Thabametsi project

Overview

The Thabametsi project is 22km west of the town of Lephalale and adjacent to Exxaro’s Grootegeluk mine. The project area is divided into a northern open-castable portion, and a southern underground area. The northern portion aims to produce power station coal for an on-site independent power producer (IPP) as part of phase 1. A feasibility study on phase 1 was successfully concluded in 2016 and studies on extension of the phase and the southern project area are ongoing.

In October 2016, the South African Minister of Energy announced that the Thabametsi power project, for which Thabametsi project has a 30-year coal-supply agreement, had been selected as a preferred bidder in the first bid window of South Africa’s coal-baseload independent power producer procurement programme (CBIPPPP).

A mining right (10013MR) for a period of 30 years was granted and executed in June 2016. A section 102 of the MPRDA submitted to include several additional minerals to coal, to correct an administrative error, was granted in July 2017 and executed in November 2017.

History

Drilling on the Thabametsi project area began in 1979 during Iscor’s regional exploration of the Waterberg. This investigation was prompted by positive results on adjacent farms where Grootegeluk mine began production in 1980.

As part of this exploration, one borehole was drilled on all farms of interest. On farms where results were promising, follow-up drilling was conducted in 1980/81. During this time, eight boreholes were drilled on four of the five Thabametsi farms: McCabesvley, Jackalsvley, Zaagput and Vaalpensloop.

In 1988, two boreholes were drilled on the remaining farm, Van der Waltspan, to complete the regional exploration of the Thabametsi project area. All regional exploration during this time, except the boreholes on Van der Waltspan, was conducted through rotary core diamond drilling using an NQ-sized (47,5mm) core barrel. The boreholes on Van der Waltspan used a T6-146 (123mm) sized core barrel.

In 2008, exploration activities began in earnest on the project area. Since the start of the latest drilling programme, 61 boreholes have been drilled on Thabametsi at a cost of around R50 million. All boreholes completed on the project site since 2008 were undertaken using a T6-146 sized core barrel to produce a 123mm diameter core.

Geology

The geology is like Grootegeluk’s geology but increased weathering and deteriorating coal qualities required a different bench configuration. In the north, the full succession of the Volksrust and Vryheid formations are present. Further south, however, 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. A cross-section through the geological model is presented in figure 18 and figure 19.

Reasonable prospects for eventual economic extraction

All criteria (table 24) have been considered. The aspects for reasonable prospects for eventual economic extraction were inferred from the current economic viability of resources in the IPP phase 1 pit layout as well as the study that underpins the mine works programme (open-cast and underground) in the approved mining right. All surface land is owned by Exxaro.

Resource evaluation

Resource estimation and data-compositing methods are aligned to the methodology applied at Grootegeluk and described above. In recent years, five geological models have been built for the Thabametsi project area, accounting for alternate interpretations and compositing scenarios. Resource classification, throughout the Volksrust and Vryheid formations, is based on SANS 10320:2004 guidelines for multi-seam deposits. This approach is recognised as more conservative than applying guidelines for thick interbedded type deposits and was chosen to remain conservative during current studies. We envisage that the classification methodology will be reviewed (as with Grootegeluk) in 2018 once a geostatistical study into optimum borehole spacing is finalised. Some 112 boreholes were used for resource estimation, all of which contain coal-washability data. A thickness cut-off of 1m and 5% geological losses were used for estimating MTIS.

Reserve estimation

For the phase 1 feasibility study, XPAC mine-scheduling software is used to derive remaining saleable reserves from run-of-mine 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.

The resource category areas are also loaded into the XPAC model for reserve categorisation. Indicated resources are converted to probable mineable reserves and in-situ measured resources converted to proved mineable reserves. The reserve model is on a bankable feasibility project level of investigation.

The modifying factors used are as follows:

  • Mining limits. The following mining limits were applied to the resource model:
    • Economic cut-off
    • Farm boundary cut-off
    • Tenure and licence approvals
    • Seam thickness – only seams with a thickness of over 1m were considered
    • Environmentally sensitive areas such as waterways and wetlands.
  • Geological losses:
    • Proved: 5% (both benches).
  • Mining losses:
    • For bench T1, a loss of 0,5m of T1 thickness due to overburden stripping operation
    • For bench T2, a loss of 0,25% of coal left at the pit bottom.

Risks

We do not know of any pertinent risks or other material conditions that may impact on the company’s ability to mine or explore, including technical, environmental, social, economic, political and other key risks.