core recovery and logging, sampling, quality assurance and control, relative density determination and wireline logging standards are enforced. These standards were updated in 2021 to comply with the SAMREC Code and SANS 10320:2020 edition 2.

Table 3: Summary of estimation considerations

Resource fact pack Lists new information since last estimation together with a reconciliation between predicted mineable tonnage in-situ (MTIS), actual RoM and dates of internal/external audits.
Exploration Annually compiled, integrated and signed-off exploration plans outline planned activities to investigate areas of low confidence and/or geological or structural complexities to ensure Resources with a high level of geological confidence are considered for mine planning. Exploration plans are available as supplementary information to the Competent Persons' report.
Drilling, logging and sampling process The senior geologist supervises all drill hole drilling and is responsible for logging and sampling in compliance with Exxaro's logging and sampling standards as well as standard operating procedures. Sampling of drill holes is only conducted after the stratigraphy has been correlated.
Core recovery The core recovery standard (>95% in coal seams for valid points of observation), as stipulated in the SAMREC Code and SANS 10320 standard, is not always empirically enforced due to unavailability of digital core recovery data for pre-2017 drill holes. However, Exxaro's Competent Persons confirm that there is high confidence in core and sample recovery for all drill holes used for Resource estimation purposes, and any deviation is managed by increased geological losses within geological loss domains, downgrading Resource classification and/or redrilling drill holes. Core recovery is continuously reviewed and any shortcomings are actively addressed through downhole geophysical surveys, seam validations and redrilling.
Relative density determination For Coal Resources, relative density (air-dried) is determined by accredited laboratories using the Archimedes method in all instances, except for Grootegeluk mine and the Thabametsi project where relative density is determined using an on-site mine laboratory application of the Archimedes method, and results are continuously used to validate core recovery. A comparative study between the field and laboratory methods was undertaken in 2015 and results indicated no significant difference.
Technical data validation Technical validation of data to be used for Resource estimation including collar validation, gaps and overlaps checks and data distribution.
Data analysis Entails a review and analysis of the geological integrity and continuity of data in a spatial and geostatistical sense with domaining and structural interpretations.
Data modelling Geovia MinexTM is used for coal modelling and the MinexTM growth algorithm is the preferred interpolation technique with Esri's ArcGIS used for modelling structural features. acQuire or MinexTM is used for coal compositing and, in both instances, representative substitute values are used for unsampled non-coal material. The geological model and structural interpretation are presented by the Resource Competent Person, aided by relevant technical specialists, to a panel comprising Exxaro's lead Competent Person and domain experts for sign-off and approval. Concept-level geological models, where applicable, are compiled for alternative interpretations and these risks are evaluated during sign-off. Feasibility level and/or LoM plan (LoMP)-level geological models are based on reviewed and signed-off interpretations.
Resource classification Resource classification follows the Exxaro estimation procedure and is aligned with SANS 10320:2020 edition 2 and considers risk and opportunity domain analysis (RODA). Anomalous drill hole data and structurally complex areas are accounted for and Resource classification is used to control the adequacy of drill hole data. Separate confidence zones are determined for structural features, based on a matrix approach. The effect of extrapolation is controlled by Resource classification in which classification domains are not extrapolated beyond half the average drill hole spacing for the classification category. Only points of observation with applicable quality data are used for classification.
Estimation and reporting

Resource reporting uses approved cut-offs and geological loss domains, followed by completion of all necessary reports and audit trails. Exxaro currently uses a systematic and integrated review process that measures the level of maturity of exploration work done, the extent of geological potential, licence to operate and associated geological risks to establish the eventual extraction. The criteria for assessing reasonable prospects for eventual economic extraction (RPEEE) are shown in Table 4.

Reporting includes technical information that requires subsequent calculations to derive subtotals, totals and weighted averages. Such calculations may involve a degree of rounding and consequently introduce an error. Where such errors occur, Exxaro does not consider them material.

Review and consolidation Individual reports are reviewed and corrections are effected if necessary. Reports are endorsed by management and used to compile the consolidated Coal Resources and Coal Reserves report.


RPEEE should be demonstrated through the application of an appropriate consideration of Mineral Resources. Such a consideration should include a reasoned assessment of the geological, mining engineering, processing, metallurgical, legal, infrastructural, environmental, marketing, socio-political and economic assumptions which, in the opinion of the Competent Person, are likely to influence the prospect of economic extraction. All of the issues listed under "reasonable prospects for eventual economic extraction" should be discussed at the level appropriate for the specific investigation. – SAMREC Code

Table 4: Exxaro's considerations for RPEEE

Geological data Data validated and signed off by Competent Person Seam depth, extent, thickness, geological structure and seam quality (cut-off)
Geological model Geological model considered and signed off
Structural model Structural model considered and signed off
Mining Mining assumptions considered and defined Mining method, inputs from metallurgist, rock engineer and hydrogeologist
Assurance Minimum tier 1 assurance as per Exxaro governance and assurance framework As per tier 1 requirement
Economic evaluation Concept-level exploitation and economic evaluation quantifies economic potential based on economic and mining assumptions including geotechnical and geohydrological assumptions Preliminary appraisal of layout, cost and profit
Environmental Assessment of potential impediments and, if any exist, a reasonable expectation of resolution with reasonable demonstration that environmental approvals can be obtained within the context of local, regional and national legislation
Tenure Formal tenure must be demonstrated and, if any potential impediments exist, there must be reasonable expectation of resolution or, if a prospecting right, there should be reasonable demonstration that a mining right approval can be obtained within the context of local, regional and national legislation
Infrastructure Assumptions used should be reasonable and within known/assumed tolerances or have examples of precedence and any potential impediments should have a reasonable expectation of resolution, considering power, water and transport
Market Potential market for product that is planned to be extracted from the Resource with a reasonable assumption that this market is sustainable


Exxaro is keenly aware of the importance of its mineral assets for the short-term profitability of its operations and the sustainability of the company. The optimisation of mineral assets beyond what is generally referred to as Mineral Resource management is being driven as a priority.

Changes in the resources market, increased awareness of protecting the natural environment and changing legislation and statutory requirements demand a change in the utilisation strategy and execution of mining operations. Exxaro continuously assesses the various LoM strategic plans to consider the best way to address these challenges.

Figure 5: SAMREC figure

Table 5: Summary of reserving process

Inputs For Coal Reserve estimates to comply with LoM policy, survey, rock engineering, infrastructure, legal, processing, social, economic, political and environmental inputs are required for all Reserve estimates as well as a Reserve estimation scoping report.
Reserve fact pack report

At the start of the estimation process, the applicable Reserve Competent Person must compile, for every operation, a Reserve fact pack report, outlining the standards and norms of that operation as well as all relevant planning standards. All standards, norms and planning parameters, the geological model, infrastructure and environmental plans together with the structural plan, geotechnical review report, among others, are also considered. The market strategy, supply contracts and planned volumes drive the schedule. All operation standards must be signed off by the applicable mine management and Reserve Competent Person. A similar procedure is followed for projects with the project steering committee fulfilling the role of mine management.

Reserve estimation may be conducted either as required (in a project-stage evaluation, for example) or as part of the annual Mineral Resource and Mineral Reserve estimation process. The data conversion, validation and verification report are the first outputs of this procedure.

Geological model validation On receipt of the geological model, the validation procedure is conducted and the model is converted into a mining model. A report is then compiled with possible geological model anomalies, and a comparison of volumes in the geological model and mining model to confirm data conversion has been conducted correctly. This information is signed off as acceptable by the Resource Competent Person and manager: strategic mine planning and design.
The following components are included in the LoMP and Reserve estimation: exploitation strategy, operational methodology and pit shell.
Exploitation strategy The exploitation strategy needs to broadly demonstrate the pit/mining economics in terms of Resource boundaries, legal and other, such as servitudes. For example, when converting the Resource to Reserve, explain the economics, in terms of stripping ratio, underground versus open pit, among others. Lastly, the extraction sequence of mining different areas in terms of access, economics or other criteria deemed most appropriate.
Operational methodology considerations

Material flow explains the flow of material over time, such as open pit (ex-pit, horizontal and vertical distances and underground), geographical expansion versus stooping and deep pit (push-back strategy, minimum and maximum stripping curves).

Equipment explains the size and type of equipment for the design, including life of equipment, major interventions and/or major changes (such as open pit to underground) over the life of the Resource.

Waste dumps (size and position), rehabilitation (main issues and interventions) together with legal and other indicated licences obtained and required are included.

Pit shell Pit shell is the final delineation or envelope of the Resource that will be converted to a Reserve. The LoMP pit shell is the foundation of the business case and, as such, is based on the most accurate information available Measured and Indicated Resources are used as basis for conversion.
Modifying factors

Coal Reserves are estimated using the relevant modifying factors at the time of reporting (mining, metallurgical, economic, marketing, legal, environmental, social and regulatory requirements). Modifying factors are signed off before Reserve estimation by the persons responsible for ensuring that all factors are timeously and appropriately considered. Comprehensive modifying factor sign-off and Reserve fact packs that record losses, recoveries/yields and other factors applied are documented in each independent Competent Persons' report. Resource volumes/tonnages are converted to Reserve tonnages by applying the following mining modifying factors:

  • Mining efficiency losses as per average cut thickness are applied to account for net losses of Reserves due to mining equipment selection and mining method. The efficiency factor also accounts for the thickness of the selected RoM and waste horizons relative to selected mining equipment.
  • Layout losses account for the loss of Reserves due to actual mining activities not reaching the defined Reserve boundary or due to the
    geometry of the Reserve block.
  • RoM extraction accounts for losses incurred using the selected mining method.
  • Contamination accounts for waste or inter-burden material unintentionally added to the mining horizon as a result of mining operations and equipment used.
  • Free moisture accounts for the change in the Reserve tonnage due to the addition of moisture from bench-mining operations.
Reserve classification The Reserve classification methodology for Coal Reserves under Exxaro's control is governed by the Exxaro Coal Reserve estimation procedure, as described in the LoMP policy, and aligned with the SAMREC Code and SANS 10320:2020 edition 2 standard. In general, Measured Resources are converted to Proved Reserves and Indicated Resources are converted to Probable Reserves. If an operation or project has additional constraints, such a supply agreement that has not been finalised or a sales/marketing strategy that limits the profitability of the mine, the Measured Resources can be downgraded to Probable Reserves. In situations where this has been applied, it is clearly stated in the footnotes for the Reserves tables.
Inferred Resources Where Inferred Resources were considered for LoM plans, the amount (Mt) and effect are always clearly stated. When Inferred Resources are included in the LoMP, these tonnages are never scheduled in the first five years of mine life. The rationale for considering Inferred Resources inclusion is explained and actions to address this issue are stated. Exxaro generally attempts to limit Inferred Resources to less than 15% of total Resources to be considered for LoMPs. Any inclusion of Inferred Resources must be tested, reported and modifying factors and assumptions that were applied to the Indicated and Measured Resources to determine the Coal Reserves must be equally applied to the Inferred Resources. However, Inferred Resources are not converted to Coal Reserves and are not stated as part of the Mineral Reserve. The amount of Inferred Resources considered for the reported LoMP is included in the Reserve statement.
Outputs The following outputs are generated after successfully completing the procedure: validation and verification report, mining block model, exploitation strategy report, mining schedule and equipment strategy report, and Reserve estimation report.
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Certification by group company secretary and legal
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