Thabametsi

THABAMETSI

Thabametsi is divided into two portions, a northern open cast portion and a southern underground portion. The Northern open cast portion aims to produce power station coal for an on-site IPP while the Southern underground portion is earmarked for beneficiated high value products. The strategic partner identified to undertake the development of the IPP has since withdrawn from the project and Exxaro is evaluating various options on the development of this Resource.

Thabametsi overview

Table 46: Thabametsi overview

TOPIC			INFORMATION
Location			22km west of the town of Lephalale in Limpopo, South Africa
History			Previous ownership	Material notes
1976 to 1988			Iscor – Iscor mining	Exploration drilling
1989 to 2006			Kumba	Exploration drilling
2007 to 2015			Exxaro Resources	Prospecting right and exploration activities specifically on the project area
2016 to current			Exxaro Resources	Mining right registered in 2016, valid till 2046
Adjacent properties			Grootegeluk Mine to the east
Infrastructure			Thabametsi is adjacent to Grootegeluk and therefore will use the same infrastructure. It can be reached from Lephalale via the hard-topped Nelson Mandela Drive, which is linked to the R510 road connecting Lephalale to the town of Vaalwater to the south and the Stockpoort border post between South Africa and Botswana to the north. Power supply to Grootegeluk is obtained directly from the power station via two 132kV lines . Raw water is delivered to the mine and to a water-treatment plant on the farm Zeeland by the 700mm-diameter Hans Strijdom pipeline. The pipeline originates at the Mokolo Dam, in the Waterberg mountain.
Coalfield			Waterberg coalfield
Main seams			The upper part of the coal deposit, the Volksrust Formation (approximately 60m thick) is classified as a thick interbedded seam deposit type, comprising intercalated mudstone or carbonaceous shale and bright coal layers. The Vryheid Formation (approximately 55m thick) forms the lower part of the coal deposit and comprises carbonaceous shale and sandstone with interbedded dull coal seams varying in thickness from 1.5m to 9m. It is therefore classified as a multiple-seam deposit type.
Seam development			The geology is similar to Grootegeluk's geology but practical mining practice 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.
Depositional control			The Zoetfontein fault forms the boundary of the Waterberg coalfield in the north while the Eenzaamheid fault forms the boundary in the south. The Daarby fault, with a throw of some 350m, divides the coalfield into a deep north-eastern portion and a shallow south-western portion. The first fresh coal in the shallow south-western portion is on average 20m below surface. The lowermost coal seam (Zone 1) occurs at a depth of about 130m in the shallow portion of the coalfield but this may vary depending on the local structure. The predominantly horizontal coal-bearing formations have a very gentle dip to the south-east near Grootegeluk. Only a few dolerite dykes outcrop in the south-eastern portion of the Waterberg coalfield and no sills have been encountered in any exploration drill holes drilled in the mine right area to date.
Resources and Reserves			The Resource extent is restricted by the depositional controls discussed above. The Reserves are restricted within the Resource blocks.
Mining method			The project area is divided into a northern opencast portion and a southern underground area.
Beneficiation			N/A
Product			The northern portion aims to produce power station coal for an on-site IPP as part of phase 1.
Market			Local
Mining right			Thabametsi has an approved mining right that covers some 5 455ha.
Environmental approvals			All environmental appeals have been favourably addressed for the declared Reserves.
Projects/Feasibility studies			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 Mineral Resources 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. The subsequent process to realise this initiative has progressed during the last number of years. The project development agreement with our IPP project partner, however, lapsed during the previous reporting year and we subsequently changed our reporting of Proved Reserves to Probable category to address this uncertainty. Exxaro is currently ensuring that all compliance actions are executed.

Resource estimation

Table 47: Resource estimation methodology and reporting

PROCESS			INFORMATION
Drilling, logging and sampling			Logging and sampling follow the same protocols as at Grootegeluk mine.
Laboratory and accreditation			Bureau Veritas, SANAS T0469.
Laboratory dispatch and receiving process			Sampling of drill holes is only conducted after the stratigraphy has been correlated. The geologist in charge supervises all drill hole drilling and is responsible for logging and sampling. Each sample submitted to the laboratory is accompanied by a unique sample number for validation and tracking, as well as a submission list that serves as a sample advice sheet with instructions for analysis.
Laboratory quality control and quality assurance			The laboratory follows one of four standard suites of analysis for each sample from Grootegeluk, namely Volksrust Formation coal, Volksrust Formation shale, Vryheid Formation coal and Vryheid Formation shale. Emphasis is placed on ensuring data integrity though rigorous procedures and supervision while processing. As part of the assurance and control process, audits are performed internally and externally. Bureau Veritas is accredited for analytical work and participates in monthly local and international round robins.
Data datum			WGS84 – LO27
Drill hole database			acQuire
Number of drill holes in MR			218
Number of drill holes used for Resource estimation			116
Number of drill holes used for classification			116
Data compositing and weighting			Coal analysis and beneficiation (CAB) module in Sable Data Warehouse
Data validation			Conducted using queries in acQuire and Excel
Geological modelling software			Geovia MinexTM
Estimation technique			Growth algorithm
Previous model date			2014
Last model update			2015
Grid mesh size			45m x 45m
Scan distance			1 000m
Data boundary			300m
Model build limits			Upper: limit of weathering and topography/collar Lower: Zone 1 floor
Model outputs			Roof, floor and thickness grids generated for structure Raw and wash quality grids
Changes to modelling process			None
Thickness cut-off and extraction height considerations			Opencast =0.5m
Quality cut-offs (adb)			Ash =65%
Geological loss applied			Variable per bench based on the adjacent Grootegeluk methodology

Table 48: Resource classification criteria

CATEGORY

TYPE OF DRILL HOLES

DRILL HOLE SPACING

STRUCTURALLY COMPLEX AREAS

DRILL HOLES/HA

Measured

Cored drill holes with applicable coal qualities

0m to 350m

(Matrix) Additional geophysically logged drill holes needed

0.08

Indicated

Cored drill holes with applicable coal qualities

350m to 500m

(Matrix) Additional geophysically logged drill holes needed

0.04

Inferred

Cored drill holes with applicable coal qualities

500m to 1 000m

(Matrix) Additional geophysically logged drill holes needed

0.01

Table 49: RPEEE considerations

ITEM			CRITERIA			CRITERIA MET			COMMENT
Geological data			Data has been validated and signed off by Competent Person			Yes			Geological structures, seam thickness ≤0.5m, ash content ≥65%. Coal qualities reported on an air-dried basis
Geological model			Geological model has been considered and signed off			Yes			2015
Structural model			Structural model was considered and signed off			Yes			2015
Mining			Mining assumptions considered and defined			Yes			Opencast and underground
Assurance			Exxaro internal audits and external audit conducted			Yes			2015
Economic evaluation			Exploitation study 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			All environmental 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, expires in 2046 with no impediments noted.
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

Table 50: Reserve estimation

TOPIC			INFORMATION
Software			XPAC
Reserving process			For the phase 1 of the IPP feasibility study, 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.
Conversion classification			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. The Coal Reserve is based on a bankable feasibility project level of investigation. The project development agreement with our IPP project partner lapsed during the previous reporting year and we subsequently changed our reporting of Proved Reserves to the Probable category to address this uncertainty. Exxaro is currently ensuring that all compliance actions are executed.
Inferred Resources inside LoM			N/A

Modifying factors

Average thickness cut-off			≤1m
Quality cut-offs			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/t
Environmentally sensitive areas			No sensitive areas in pit layout
Legal			The layout is within the mining right boundary
Social			There are no known socially sensitive areas in the pit layout (for example, graveyards and dwellings)
Geohydrological			No areas identified in the mining area

* T1 and T2 mining benches (Figure 16).

Table 51: Thabametsi Coal Resource and Coal Reserve statement

Category	2021  (Mt)	2020  (Mt)	Difference in  tonnes  (Mt)	Difference  (%)	Reason for change
Measured	270	270
Indicated	749	749
Inferred	2 857	2 857
Total Coal Resources	3 876	3 876			No change
Proved
Probable	130	130
Total Coal Reserves	130	130

• Rounding of figures may cause computational discrepancies.
• Tonnages quoted in metric tonnes and million tonnes (Mt). Coal Resources quoted as MTIS.

Exploration summary

Summary of the exploration for the reporting year can be seen in Table 52. For detailed expenditure, please refer to Table Table 54.

Table 52: Exploration summary

OBJECTIVES			PROGRESS IN REPORTING YEAR			PLANS FOR NEXT REPORTING YEAR
Reviewing of future exploitation options for full mining right area			Various options concluded			Evaluation of options for the best exploitation strategy.

Risks

Table 53: Thabametsi risks

RISK			DESCRIPTION			MITIGATION
Market			The project development agreement with our IPP project partner lapsed.			Exxaro is investigating various future options for the development of the project, communicated to the DMRE, including alternative markets such as the Grootegeluk steam coal market.

Operational excellence

Currently not an operating mine.

Silo at ECC