Resource estimation methodology summary

The estimation process, summarised below, 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 with the SAMREC Code and SANS 10320. The data used for Resource estimation is managed by separate commodity-specific procedures through which core recovery and logging, sampling, quality assurance and quality control (QAQC), relative density determination and wireline logging standards are enforced.

Table 3: Summary of estimation considerations

Item		Description

Resource fact pack		States revised information since the last estimation, eg RPEEE considerations.
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. All drill holes are drilled as vertical drill holes from the surface and the intersection to the seams is considered to be representative of true thickness.
Core recovery		The core recovery standard (>95% in coal seams for valid points of observation), as stipulated in the SAMREC Code and SANS 10320, 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 re-drilling drill holes. Core recovery is continuously reviewed, and any shortcomings are actively addressed through downhole geophysical surveys, seam validations and re-drilling.
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 again in 2023, with results indicating no significant difference in the methodology.
Technical data validation		Technical data validation is used for Resource estimation and includes collar validation, gaps and overlaps checks and data distribution.
Data analysis		Entails a review and analysis of the data's geological integrity and continuity in a spatial and geostatistical sense.
Data modelling		GEOVIA Minex^TM is used for coal modelling, and the Minex^TM growth algorithm is the preferred interpolation technique with the Move software used for modelling structural features. acQuire or Minex^TM 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 the risks are evaluated during sign-off. Feasibility-level and/or LoMP-level geological models are based on reviewed and signed-off interpretations.
Resource classification		Resource classification follows the Exxaro estimation procedure, aligns with SANS 10320 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. We determine separate confidence zones for structural features using a matrix approach where applicable. The effect of extrapolation is controlled by Resource classification, which does not extrapolate domains beyond half the average drill hole spacing for the classification category and only uses points of observation with applicable quality data.
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 RPEEE are shown in Table 4. Reporting includes technical information that requires subsequent calculations to derive sub-totals, 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 considered if necessary. Reports are endorsed by management and used to compile the consolidated Mineral Resources and Mineral Reserves report.

RPEEE considerations

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 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 RPEEE considerations

Item	Criteria	Considerations

Geological data	Data validated and signed off by a Competent Person	Seam depth, extent, thickness, geological structure and seam signed off quality (cut-off)
Geological model	Geological model considered and signed off
Structural model	Structural model considered and signed off
Mining and processing	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 and socio‑political	Formal tenure must be demonstrated, and, if any potential legal or socio-political impediments exist, there must be a reasonable expectation of resolution or, if a prospecting right, there should be a 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 or 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

From the left: Kotie Enslin (principal reporting) and Amantha Naicker (principal geologist, structural and enablement)

Reserve estimation methodology summary

Exxaro is keenly aware of the importance of our mineral assets for the short-term profitability of our operations and the company's sustainability. The optimisation of mineral assets beyond what is generally referred to as MRM is 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 1: Relationship between exploration results, Mineral Resources and Mineral Reserves — SAMREC Code

Table 5: Summary of reserving process

Item		Description

Inputs		To comply with LoM policy, all Reserve estimates require survey, rock engineering, infrastructure, legal, processing, social, economic, political and environmental inputs.
Reserve fact pack report		At the start of the estimation process, the applicable Reserves Competent Person must compile a Reserve fact pack for every operation outlining the standards and norms of that operation as well as all relevant planning standards. All standards, norms and planning parameters, the geological model, RODA, infrastructure and environmental authorisations with the structural plan, geotechnical designs, 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, and the project steering committee fulfils 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		Upon 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 that data conversion was conducted correctly. This information is reviewed by the manager: strategic mine planning and design and signed off as acceptable by the Resource and Reserve Competent Persons.
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 or mining economics in terms of Reserve boundaries, legal and other, such as servitudes. For example, when converting the Resource to Reserve, explain the economics in terms of stripping ratio and underground versus open pit, among others. The strategy needs to explain 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 Reserve. 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 the 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 Person’s 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 interburden material unintentionally added to the mining horizon as a result of mining operations and equipment used Free moisture accounts for the change in 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 LoMP policy and aligned with the SAMREC Code and SANS 10320. 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 as 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 of the Reserves tables.
Inferred Resources		Where Inferred Resources were considered for LoMPs, the amount (Mt) and effect are always clearly stated. When Inferred Resources are included in the LoMP, these tonnages are not scheduled in the first five years of mine life. We explain the rationale for considering the inclusion of Inferred Resources and state our actions to address this issue. 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 and reported. Modifying factors and assumptions applied to the Indicated and Measured Resources to determine the Coal Reserves must be equally applied to Inferred Resources. Inferred Resources are not converted to Coal Reserves or stated as part of the Mineral Reserve. The amount of Inferred Resources considered for the reported LoMP is included in the Reserves statement.
Outputs		The following outputs are generated after successfully completing the procedure: validation and verification report, fact pack report, exploitation strategy report, mine design and layout report, and mining schedule, and in the case of projects, a mining study report.

Automated dozer at Mafube mine