Thabametsi

Thabametsi is divided into a northern opencast portion and a southern underground portion. The northern opencast portion aims to produce power station coal for an on-site IPP, and the southern underground portion is earmarked for beneficiated high-value products. As outlined last year, we evaluated the potential of the Thabametsi mining right, a large Coal Resource next to the Grootegeluk coal mine, after the associated IPP project was cancelled. Exxaro has compiled a consolidation plan which will be submitted for approval at the applicable authorities.

Thabametsi overview

Table 48: 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
2016 to present	Exxaro Resources	Mining right registered in 2016, valid until 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 are 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 the 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 the Probable category to address this uncertainty. Exxaro is currently ensuring that all compliance actions are executed.

Figure 16: Thabametsi project

Figure 17: Thabametsi cross-section

Resource estimation

Table 49: 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 QAQC	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 Works Proprietary
Data validation	Conducted using queries in acQuire, Minex™ and Excel
Geological modelling software	GEOVIA Minex™
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 50: 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 51: 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 adb.
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 were considered and defined	Yes	Opencast and underground
Assurance	Exxaro internal audits and external audit were 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. A proposal was submitted to the applicable authorities regarding a revised mine works programme.
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.

Reserve estimation

Table 52: Reserve estimation

Topic	Information
Software	XPAC
Reserving process	For 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 Resources are either not converted or are converted but downgraded to Probable and the associated risk is clearly stated. Inferred Resources are not converted to Coal Reserves. The Coal Reserves are 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 the 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 the 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 53: Thabametsi Coal Resources and Coal Reserves statement

Category	2022 (Mt)	2021 (Mt)	Difference in tonnes (Mt)	Difference (%)	Reason for change
Measured	270	270			No change
Indicated	749	749
Inferred	2 857	2 857
Total Coal Resources	3 876	3 876
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

Table 54 outlines the exploration for the reporting year. For detailed expenditure, please refer to Table 64.

Table 54: Exploration summary

Objectives	Progress in reporting year	Plans for next reporting year
Percussion holes for OVB material classification and to aid in the delineation of faults in structurally complex areas.	16 percussion holes were completed.	Desktop studies to further optimise extraction alternatives.
Deep rotary core drill holes to obtain samples for quality analysis and to aid in Resource classification.	Two deep rotary core drill holes were completed.
Reviewing of future exploitation options for full mining right area	Evaluation of options for the best exploitation strategy. Options selected and concluded.

Risks

Table 55: Thabametsi risks

Risk	Description	Mitigation
Market	The project development agreement with our IPP project partner lapsed.	Exxaro has concluded the evaluation of the potential of the Thabametsi mining right. Exxaro compiled a consolidation plan which will be submitted for approval to the applicable authorities. We have a reasonable expectation that the consolidation plan will be accepted and implemented.

Operational excellence

Thabametsi is not currently an operating mine.