Dorstfontein overview

Dorstfontein complex forms part of ECC and is on the northern margin of the Highveld coalfield along the boundary of the Smithfield Ridge, the boundary between the Highveld and Witbank coalfields.

It is 36km south of the town of eMalahleni and, to the south-west, the property borders the town of Kriel. It is in the Highveld magisterial district, under the jurisdiction of the eMalahleni local council, Mpumalanga, South Africa. Operations can be reached via the hard-topped R544/R547 roads linking the towns of Witbank and Kriel. It is surrounded by mineral right tenure owned by Kusile Mining to the west, the Universal Coal New Clydesdale operation to the north, the Kriel East operation to the south and Mbuyelo Coal to the east.

The complex covers a total rights area of 7 892ha comprising the underground Dorstfontein West mine and opencast and newly developed underground mine at Dorstfontein East mine. Seams being exploited are mainly S4 divided into S4 upper (U) and S4 lower (L) and S2 divided into S2U and S2L. The Dorstfontein West operation is exploiting the S4L through an incline development from the historical S2 workings with three production sections. A new development at Dorstfontein East is the implementation of an underground mine exploiting S2 through two adits accessed from one of the open pits. Dorstfontein East is the only opencast mine in the ECC stable targeting primarily S2 and S4. However, where thicker than 1.0m S5, S3 and S1 are present, they are also extracted. Mining activities use a truck-and-shovel method to expose and extract coal.

A major high-tension power line from the Komati power station crosses the property, in a south-westerly direction, over the northern part of the farm Fentonia 54IS and then swings westward over portions 1, 2 and 9 of the farm Dorstfontein 71IS. A secondary high-tension power line runs along the southern boundary of the farm Welstand 55 IS and continues over portions 2 and 3 of the farm Fentonia 54IS.

Dorstfontein West mining infrastructure extends over a portion of the farm Rietkuil 558 IS and portion RE 3 of the farm Dorstfontein 71IS while Dorstfontein East mining infrastructure lies on portion 11 of the farm Welstand 55 IS. Surface infrastructure consists of mine buildings (offices, workshops and change houses), a box-cut to access the coal seams, conveyor belt systems, coal-washing plant, pollution-control dams, coal stockpile areas, truck-loading facilities with weighbridges, discard dumps and a rapid coal-loading facility (rapid-loading terminal) linked to the main Richards Bay Coal Terminal. Dorstfontein West RoM is beneficiated in a heavy medium coal-washing plant for various sizes. Final plant product is screened and classified into large nuts, small nuts, jumbo peas, peas and duff. RoM from Dorstfontein East is also beneficiated in a heavy medium coal-washing plant to produce a product that depends on the contractual requirements. Currently Dorstfontein West and East mainly support the export market. However, Dorstfontein East is scheduled to start supplying Eskom from 2022.

Figure 17: Dorstfontein complex

Dorstfontein history

Dorstfontein complex mining and prospecting rights cover some 8 617ha (mining and prospecting right areas), which have been explored since the 1950s. To date, 2 365 boreholes have been drilled. However, the 2020 geological model was built using 1 717 boreholes with wash-quality information and excluding the remaining boreholes based on a rigorous data-validation process. As a result of the long history of ownership and various exploration companies some boreholes cannot be directly correlated with a certain company or date drilled as the boreholes logs do not always have the relevant information.

Table 35: Dorstfontein operation history

Date range	Company	Material notes
1956	Natal Navigation Collieries jointly with Estate Company	Widespread drilling of 13 boreholes on the farms Dorstfontein 71IS, Welstand 55IS and Rietfontein 43IS
1970	Anglo American	Drilling of 37 boreholes for more detailed cover
1974 to 1975	South Cape Exploration	Drilling of 37 boreholes for more detailed cover
1976 to 1978	Sun Mining and Prospecting, an Anglovaal exploration company	82 boreholes drilled and 328 coal samples analysed for washing characteristics
1980 to 1982	Anglovaal	100 boreholes drilled on the farm Dorstfontein 71IS
1996 to 1998	Anglovaal	Drilling of 105 boreholes on the southern portion of the farm Dorstfontein 71 to support a feasibility study of the S2 mining operation at Dorstfontein West for first coal in 1997
1999 to 2004	Total Exploration South Africa	Total Exploration South Africa took over the Dorstfontein West operation
2004 to 2007	Dorstfontein Coal Mines	Total Coal South Africa emerged from Total Exploration South Africa. Continuous drilling for exploration and mine planning purposes. In 2007, 140 boreholes drilled for the feasibility study of the proposed S4 mining operation at Dorstfontein West. An additional 25 boreholes drilled for specialised analysis
2008 to 2015	Dorstfontein Coal Mines	Since 2008, a total 1 022 boreholes drilled in both areas where ECC holds prospecting and mining rights. First coal was recorded at Dorstfontein East in 2011
2015 to 2019	Dorstfontein Coal Mines	Exxaro acquired Total Coal South Africa in 2015. The feasibility study for Dorstfontein West S4L project was approved as a replacement for the current Dorstfontein West S2L operations. A total of 201 boreholes were drilled
2020	Dorstfontein Coal Mines	Pit 2 opencast operation came to an end in the fourth quarter of 2020. Preparations for S4L underground as a replacement through an adit in Pit 2 highwall is progressing well. A total of 59 boreholes were drilled during the reporting year.

Dorstfontein geology

Coal measures of the Highveld and Witbank coalfields are hosted in the Ecca group, which includes the Vryheid and Volksrust coal-bearing formations. All coal seams in the ECC area are hosted in the Vryheid formation, which ranges in thickness from 80m to 300m. There are five major coal seams present in the area, named from the base upwards as S1, S2, S3, S4 and S5.

A granitic basement high, which forms part of the Smithfield Ridge and is referred to below as the Central plateau, divides the Dorstfontein complex into two separate geological domains, and the western and eastern limbs can be found on either side of this plateau. S1 is only developed in the central portions of the paleo-valleys, ranging in thickness from 0.1m to 2.5m. Underground extraction of this seam is considered uneconomic due to its highly variable thickness, inferior quality, isolated occurrence and coal devolatilisation. In the Dorstfontein complex, seam splitting is generally a provenance of detrital material resulting largely from the proximity of the seam to the Smithfield Ridge and, as a result, the S2 and S4 are further subdivided into S2L, S2U and S4L and S4U respectively.

S2L is thinnest over palaeo-highs and thickest over troughs of palaeo-valleys. Two S2L thickness domains exist in the complex. In the west (Dorstfontein West), seam thickness ranges from 0.1m to 5m and in the east (Dorstfontein East) from 0.2m to 6.0m. In the north of Dorstfontein West, the S2L exists as a single coal horizon, generally devoid of stone partings. To the south of this block, an arenaceous parting splits the seam into an upper and lower subseam. The parting separating S2U and S2L in both the west and east attains a maximum thickness of 4.5m and, in the northern portion, a minimum of 0.2m with an average of 1.5m. The S2U is considered uneconomic to mine separately by underground methods but is included for the opencast blocks. Generally, S2L is the thicker of the two subseams and has better quality coal. As such, S2L is theoretically the mining target. However, practical mining of S2L is often problematic due to parting between two subseams S2L and S2U.

On the basis of seam thickness and coal quality, S4L is the main underground exploitation target in S4, which comprises coal and minor in-seam partings, and is characteristically banded with alternating dull and bright coal. The seam contains one in-seam parting of significant thickness and lateral extent with a thickness average of 0.2m but can reach 0.5m. Generally, the average thickness of S4L is 3.0m. S4U has an average thickness of 1.7m in the west and, in the east, the thickness is generally more than 1.0m, reaching 3.0m in the centre of the palaeo-valley. S4U has a higher ash content and thus lower CV compared to S4L. Thickness of the S5 is generally over 1.5m. Due to a significant parting, the seam is considered uneconomic for underground extraction but can be considered for selective extraction in opencast.

Numerous Jurassic dolerites (dykes and sills) intrude the Vryheid formation at various stratigraphic levels in the area. These intrusions negatively influence the stratigraphy and coal qualities in places. The distribution of the lower coal seams are strongly influenced by basement topography while distribution of the upper seams is controlled by present-day topography. Most affected by basement topography are S1 and S2. Seams are often thin and sometimes pinch out over and against palaeo-highs. Strata (including coal) are often faulted, although displacements are rarely more than 1m. Structural displacements, resulting from intrusions of dolerite sills through seams, often complicate mining seams.

The Dorstfontein complex geology and grade continuity are largely influenced by palaeo-topography, present-day topography, surface weathering, seam thickness variation (mainly between Dorstfontein West and East), in-seam parting, in-seam washouts, dolerite intrusions in the form of sills and dykes, resulting in minimal to extensive zones of devolatilisation. These geological risks are well managed through extensive drilling in areas of concern, using downhole wireline logging for better definition, underground channel sampling incorporated as points of observation in the short-term model, underground face mapping generally used to track both vertical and lateral variations in the lithology to assist with reconciliation as well as structural interpretation and surface mapping, particularly of basement outcrops. The information collated from the various approaches is incorporated in the structural model, together with additional potential risks from other disciplines and represented in a GIS-based RODA, allowing for a more integrated approach to risk management.

Dorstfontein Resource evaluation

All exploration boreholes are logged and sampled by experienced on-site geologists aligned and complying to logging and sampling standards and standard operating procedures. Samples are selected according to seam boundaries, visual variation in the vitrinite content, assisted by density logs, and non-coal material present in the seam boundaries. Each sample submitted to the laboratories 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. Three major laboratories have been used over the past 10 years: Australian Laboratory Services, SGS and CoalLab, all with SANAS accreditation (T0611, T0815 and T0612 respectively). All three laboratories have committed to assuring the quality of results provided to the customer by ensuring quality assurance, quality control, data validation and proficiency testing procedures are observed.

The Coal Resource classification methodology is fundamentally based on SANS 10320 and considers borehole spacing, type of boreholes and structural complexity of the Resource.

Table 36: Dorstfontein Coal Resource reporting criteria

Thickness cut-off (thickness and extraction height considerations)	Quality cut-offs (adb)	Geological loss*
Opencast ≤0.5m Underground ≤1.2m	Dry ash free volatiles (DAFV) ≤24% Raw ash ≥50%	10% to 50% (domains)

*	A 10% standard geological loss is applied but may vary based on the consideration of structural complexity (dolerite sill breakthrough – 25% loss within determined spatial extent), seam gradient impacted by proximity to basement (>4 degrees – 50% loss) and weathering (25% loss).

Figure 18: Typical south-west-north-east section through Dorstfontein geological model

Table 37: Dorstfontein Coal Resource estimation criteria

		Item		Description
Database		Borehole database		acQuire
		Data datum		LO29 WGS 84
		Number of boreholes used for Resource estimation		1 717 of 2 365 boreholes in the database
		Validation		The laboratory conducts data validation and proficiency testing on the samples submitted. In the acQuire database additional validations are conducted on the points of observation where missing data and or duplicate data are identified and corrected. Data is exported from acQuire into comma separated values (csv) files where it is subjected to additional checks
		Data compositing and weighting		Data compositing is conducted per seam using a weighted value from the individual samples that make up the seam along with the relative density and length of each individual sample. This is done in Geovia MinexTM
Model		Previous model date		2017
		Last model update		2020
		Geological modelling software		Geovia MinexTM
		Estimation technique		Growth algorithm
		Grid mesh size		25m x 25m
		Scan distance		2 000m
		Data boundary		200m
		Model build limits		Upper: limit of weathering and topography/collar Lower: basement/Dwyka
		Model outputs		Roof, floor and thickness grids generated for structure with raw quality and washability grids
		Changes to modelling process		Faulting included

Table 38: Dorstfontein Coal Resource classification criteria

Category	Type of boreholes	Borehole spacing	Structurally complex areas	Borehole/ha
Measured	Cored boreholes with applicable coal qualities	0m to 350m	Structural complexity and coal variability (RODA) additional infill drilling	0.24
Indicated	Cored boreholes with applicable coal qualities	350m to 500m	Structural complexity and coal variability (RODA) additional infill drilling	0.09
Inferred	Cored boreholes with applicable coal qualities	500m to 1 000m	Structural complexity and coal variability (RODA) additional infill drilling	0.06

Dorstfontein Reserve estimation

Scheduling of the Reserve is determined using mining scheduling applications from XPAC. This is the same software used to develop the LoM plan schedule.

The geological 3D model used for the Reserve statement is referred to as the Reserve geological 3D model. This Reserve model differs from the Resource model as the latter uses the full coal seam (with specific reporting assumptions) while the Reserve model uses a select mining height based on practical mining heights and other modifying factors. The process ensures that the model represents practical aspects of the capabilities of production sections and their equipment.

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 Resource is either not converted or the Measured Resource is converted but downgraded to Probable and the associated risk is clearly stated. Inferred Resources are not converted to Coal Reserves.

A total of 0.8Mt of Inferred Resource is included in the LoM plan, which is around 1% of the LoM plan. The majority is located along main developments that serve as access to future Reserve blocks well beyond the first five years of LoM. The impact of including these Coal Resources is well understood and tested and exploration activities are planned to upgrade these categories to a higher level.

Table 39: Dorstfontein Coal Resource and Reserve statement

Category	2020  (Mt)	2019  (Mt)	Difference  in tonnes  (Mt)	Difference  (%)	Reason for change
Measured	175.6	149.1	27	18	The change is the result of new information from the Dorstfontein East underground and Pit 1 north-west opencast extension areas and mining from both Dorstfontein West and Dorstfontein East mines
Indicated	121.4	135.5	(14)	(10)	The movement is due to new information leading to an increased level of confidence
Inferred	53.3	52.1	1	2
Total Coal Resources (OC/UG)	350.2	336.7	13	4	Mining (4.6Mt) is offset by new information (15.9Mt) and model refinement (2.4Mt)
Proved	50.9	46.5	4	9	Mining depletion was offset by new information used to update the geological and subsequent mining model
Probable	30.1	41.5	(11)	(27)	New information resulted in an updated LoM plan
Total Coal Reserves (OC)	81	88	(7)	(8)	Movement between categories is the result of mining (4.1Mt), new information (3.6Mt), steriliSation due to dolerite activity (4.5Mt), and the introduction of a new underground mine layout at Dorstfontein East (1.8Mt)

Notes:

• Rounding of figures may cause computational discrepancies.
• All changes more than 10% are explained.
• Mining method: OC AND UG.
• Figures are reported at 100% irrespective of percentage attributable to Exxaro.
• Tonnages are quoted in metric tonnes and million tonnes (Mt). Coal Resources are quoted as MTIS and refer to remaining Resources after 31 December 2020 and 31 December 2019.
• Coal Resources are reported on MTIS basis.
• Cut-offs applied as per Resource reporting criteria table.
• Coal Resources are quoted inclusive of Coal Resources converted to Coal Reserves.

Table 40: Dorstfontein RPEEE considerations

	Item		Criteria		Considered		Comment
	Geological data		Data has been validated and signed off by competent person		Yes		Geological structure and depositional extent, seam thickness >1.2m (underground) and >0.5m (opencast), <50% ash content and >24% DAFV with coal qualities reported on an air-dry basis
	Geological model		Geological model was considered and signed off		Yes
	Structural model		Structural model was considered and signed off		Yes		RODA review
	Mining		Mining assumptions considered and defined		Yes		Opencast and underground areas defined and aligned with exploitation strategy
	Assurance		Minimum tier 1 assurance (Exxaro governance)		Yes		Compliance updated in 2018
	Economic evaluation		Concept-level exploitation with economic and mining assumptions, including geotechnical and geohydrological assumptions		Yes		Only approved economic assumptions and parameters are applied
	Environmental		Reasonable demonstration that environmental approvals can be obtained within the context of local, regional and national governmental legislation		Yes		Environmental and social concept assessment is done, applications and approvals are considered
	Tenure		Formal tenure must be demonstrated. Reasonable demonstration that a mining right approval can be obtained within the context of local, regional and national governmental legislation		Yes		Mining and prospecting rights licences are valid. Extensions or annexations will be lodged when necessary with reasonable expectations that the applications will be granted
	Infrastructure		Assumptions used should be reasonable and within known/assumed tolerances or have examples of precedence		Yes		Current infrastructure is considered
	Market		Market(s) identified – form part of an existing operation market strategy or potential market for which a conceptual market study exists		Yes		Operational strategies are aligned with existing markets

Table 41: Dorstfontein production figures

	Actual 2019	FC 2020	Actual	FC 2021	FC 2022
Dorstfontein East RoM (Mt)	2.2	2.3	1.7	2.0	3.0
Dorstfontein West RoM (Mt)	1.3	1.8	1.7	2.1	2.5
Dorstfontein complex RoM (Mt)	3.5	4.1	3.4	4.1	5.6

Table 42: Dorstfontein modifying factors considered in converting Coal Resources to Coal Reserves

Considerations	Underground	Opencast
Geological loss	10% to 50%	10% to 50%
Average thickness cut-off	1.4m	1.0m
Quality specification	4 800/5 300kcal/kg	4 800/5 300kcal/kg
Mining loss	0.05m	0.1m
Depth to roof	15m	0
Safety factor	1.6 to 2.0	0
Bord width	6.5m	0
Barrier pillar	At least equal to the panel pillar width	0
Boundary pillar	15m	15m
Pillar centres	14m x 14m	0
Mining height	1.4m	0
Extraction factor	65%	0
Dilution	Already included in model	Already included in model
Contamination	0.05m	0.10m
Practical plant yield	Considered in reserving process	Considered in reserving process
Environmentally sensitive areas	Areas underlying wetlands and other eco-sensitive areas are excluded from Reserves. A higher safety factor is used underneath rivers and surface structures	50m cut-off away from opencast mining activities
Legal	Mining right boundary
Social	Considered in reserving process
Geohydrological

Dorstfontein known risks

Dorstfontein East pits 1, 2 and 3 and Vlakfontein areas are affected by dolerite activity. Risk in these areas has been accommodated in mine planning by assigning higher geological loss values to areas reasonably expected to incur losses caused by dolerite activity. Reporting of Coal Resources on the Rietkuil Vhakoni prospecting right (1916PR) is currently under review with regard to RPEEE considerations.

Dorstfontein excellence

Dorstfontein East has been operating as an opencast mine since 2011, exploiting mainly coal seams S4 (S4U and S4L) and S2 (S2U and S2L) of the Witbank coalfield. The implementation of an underground mine at the east mine, targeting significant S4L and S2L Resources, is exploited using the bord and pillar extraction method, celebrated as an exceptional excellence drive. The study started in early in 2019 and is progressing. First coal of S4L was accessed on 19 November 2020 and mining of S2L is scheduled to start around 2029.