Ore reserves have the same meaning as mineral reserves as defined in the applicable reporting codes. Ore 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 and after 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 CP’s report.
Exxaro is keenly aware of the importance of its mineral assets, both 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 life-of-mine strategic plans to consider the best way of addressing these challenges.
For reserve estimates to comply with life-of-mine policy, the following supporting inputs are required for all reserve estimates: survey, rock engineering, infrastructure and an environmental as well as reserve estimation scoping report.
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.
At the start of the estimation process, the applicable reserve CP 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. Also considered are all standards and norms and planning parameters, the geological model, infrastructure and environmental plans together with the structural plan, geotechnical review report, and others. The market strategy, supply contracts and planned volumes drive the schedule. All operations standards must be signed off by the applicable mine management and reserve CP. 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, e.g. for a project-stage evaluation, or as part of the annual mineral resource and ore reserve estimation process. The data conversion, validation and verification report are the first outputs of this procedure.
On receipt of the geological model, the validation procedure is run, and the model is converted into a mining model, after which a report is compiled with possible geological model anomalies, and a comparison of volumes in the geological model and mining model to confirm data conversion has been carried out correctly. This information is signed off as acceptable by the resource CP 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.
The exploitation strategy needs to broadly demonstrate the pit/mining economics, in terms of resource boundaries, legal and other, i.e. servitudes. For example, when converting the resource to reserve, explain the economics, in terms of stripping ratio, underground versus open-pit, etc. Lastly, the extraction sequence of mining different areas in terms of access, economics or other criteria deemed most appropriate.
Operational methodology considers:
- Material flow explains the flow of material over time, i.e. open-pit – ex-pit; distances horizontal and vertical; underground – geographical expansion versus stoping; 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 (i.e. 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 – indicates licences obtained and required
- 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. The first five years of the LoMP must be covered by at least 80% measured.
Resource volumes/tonnages are converted to reserve tonnages by applying the following mining modifying factors:
- Mining efficiency losses – as per average cut thickness. This factor is 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.
The reserve classification methodology for mineral reserves under Exxaro’s control is governed by the Exxaro reserve estimation procedure and aligned to the SAMREC 2016 and SANS 10320:2004 standard. In most instances, measured resources are converted to proved reserves and indicated resources are converted to probable reserves. If an operation or project has additional constraints, i.e. 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.
Where inferred resources were considered for life-of-mine plans, the amount (Mt) and effect is 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 explained and modifying factors and assumptions that were applied to the indicated and measured resources to determine the ore reserves must be equally applied to the inferred resources. However, inferred resources are not converted to mineral 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.