Matla overview

Matla mine is in the Highveld coalfield, immediately south of the Witbank coalfield. Matla is in Mpumalanga province, South Africa, some 15km west of Kriel and 63km south of eMalahleni. Two power stations, Kriel and Matla, are some 10km from the mine and it is contracted to supply bituminous coal to Eskom's Matla power station. Matla is on the P53-1 and R547 secondary roads branching off the R580 and R545. The well-known Kriel coal mine neighbours Matla mine to the east and the operations of Khutala (South32) and Zondagsfontein (Anglo American) to the north.

Matla comprises three underground production facilities: Mine 1, Mine 2 and Mine 3. All three are long-life assets, each with a specific operating capacity comprising conventional coal circuits to produce bituminous coal. Work at Mine 1 was stopped in 2015 due to pillar instability but an Eskom-approved project to relocate Mine 1 access is currently in the implementation phase. Mine 2 and Mine 3 use both bord-and-pillar and shortwall methods to mine S2 and S4 coal seams. In 2020, Matla continued with pillar extraction (stooping) as a mining method to maximise Resource extraction. At mine 2, there are four continuous miner sections (two currently stooping) and a shortwall section mining S2. At Mine 3, there are two continuous miner sections (one currently stooping) and a shortwall section mining S4 and three continuous miner sections mining S2.

Existing infrastructure of the three shaft complexes includes three ventilation shafts, a network of conveyor belts, coal silos and stockpiles, a crushing and screening plant, four pollution-control dams, hospital, accommodation facilities, offices, workshops, and a water treatment plant. Potable water is received from Eskom and no potable water plant exists on the mine property. Electricity is sourced from Eskom (Matla power station) and transporting coal from the mine to Matla power station is via a network of conveyor belts.

Matla mine produces thermal coal exclusively to Eskom. Historically, Matla produced approximately 12.5Mt of coal per annum. Due to the closure of Mine 1, Matla currently produces about 6Mt of coal annually. None of the coal mined at Matla is beneficiated but is crushed and screened (sized) before being conveyed to the power station.

The Eskom contract renewal is due in 2023 but Exxaro has reasonable expectations that the contract will be renewed. The Matla Resource base is sufficient to sustain mining beyond the 2023 contract-review date, where Resource thickness and quality permit mining according to existing operational standards.

Figure: 21: Matla mine

Matla history

Matla has been exploiting since the mid-1970s and a significant amount of exploration and extraction activities has been conducted over the large tenure area of some 22 000ha. The 2020 geological model update includes 2 523 boreholes where only those boreholes with relevant qualities have been considered for resource classification.

Table 51: Matla operation history

Date range	Company	Material notes
1976 to 1990	Trans Natal Mines	Construction began in 1976 with full production in 1983 and 465 boreholes drilled in this period
1990 to 2020	Eyesizwe – Exxaro	Eyesizwe (now Exxaro) took over ownership from Trans Natal Mines with >2 181 boreholes drilled in this period

Matla geology

The coal deposit at Matla forms part of the Highveld coalfield. The coal seams are found in the Vryheid formation of the Karoo Supergroup. The stratigraphy sequence in the Matla area includes five coal seams that can be easily correlated with seams found in the Witbank coalfield. Coal seams in the area are generally flat and continuous, with subsequent igneous activity resulting in displacements and devolatilisation of coal seams at places.

The principal economic seams currently exploited are S2 and S4 with mining of S5 terminated in 1998 due to high levels of contamination and subsequent increase in abrasive index. The Matla mining area is characterised by two distinct dolerite types, the B8 (porphyritic) and B4 (olive-rich) types which have varying effects on seam displacements and coal burning and devolatilisation. A dolerite sill with an average thickness of 10m is generally found above S5 in Mine 2 and 3, however, the sill intersects the coal seams and underlies S2 in Mine 1 and S4 on the south-western part of the Reserves. This sill has burned and devolatilised S2 on the southern part of the mining area in Mine 1. Floor rolls have been encountered in S2 workings and created some challenges in some mining sections. The floor rolls strike north-east-south-west, vary in width between 50m and 200m and have amplitudes up to 1.5m. The floor rolls are more prominent if the seam floor is close to the basement contact. Sandstone lenses encountered are generally less than 0.5m in width but can reach up to 1.5m in thickness.

The S5 was historically mined for a limited period but is currently not extracted. The seam is most prominent in the Mine 2 and Mine 3 areas and, to a limited extent, in the western limb of the southern part of the mining rights area. The roof comprises approximately 0.5m of thick sandy micaceous shale at Mine 2 that thickens up to approximately 1.6m in Mine 3. Above this is competent sandstone, usually saturated with water, resulting in a weathered parting between the two sequences. This presents challenges in supporting the shale during coal extraction and must, in most cases, be removed. The seam consists of mixed coal and torbanitic material with an average thickness of 1.5m.

The S2 at Matla is well developed in the north-western part of the mining area in the mines 2 and 3 Resource areas. It thins out to the south, where thickness averages at 1.2m to 2.5m. Coal qualities are also generally poor in this area, thus S2 is not generally mined in the southern portion of the Mine area. S4 is generally well distributed throughout Mine 1, Mine 2 and, to a limited extent, Mine 3. Seam thickness varies between 1.0m to 5.5m and consists of homogenous, dull lustrous coal interspersed with bright coal bands.

The S4 splits in two thin and poor-quality horizons impacting the economic viability in Mine 3. The best S4 qualities are on the southern part of the lease area (Mine 1 area). However, S4 is heavily intruded by dykes in this area, creating significant challenges for coal extraction.

Matla Resource evaluation

Geological and structural models were updated in 2020, incorporating new information from drilling and results of reviewing previously excluded historic borehole information. The new information was used to review Coal Resource classification categories and enhanced specifically the outlines of the Indicated and Measured Resource categories.

Figure 22: Typical north-south section through Matla geological model

All data collection (geological logging, description, interpretation, sampling, validation and capturing of borehole cores information) is undertaken by on-site qualified, trained and competent geologists and aligned with Exxaro standards. A well-trained grade-control and geological mapping team undertakes mapping and reconciliation. Mapping captures intrusions, devolatilised coal, channel sandstones/in-seam partings, slumping structures, faults, joints, guttering, slabbing and floor rolls as well as measurements of mined heights, contamination and dilution. Dips and dip directions of all geological features and structures are measured and recorded. Surface mapping was only conducted where outcrops were observed.

Core loss for coal-seam intersections is recorded and a recovery of <95% through coal (by volume) is deemed unsatisfactory. Anomalies are investigated and redrilled if required. Wireline logging is conducted on all vertical holes to enhance the definition of contacts and improve seam correlation.

All geological logging and sampling are undertaken by a team of on-site qualified, trained and competent geologists. Logging is conducted by recording of lithology down to centimetre according to the classification of the various coal "lithofacies"/coal type zones or ply (shale-coaly, coal-shaly, coal dull, coal mixed/mainly dull, coal mixed, coal mixed/mainly bright and coal bright), based on discernible lithofacies change and identified marker horizons, particularly through coal zones. All holes are captured in the acQuire Technology Solutions geological database.

All core sampling is done at the drill sites. Samples are selected according to their respective coal-seam boundaries after thorough correlation. A general rule of >0.5m seam sample thickness cut-off is applied but is evaluated in the field where necessary. In addition, the proposed mining method, mining equipment and sample mass (chemical and physical analysis required) are also considered. In-seam partings are sampled together with coal zone samples, especially the PL parting (after considering thickness) within the seam.

All geological coal core samples are sent to Siza Coal laboratory (SANAS accreditation no T0447) in Kinross. ISO and SANS have a standard set of tests and methods used for coal analyses by South African laboratories.

Resource classification was guided by SANS 10320: 2004 minimum guidelines (~350m spacing between boreholes with quality and structural information). Additional closer-spaced drilling was conducted in areas of structural complexity to ensure timely geotechnical accessibility and mineability (fall-of-ground considerations) of Coal Resources/Reserves.

Table 52: Matla Coal Resource reporting criteria

Thickness cut-off (thickness and extraction height considerations)	Quality cut-offs (adb)	Geological loss
<1.8m	DAFV ≤26% CV <15MJ/kg, Ash ≥50%	10% (may vary considering RODA)

Table 53: Matla Coal Resource estimation criteria

		Item	Description
Database		Borehole database	acQuire
		Data datum	Cape LO29
		Number of boreholes used for Resource estimation	S2 1 881 and S4 1 729 boreholes of the 2 523
		Validation	Conducted using queries in acQuire and Excel
		Data compositing and weighting	Conducted in Geovia MinexTM
Model		Previous model date	2019
		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 Raw quality grids
		Changes to modelling process	None

Table 54: Matla Coal Resource classification criteria

Category	Type of boreholes	Borehole spacing	Structurally complex areas	Borehole/ha
Measured	Cored boreholes with applicable coal qualities	0 to 350m	Closer-spaced boreholes and geotechnically logged holes are required to evaluate mineability	Approximately 0.22 (average 2 and 4 seam)
Indicated	Cored boreholes with applicable coal qualities	350m to 500m		~0.11 (average 2 and 4 seam)
Inferred	Cored boreholes with applicable coal qualities	500m to 1 000m		Approximately 0.09 (average2 and 4 seam)

Table 55: Matla Coal Resource and Coal Reserve statement

Category	2020  (Mt)	2019  (Mt)	Difference  in tonnes  (Mt)	Difference  (%)	Reason for change
Measured	694	705	(11)	(2)	Change is the result of mining depletion (~10.5Mt), sterilisation and disposal resulting from the Kriel colliery swop (approximately 64Mt) offset by new information approximately 63Mt
Indicated	123	105	18	17	The increase is due to new information (~18Mt)
Inferred	151	232	(81)	(35)	The change is due to new information with subsequent increase in the level of geological confidence (~63Mt to Measured and 18Mt to Indicated)
Total Coal Resources	969	1043	(74)	(7)
Proved	148	145	2	2
Probable	22	16	6	39
Total Coal Reserves	169	161	8	5	Overall a net increase of ~9Mt of Reserves from 2019 to 2020. A large portion of this increase is attributed to the new geological information with subsequent increase in the level of geological confidence, resulting in the upgrade of Inferred Resources included in the LoM in 2019 to now classified as Probable Reserves in 2020. Changes due to mining (6.2Mt) and pillar extraction removal (LoM plan) have been offset by the increase in development areas

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

Matla Reserve estimation

Scheduling of the Coal Reserve is determined using mining scheduling applications from XPAC and ProgCad. The geological 3D model used for the Coal Reserve estimation is referred to as the Reserve 3D model. The Coal Resource model uses the full coal seam while the Reserve model only defines a select mining height. The process ensures the model represents reality regarding the technical capability of current production equipment.

At Matla, Indicated Resources are generally converted to Probable Reserves and Measured Resources to the Proved Reserve category, except if any modifying factors have not been (partly) fulfilled, where the Resource is either not converted or downgraded to the Probable Reserve category, clearly stating the outstanding requirement and risk. The LoM was updated in the reporting year to incorporate new information used in the geological model update. All applicable modifying factors have been considered, specifically focusing on geotechnical as Matla faces several geological structural challenges.

Resources are converted to Reserves where the Resource confidence, continuity and other factors (including economic, environmental, safety and social aspects) allow for the reasonable expectation of successful extraction. Reserves are converted using modifying factors which account for layout design and associated losses. The Reserves stated are subject to verification according to an approved fact pack, which sets out the standards and considerations for all reserving and scheduling processes. This document is reviewed annually and vetted by all relevant stakeholders.

Table 56: Matla RPEEE considerations

Item		Criteria	Considered	Matla applicable comments
Geological data		Data validated and signed off by competent person	Yes	Seam depth, seam thickness >1.8m, dry ash-free volatiles >26% air-dried CV >15MJ/kg and ash <50% with coal qualities reported on an air-dry basis
Geological model		Geological model considered and signed off	Yes	2020
Structural model		Structural model considered and signed off	Yes	2020
Mining		Mining assumptions considered and defined	Yes	Underground
Assurance		Minimum tier 1 assurance (Exxaro governance)	Yes	2019 (model and chain of custody)
Economic evaluation		Concept-level exploitation with economic and mining assumptions, including geotechnical and geohydrological assumptions	Yes	LoM exploitation study
Environmental		Reasonable demonstration that environmental approvals can be obtained within the context of local, regional and national governmental legislation	Yes	All required approvals in place. Additional requirements can be demonstrated in the context of local, regional and national legislation. Land acquisitions for future stooping can be achieved based on current acquisition strategy
Tenure		Formal tenure must be demonstrated with reasonable demonstration that a mining right approval can be obtained within the context of local, regional and national governmental legislation	Yes	Approval for mining right is pending. Exxaro has a reasonable expectation that the right will be granted
Infrastructure		Assumptions used should be reasonable and within known/assumed tolerances or have examples of precedence	Yes	Current infrastructure
Market		A potential market for the product with a reasonable assumption that it is sustainable	Yes	Current coal supply agreement in place until 2023

Table 57: Matla production figures

	Actual 2019	FC 2020	Actual 2020	FC 2021	FC 2022
RoM (Mt)	6.0	7.5	6.2	6.6	8.3

Table 58: Matla modifying factors considered in converting Coal Resources to Coal Reserves

Modifying factors	Value
Geological loss	10% (already included in model)
Average thickness cut-off	>1.8m and <4.8m
Quality cut-offs (adb)	DAFV >26% and CV >15MJ/kg
Mining loss	Already included in model, based on specific geological conditions and mining restrictions
Depth to roof	40m unless rock strength allows otherwise
Safety factor	Tertiary panels 1.6 and main development 2.0
Bord width	7.2m
Barrier pillar	At least equal to pillar width
Boundary pillar	15m
Pillar centres	19m x 19m or depending on depth and safety factor
Mining height	>1.8m and <4.8m
Extraction factor	Already included in model
Dilution	Already included in model
Contamination	Use select seam
Practical plant yield	N/A
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
Legal	Mining right boundary
Social	None
Geohydrological	None

Matla known risks

The risk of geological faulting as well as the impact of sill and dykes are very pertinent challenges in all three of the Matla mine expansion projects. Dykes have been identified through both geophysical surveys and mining observations and are known to affect S4 at Mines 1 and 2 as well as S2 at Mine 3. Dykes impact on production rate and roof stability, where sill activity causes burnt coal, devolatilisation and instability and mine-panel accessibility challenges. The challenges are addressed through a suite of exploration activities and are generally proactively accommodated in mine planning. Continuous surface exploration drilling aims to improve sill characterisation in Mine 2 while underground horizontal drilling is used to pinpoint dykes in operating sections at Mines 2 and 3. Unforeseen geological structural complexity (faulting and intrusives) poses risk for specifically the low seam Reserves at Mines 2 and 3. Geological faults with a significant offset have been encountered and they have production tempo impacts mining sections.

Sizeable pillars of generally good qualities with the potential to be mined by the stooping method are left behind due to current mining equipment limitations.

Obtaining environmental approvals for stooping, as an alternative mining method, may have an impact on the mining schedule, and requires a revision of the LoM plan. The ability to extract all planned stooping Reserves is dependent on Eskom purchasing the required surface rights.

The implementation of the various expansion projects on schedule is important to ensure the availability of adequate S2 and S4 coal Reserves.

Matla excellence

The implementation, currently in progress, of both Mine 1 relocation and the two (Mines 2 and 3) expansion projects (called the north-western access projects) will unlock considerable value for the operation and provide vital mining flexibility for mine planning and operational teams.

The implementation of surface-to-seam directional drilling to outline intrusive sills and dykes as well as geological faults at the north-west access mine project unlocked exceptional value for the operation. The same methodology will be implemented at the Matla Mine 1 operation in 2021.