Risk, liability and assurance

Assurance is implemented on a three-tier system, aligned with the guidelines of the Exxaro mineral resource and reserve reporting procedure and summarised as follows: In 2017, tier 1 assurance was undertaken for the Matla, Dorstfontein and Forzando coal mines. The resource fact packs indicated that an update of the resource estimate was required, either due to additional information being available or on recommendations from previous audits. Geological data validation, data analysis and subsequent update of geological and structural models were concluded in the reporting period. The models were signed off by the applicable CPs and their supporting technical teams. On the reserve side, the Grootegeluk life-of-mine plan was reviewed, resulting in an update and subsequent sign-off in December 2017. In addition, the Dorstfontein, Forzando and Leeuwpan operations were reviewed, leading to optimisation of the Dorstfontein and Forzando life-of-mine plans as well as the Leeuwpan OI expansion project mine plan.

On tier 2, reviews were conducted of Dorstfontein West seam 4 expansion, Grootegeluk production drill and sampling strategy, Matla mine ventilation shaft and north-west (NW) and north-east (NE) incline and decline expansion projects. Recommendations were documented and correction measures were scheduled and are on track. In addition, resource reviews of Grootegeluk and Forzando were concluded. The internal review for Forzando entailed evaluating the Forzando integrated exploration plan, ex-Total Coal South Africa (TCSA – pre-2016 owners) standards and procedures, data management, geological modelling, resource estimation (including classification and reconciliation) and reporting. There were no findings that could materially impact (>10%) the integrity of reported mineral resource estimates. Major findings related to aligning governance and compliance standards and procedures per example on core recovery and downhole geophysical logging. A number of minor findings related to SAMREC 2016 requirements in terms of sampling chain of custody. A response plan to address all findings is being executed.

The resource review of the Grootegeluk mine coal resource to assess compliance with Exxaro procedures and SAMREC 2016 requirements was conducted. We focused on continuous improvement in resource estimation and addressing compliance shortcomings. Geological and structural models were found to be of good standard, with no major findings. Findings on standard nomenclature, core recovery logging and classification methodology are being addressed.

Tier 3 external audits were scheduled for Grootegeluk and Forzando for 2017. A ruling was made to reschedule to 2018 to incorporate the 2017 updated CPRs in the audit scope. The audit for Forzando is scheduled for the first quarter and Grootegeluk for the second quarter of 2018.