| Tue 15 Jun 2010, 9:50 | | CZA - Coal of Africa Limited - Company Update - Status Of Intended Move Of |
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CZA
CZA
CZA - Coal of Africa Limited - Company Update - Status Of Intended Move Of
Listing To The Main Market Of The London Stock Exchange
Coal of Africa Limited
(previously, "GVM Metals Limited")
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
JSE/ASX/AIM Share code: CZA
ISIN AU000000CZA6
("CoAL" or the "Company")
COMPANY UPDATE - STATUS OF INTENDED MOVE OF LISTING TO THE MAIN MARKET OF
THE LONDON STOCK EXCHANGE
Coal provides the following update with regard to the Company`s general
operations and its intention to seek approval for admission to listing on
the Official List of the UK Listing Authority ("UKLA") and to trading on the
London Stock Exchange`s Main Market for Listed Securities ("LSE Main
Market"), as previously announced on 29 October 2009.
TRADING UPDATE
Mooiplaats Colliery - Ermelo Coalfield
A total of three sections are now opened and all are in the high quality
bituminous coal which, after washing, is producing a typical export quality
thermal coal, save for sulphur. Additional run of mine ("ROM") coal
continues to be acquired from a mine adjacent to Mooiplaats which is being
used to supplement that being mined at Mooiplaats, the result being that
approximately 125,000 tonnes of export quality thermal coal had been railed
to the Matola terminal at Maputo in Mozambique ("Matola Terminal") by the
end of May 2010.
With three sections opened, ramp up at Mooiplaats is expected to accelerate
such that 120,000 ROM tonnes per month is expected to be achieved by the end
of December 2010, growing to 200,000 ROM tonnes per month thereafter.
Woestalleen - Witbank Coalfield
The assets referred to as Woestalleen were acquired in late January 2010
through the acquisition of NuCoal Mining (Pty) Limited ("NuCoal"), and
comprise the Zonnebloem, Hartogshoop and Klipbank open cast mines, the
Woestalleen washplant and Richards Bay Coal Terminal ("RBCT") compliant
siding, together with a number of development projects ("Woestalleen").
For the period from 1 January 2010 through to 31 May 2010, the Woestalleen
assets produced over 1.8 million tonnes ("Mt") of ROM coal, which translated
into approximately 640 thousand tonnes ("kt") of export quality thermal
coal, 190kt of lower grade coal and over 450kt of ROM coal sales. During
that period, in excess of 585kt of coal was railed to a combination of RBCT,
the Dry Bulk Terminal at Richards Bay and the Matola Teminal for export.
Woestalleen continues to perform in line with CoAL management expectations,
notwithstanding that the newly commissioned `build, own, operate and manage`
plant is not yet operating at its full capacity of 150kt per month.
Further, as a result of the Transnet Freight Rail strike action in May 2010,
there was a three week period in which no railings took place.
Vele Project - Tuli Coalfield
Since the execution of the New Order Mining Right ("NOMR") and approval of
the Environmental Management Plan in March 2010, CoAL has mobilised the
necessary general contractors and an Engineering, Procurement, and
Construction Management contractor in order to be able to commence
production during August this year.
Progress to date includes completion of the Musina bypass road and rail
siding improvements, modular plant construction is 60% complete, access
roads are 90% complete, first blasting commenced during early June 2010, the
box cut opening is 70% complete and transfer dam construction is under way.
The Company still awaits the approval of an integrated water use licence, an
application for which was submitted to the Department of Water Affairs on 10
November 2009. CoAL is liaising with the relevant authorities on an ongoing
basis, and remains confident that the required licence should be received
prior to the intended commissioning of the plant and first production.
Makhado Project - Soutpansberg Coalfield
As announced on 11 March 2010, CoAL has received approval to remove a bulk
sample from Makhado, which will be washed and trucked to ArcelorMittal South
Africa`s ("AMSA") Vanderbiljpark works. Processing of the bulk sample in
AMSA`s coking ovens is intended to facilitate the finalisation of terms and
conditions, including price, volume and quality, of the proposed formal off-
take agreement between AMSA and CoAL.
A definitive feasibility study in relation to the Makhado Project has also
been launched, the results of which are expected to be received early in
2011.
Project Overview
An overview of CoAL`s coal mines and projects is attached as Annexure A to
this announcement.
Funding Options
The Company continues to consider a number of funding options which include
various forms of debt (such as additional working capital facilities),
equipment financing leasing, self funding environmental rehabilitation
guarantees, sale of non-core assets (such as Holfontein and Madagascar) and
equity. In order to fund the development of the Makhado Project and
participation in any further potential expansions of capacity at the Matola
Terminal, the Board believes a combination of the above would be preferable.
The Company also notes the potential sources of funding that would arise if
either: (i) Firefly Investments 163 (Proprietary) Limited exercised its
option (granted pursuant to the Company`s black economic empowerment
arrangements) to subscribe for 50 million of the Company`s shares; or (ii)
Exxaro Coal (Proprietary) Limited exercised its option to acquire a 30%
participating right in certain properties at the Makhado Project.
ADMISSION TO OFFICIAL LIST OF THE LONDON STOCK EXCHANGE
CoAL is currently listed on three securities exchanges: the Australian
Securities Exchange ("ASX"), the AIM Market of the London Stock Exchange
("AIM") and the Main Board of JSE Limited ("JSE"). As previously announced,
the Company intends to de-list from AIM and seek simultaneous approval for
admission to the Official List and to trading on the LSE Main Market ("LSE
Admission"). In connection with this move and in order to address the
requirements for inclusion in the FTSE Index UK series, the Company is also
considering de-listing from the ASX following the LSE Admission.
The Company previously indicated that the LSE Admission was expected to take
place in the first half of 2010. The LSE Admission requires the publication
of a full Prospectus Rules-compliant prospectus including, inter alia,
audited financial statements and mineral expert reports on the Company`s
mining assets.
As a result of timing requirements under the Prospectus Rules in relation to
the financial statements to be included in the prospectus, the Company has
decided to wait until its next audited full year financial statements, for
the year ended 30 June 2010, are available to be published before proceeding
with the LSE Admission. It is expected the financial statements will be
available in September or October 2010, and accordingly it is currently
anticipated that the LSE Admission will, subject to approval from the UKLA
being obtained, take place no later than November 2010.
In connection with the LSE Admission and the preparation of the related
prospectus, CoAL engaged mineral experts to prepare reports in relation to
its assets, including the assets acquired through the acquisition of NuCoal
which was completed earlier this year. The Company engaged:
1. Mineral Corporation Consultancy (Pty) Limited ("The Mineral
Corporation") to prepare a report (the "MinCorp Report") in relation to
its Mooiplaats mine and its Vele and Makhado coal projects; and
2. Caracle Creek International Consulting (Pty) Limited ("CCIC") to
prepare a report ("CCIC Report") in relation to the former NuCoal
thermal coal assets now owned by CoAL, namely the Zonnebloem,
Hartogshoop and Klipbank mines, the Opgoedenhoop project and the
Woestalleen colliery.
The CCIC Report has been received in its final form, and an Executive
Summary is provided as Annexure B to this announcement. Further, a copy of
the full CCIC Report is available on the Company`s website at
www.coalofafrica.com/-Reports-.html
The MinCorp Report is close to completion. However, the Company and its
advisors are still awaiting receipt of the completed Makhado project coking
coal analysis resulting from the 25 large diameter drill program completed
later last year, the cores of which were submitted to ACT Laboratories for
testing. The initial analysis has been completed and the results are
attached as Annexure D to this announcement. The commentary on the results
of the analysis are included in the MinCorp Summary Report (refer below).
The results of the complete analysis will be included in the MinCorp Report
in commentary on the quality of the coking coal at the Makhado project. On
receipt of the final MinCorp Report, the Company will make an announcement
to the market providing a summary of the report and will publish the report
in full on the Company`s website.
As an interim measure until the final MinCorp Report is available, the
Company asked The Mineral Corporation to issue a summary report ("MinCorp
Summary Report") containing details of the resources at the Mooiplaats mine
and the Vele and Makhado coal projects. This MinCorp Summary Report has now
been finalised and is attached as Annexure C to this announcement. A copy
of the MinCorp Summary Report is also available on the Company`s website.
A summary of the key resource information for CoAL`s projects is shown
below. This has been extracted without amendment from the CCIC Report and
the MinCorp Summary Report. These resource statements were compiled in
accordance with (and comply with) the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves ("JORC Code"), as
published by the Joint Ore Reserves Committee of the Australasian Institute
of Mining and Metallurgy, the Australian Institute of Geoscientists and The
Minerals Council of Australia. The revised resource statements from the
CCIC Report and the MinCorp Summary Report are all in line with previously
reported gross tonnes in situ ("GTIS") resource estimates.
CoAL Resource Summary(1)
Project GTIS
Vele 813.5
Mooiplaats 84.5
Makhado 947.0
Zonnebloem 11.8
Hartogshoop 1.2
Klipbank 7.60
Opgoedenhoop 27.4
Notes
(1) All figures shown are in millions of tonnes, rounded to one decimal
place
HIGHLIGHTS OF MINCORP SUMMARY REPORT
Vele Project
- The Mineral Corporation has estimated that the Vele Project contains
total GTIS and mineable tonnes in situ ("MTIS") resources of 813 Mt and
690 Mt respectively. The current estimate of 813.5 Mt GTIS generated by
The Mineral Corporation shows an increase in the GTIS tonnage of
approximately 93Mt from the previous CoAL estimate of 720.8 Mt.
- The deposit is considered to be amenable to exploitation by opencast
and underground mining methods. The potential opencast GTIS resources
in all four targeted seams total 333 Mt. Only the Bottom Lower seam,
with a GTIS resource of 212 Mt, is targeted for underground extraction.
- Free Swelling Indices ("FSI") determined on a 12% ash product derived
from large diameter ("LD") bulk samples are relatively high, ranging
from 7.5 to 8.5, while Gray King and Roga Indices are similarly high,
ranging from G8 to G11 and 84 to 90 respectively.
- On the basis of the bulk sampling test work, Vele coals could be
categorised as high volatile soft (blend) coking.
- The results of testwork conducted on LD core samples indicate that
product yields in the practical mining situation are likely to be
significantly higher than the slim core indications, in some cases by
more than 90%. In some seams, yields over 40% were shown.
Mooiplaats Colliery
- The Mineral Corporation calculated a MTIS for Mooiplaats of 79.4 Mt
which compares to CoAL`s previously stated resource of 74.5 Mt. This
resource estimate is based on a seam thickness cut-off of one metre.
- GTIS resources for the B Upper Seam, which is currently being mined,
total 56.3 Mt of which more than 95% is classed as measured. A seam
thickness cut-off of 1.4 metres was used to define potentially mineable
GTIS resources, as this is considered the minimum underground mining
height from practical and economic aspects.
- Resources in all categories in the North Block are measured, while
approximately 95% of resources in the South Block fall into the
measured category.
Makhado Project
- The Mineral Corporation has estimated a total GTIS resource of 947 Mt
for the coal deposits contained on the contiguous farms Windhoek,
Tanga, Fripp and Lukin (held by CoAL) and Salaita and Telema (held by
Rio Tinto), of which 387 Mt is measured resource and 542 Mt is
indicated resource. This is within 10% of CoAL`s previous resource
statement which estimated 1,035 Mt GTIS.
- The opencast GTIS resources total 311.5 Mt and comprise 284.4 Mt
measured resource and 27.1 Mt indicated resource. No resource
statement was calculated for underground resources.
- Results of analyses for slim core samples from the CoAL boreholes
indicate an overall average yield of 19.5% for a coking coal product
with an ash content of 12%. Average product yields from LD bulk samples
are higher and in some seams, yields of over 30% were shown.
- The product has a low inherent moisture content and the arithmetic
average sulphur content of 1.1% is moderate. Based on the initial
results received from LD bulk sample testwork, the product exhibits
high Free Swelling and Roga Indices of 9 and 89 respectively while the
vitrinite content ranges from 79% to 88% with an average vitrinite
reflectance of RoVmax1.0. Maximum fluidities of over 14,000 dial
divisions per minute have been recorded.
- The vitrinite reflectance, FSI and volatile matter contents suggest
that the Makhado product has the potential to be classed as a medium
volatile, semi-hard coking coal. This is expected to be confirmed when
further results of specialised testwork are received.
HIGHLIGHTS OF CCIC REPORT
- CCIC have estimated a total GTIS resource across the various projects
under review of approximately 48 Mt, of which 23 Mt are measured
resources and 25 Mt are indicated resources. MTIS are estimated at 43
Mt.
- The resource projects in question are called the Zonnebloem (Vuna),
Hartogshoop, Klipbank and Opgoedenhoop projects. The first three are
active surface (open pit) collieries mined by truck and shovel methods,
and Opgoedenhoop is a drilled out exploration project with potentially
exploitable resources.
- Zonnebloem is presently producing an average of 260kt per month of ROM
coal, which is transported some 40 kilometres to Woestalleen, where it
is beneficiated for export and domestic thermal coal markets.
Presently, the estimated GTIS resource at Zonnebloem stands at
approximately 11.77 Mt. To the immediate east and north of Zonnebloem,
there is considerable upside potential to jointly develop other
resources not currently held by CoAL.
- The Hartogshoop Colliery began production in December 2009 and
currently has a steady rate of production with a maximum capacity of
60kt per month of ROM coal. The mining method is via open pit truck and
shovel roll-over. The mining layout is a single box cut 600 metres in
length. Some coal has been sold raw as mined but presently the majority
of the coal is beneficiated at Woestalleen.
- The Opgoedenhoop Project has an estimated GTIS resource of 27.41 Mt. A
NOMR has been granted in respect of the project, however mining has not
yet begun.
- Woestalleen is a coal preparation facility in close proximity to the
coal resources from which it currently receives coal to be beneficiated
for the export and domestic markets. The plant is established, well run
and flexible, being well suited to its present task. Woestalleen has
its own RBCT and general freight rail siding, and has produced
beneficiated coal product since 1986. The present plant capacity is
some 350kt (+/-1O%) ROM feed tonnes per month. A two stage wash is
undertaken to produce a 26.5 megajoules per kilogram ("MJ/kg") primary
product for the export thermal coal market and a secondary 21 MJ/kg
product for the domestic thermal coal market.
- As Zonnebloem, Hartogshoop and Klipbank are all producing mines; the
main development opportunities at these sites lie in enhancing the coal
recoveries, decreasing mining dilution and costs, and enhancing
processing on site, such that less non-coal material needs to be hauled
to Woestalleen and beneficiated. Opgoedenhoop is a greenfield project
that contains a significant coal resource.
ASX LISTING
If the Board concludes that de-listing from the ASX is in the best interests
of the Company and all of its shareholders, certain prescribed conditions
must be met by the Company before de-listing, namely:
1. A minimum of three months` formal notice to the market regarding the
Company`s intention to delist;
2. Provision of a facility through which shareholders may sell their
securities on AIM, the LSE Main Market or the JSE through an ASX
participating organisation for a period of not less than three months
after the Company`s removal from the Official List of ASX; and
3. Provision of a letter to shareholders informing them of the Company`s
intention to be removed from the Official List of ASX and notifying
them of the facility through which they can sell their shares on AIM,
the LSE Main Market or the JSE.
4. The Company will provide further details of progress and the timetable
regarding the move to the LSE Main Market and de-listing from ASX in
due course.
Yours sincerely,
SIMON J FARRELL
Managing Director
Johannesburg
15 June 2010
JSE Sponsor
Macquarie First South Advisers (Pty) Limited
Contacts
CoAL
Simon Farrell Tel: +61 (0) 417 985 383
Blair Sergeant Tel: +27 (0) 11 459 2858
Azure Capital Tel: +61 (0) 8 6263 0888
Geoff Ward
Ryan Rockwood
Evolution Securities Tel: +44 (0) 20 7071 4300
Simon Edwards
Chris Sim
Conduit PR Tel: +44 (0) 20 7429 6603
Jos Simson
Leesa Peters
Macquarie First South Advisers Tel : +27 (0) 11 583 2000
Melanie de Nysschen
Annerie Britz
About CoAL
CoAL is an AIM/ASX/JSE listed coal mining and development company operating
in South Africa. CoAL`s key projects include the Woestalleen Colliery, the
Mooiplaats thermal coal mine, the Vele coking coal project and the Makhado
coking coal project.
The Mooiplaats coal mine commenced production in 2008 and is currently
ramping up to produce 2 million tonnes per annum ("Mtpa"). CoAL`s Vele and
Makhado coking coal projects are expected to start production in Q3 2010 and
Q1 2012 respectively, collectively producing an initial 2 Mtpa rising to a
combined annual output of 10 Mtpa of coking coal.
In 2010, CoAL completed the ZAR650m acquisition of NuCoal Mining (Pty)
Limited ("NuCoal"), a thermal coal producer with assets in South Africa in
close proximity to CoAL`s Mooiplaats mine. NuCoal owns the Woestalleen
Colliery, which has a number of off-take contracts in place and processes
approximately 2.5Mtpa of saleable coal for domestic and export markets.
NuCoal also owns two beneficiation plants, one fully operational mine
producing approximately 300kt per month of ROM coal and has recently
commenced production at a second mine.
CoAL currently has 1 Mtpa export capacity at the Matola Terminal in Maputo,
Mozambique, increasing to 3 Mtpa on completion of the next phase of
expansion at the terminal. CoAL also has the option to participate in
further expansion at the Matola Terminal, which is expected to increase the
capacity at the terminal by an additional 10 Mtpa.
Competent Persons Statement
The information in this announcement that relates to exploration results,
mineral resources or ore reserves is based on information compiled by the
following persons:
1. In respect of the MinCorp Summary Report, Mr Mark Craig Stewardson, who
is registered as a Professional Natural Scientist (Pr Sci Nat, Reg. No.
400119/93) with the South African Council for Natural Scientific
Professions (SACNASP), which is a Recognised Overseas Professional
Organisation (ROPO) in terms of the JORC Code. Mr Mark Craig
Stewardson is employed by The Mineral Corporation.
2. In respect of the CCIC Report, Dr. Philip John Hancox , who is a member
of the South African Council for Natural Scientific Professions
(SACNASP No. 400224/04), which is a Recognised Overseas Professional
Organisation (ROPO) in terms of the JORC Code. Dr. Philip John Hancox
is employed by CCIC.
Mr Mark Craig Stewardson and Dr. Philip John Hancox have sufficient
experience that is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which they are undertaking
to qualify as Competent Persons as defined in the 2004 Edition of the JORC
Code. Mr Mark Craig Stewardson and Dr. Philip John Hancox consent to the
inclusion in this announcement of the matters based on their information in
the form and context in which it appears.
Glossary
bituminous coal A medium quality coal mostly used in for
raising steam for the generation of
electricity.
coal A readily combustible sedimentary rock
containing more than 50% by mass and 70%
by volume of carbonaceous material.
coke The solid product of heating coal in an
oven to very high temperature in the
absence of air.
coking coal Coal that can be converted into useful
coke.
Free Swelling Index A measure of the tendency of coal to swell
when heated under controlled conditions.
Gray King index A measure of the coking properties of a
coal sample.
indicated coal resource That part of a coal resource for which
tonnage, densities, shape, physical
characteristics and coal quality can be
estimated with a low level of confidence.
measured coal resource That part of a coal resource for which
tonnage, densities, shape, physical
characteristics and coal quality can be
estimated with a high level of confidence.
mineable in situ coal Tonnage and coal quality, at specified
resource moisture content, contained in the coal
seams or sections of the seams, which are
proposed to be mined at the theoretical
mining height, excluding dilution and
contamination material, with a specific
mining method and after the relevant
minimum and maximum mining thickness cut-
off and relevant coal quality cut-off
parameters have been applied.
MJ/kg Megajoules per kilogram, a measure of the
heat generating capacity of coal
Roga Index An indicator of the potential caking
properties of coke produced from coal.
thermal coal Coal used to generate heat.
vitrinite An organic component of coal.
vitrinite reflectance A measure (used in the determination of
coal quality) of the light reflected back
from the vitrinite when viewed under a
microscope.
ANNEXURE A: KEY PROJECTS OVERVIEW
THERMAL COAL
Ownership 100%(4) 100%(2)
Location Mpumalanga Province, South Mpumalanga Province, South
Africa Africa
Asset 48.0m tonnes GTIS resources 53.3m tonnes MTIS resources
Overview (Zonnebloem,Klipbank,
(1) Hartogshoop, Opgoedenhoop)
Woestalleen colliery ROM feed
capacity: 4.2mtpa
Current 4.2mtpa (annualised) ROM 40kt per month ROM
Production
Key Vuna, Klipbank and Adjacent to Eskom`s Camden
Highlights Hartogshoop mines all in Power Station
production Key development milestone
High quality bituminous coal achieved:
for export and domestic sale Oct. 2008: first extraction
Opgoedenhoop currently being Mar. 2009: mine operational
reviewed Jan. 2010: first shipment
Woestalleen colliery exported from Matola terminal
currently running at 90% name Currently mining high quality
plate capacity processing bituminous coal
coal from the group assets Supplementing with ROM coal
(Vuna, Klipbank, Hartogshoop) from adjacent operation
Rail siding at Woestalleen Off-take marketing & sale
colliery allowing export of agreements:
the majority of coal 35% Traxys / 35% Macquarie
processed through
Richards Bay Coal Terminal
Richards Bay Dry Bulk
Terminal
Matola Terminal
Remainder trucked to domestic
customers
COKING COAL
Ownership 100% 100%(3)
Location Limpopo province, South Limpopo province, South
Africa Africa
Asset 813m tonnes GTIS resources 947m tonnes GTIS resources(5)
Overview
(1)
Current Nil Nil
Production
Key Feb. 2010: New Order Mining NOMR documentation
Highlights Right (NOMR) granted and completed-submission awaiting
ownership increased to 100% Department of Minerals and
Development plan Resources (DMR) approval of
Phase I (underway, completion RioTinto farm swap
by end 2010), modular coal Mar. 2010: DMR approval for
treatment plant: bulk sample extraction for
Dry & Wet commissioning testing by ArcelorMittal SA
completed at Vanderbijlpark
Supporting infrastructure Definitive Feasibility Study
construction on schedule (DFS)currently being prepared
Phase II: extension to Option granted to Exxaro to
5.0mtpa buy up to 30% participating
right for cash based on
market value less a 20%
discount
Letter Of Intent (LOI) signed by ArcelorMittal SA and
negotiations underway to formalise agreement for the
delivery of 2.5 to 5.0 mtpa coal from Vele or Makhado for
delivery to Vanderbijlpark steel works (subject to testing)
Definitions:
MTIS = Mineable tonnes in situ; GTIS = Gross tonnes in situ; ROM = Run of
mine production
1. Indicates Measured, Indicated and Inferred Resources
2. CoAL currently holds only a beneficial interest in the Mooiplaats mine,
pending registration
3. Assuming Exarro call option for 30% of the equity is not exercised
4. 100% economic control of Vuna is held through a life of mine contract
and coal purchase agreement. 51% is legally held by Vuna Holdings (Pty)
Ltd. CoAL has an option to acquire an additional 2% and take its
ownership to 51%
5. Including RioTinto farm swap
ANNEXURE B - EXECUTIVE SUMMARY OF CCIC REPORT
CCIC COAL
Geological Consultants
Project Management
PO Box 9062, Devon Valley,
Weltevreden park, 21715
TEL: 011 8800278 FAX: 011 4474814
EMAIL: liz@cciconline.com
MINERAL EXPERT`S REPORT
COAL OF AFRICA`S ZONNEBLOEM, HARTOGSHOOP, KLIPBANK AND OPGOEDENHOOP COAL
PROJECTS
Republic of South Africa
Prepared For:
COAL OF AFRICA LIMITED
4 Fricker Road, Ground Floor
Illovo, Sandton 2191
Republic of South Africa
By:
Caracle Creek International Consulting (Pty) Ltd.
Coal Division
The Mall Offices,
11 Cradock Avenue,
Rosebank,
Johannesburg, Gauteng,
Republic of South Africa
June 2010
1. EXECUTIVE SUMMARY
The South Africa-focused coal-miner Coal of Africa Limited has recently
completed its acquisition of NuCoal Mining (Pty) Ltd. As part of this
transaction a number of coal resource areas were acquired from NuCoal, as
well as the Woestalleen Colliery and coal processing facility. The resource
projects in question are termed the Zonnebloem (Vuna Colliery), Hartogshoop
(Bravo), Klipbank and Opgoedenhoop projects. The first three are active
surface (open pit) collieries mined by truck and shovel methods, and
Opgoedenhoop is a drilled out exploration project. The acquisition of NuCoal
Mining provided Coal of Africa Limited with access to additional thermal
coal production, supply contracts (with, among others Eskom) and export
capacity at the Richard`s Bay Coal Terminal.
Geologically Zonnebloem, Hartogshoop and Klipbank are situated in the
Witbank Coalfield whereas Opgoedenhoop occurs in the Ermelo Coalfield, both
important historical coal producing areas in South Africa. The target coal
in all of the projects areas is defined as multiple seam type as per South
African National Standard (SANS 10320:2004).
Zonnebloem is currently an active open pit surface mine to a maximum depth
of 30 metres. Since 2008 a portion of the original resource in the south has
been mined out, with two parallel cuts simultaneously being mined to give an
overall face length of over four kilometres. The mine is presently producing
approximately 260 000 tonnes per month run of mine coal, which is
transported some 40 km to Woestalleen, where it is beneficiated for the
export and domestic thermal markets.
The Hartogshoop Colliery began production in December 2009 and currently has
a steady rate of production, with a maximum capacity of 60 000 tonnes per
month run of mine coal. The mining method is via open pit truck and shovel
roll-over. The mining layout is a single box cut 600 m in length. Some coal
has been sold raw as mined, but presently the majority of the coal is
beneficiated at Woestalleen.
The open pittable resource at Klipbank is mature with production during late
2009 being erratic. Coal of Africa Limited is however currently looking at
various innovations to increase the life of mine of this asset.
The Opgoedenhoop Project is a drilled exploration play that hosts a combined
A, B and C Seam resource of some 27.41 million tonnes (Gross Tonnes In
Situ). A mining right has been granted, however mining has not yet begun.
Woestalleen is a coal preparation facility in close proximity to the coal
resources from which it currently receives coal to be beneficiated for the
export and domestic markets. This asset formed the centre of the NuCoal
operations and acted as a hub from which it received coal from the other
operations. The plant is established, well run and flexible, being well
suited to its present task. A two stage wash is undertaken to produce a 26.5
MJ/kg primary product for the export thermal market and a secondary 21 MJ/kg
product for the domestic thermal market. Woestalleen has its own Richards
Bay Coal Terminal and general freight rail sidings, and has produced
beneficiated coal product since 1986. The present plant capacity is some 350
000 (+/-10%) run of mine feed tonnes per month and Woestalleen presently
supplies over 2 000 000 tonnes per annum of coal for the export market. Of
this 207 000 tonnes is via its own Quattro export allocation through the
Richards Bay Coal Terminal, the remainder being supplied under export
contracts with strategic partners.
As Zonnebloem, Hartogshoop and Klipbank are all producing mines; the main
development opportunities at these sites lie in enhancing the coal
recoveries, decreasing mining dilution and costs, and enhancing processing
on site, such that less non-coal material needs to be hauled to Woestalleen
and beneficiated.
The Zonnebloem, Hartogshoop, Opgoedenhoop and Woestalleen Colliery mining
rights are all issued for coal and have the following validity periods:
Zonnebloem, fifteen (15) years from the 10th of June 2008, which is
renewable; Hartogshoop, three (3) years from 26th of November 2009, which is
renewable; Opgoedenhoop six (6) years from the 29th of October 2009, which
is renewable; and Woestalleen Colliery, four (4) years from the 1st of April
2008, which is renewable.
All mining rights issued in terms of the Mineral and Petroleum Resources
Development Act 28 of 2002 are subject to the provisions of the Act and any
other relevant legislation. Each mining right contains standard terms and
conditions which generally repeat the provisions of the Act or refer to
other relevant legislation. The Zonnebloem, Hartogshoop, Opgoedenhoop and
Woestalleen Colliery New Order mining rights contain standard terms and
conditions, none of which are unusual in the South African context. Each
mining right also contains certain terms which are specific to the right.
These terms pertain to the holder of the right, black economic empowerment
agreements the holder has entered into and is bound by, the mining area, the
validity period of the right, and the period within which the right must be
submitted for renewal.
The mining rights each contain their own provisions regarding black economic
empowerment, however as approval in terms of Section 11 of the Mineral and
Petroleum Resources Development Act was sought and obtained to transfer
control of these Mining Rights from NuCoal Mining (Pty) Ltd. or companies
within the NuCoal group to Coal of Africa Limited, the provisions in these
mining rights regarding black economic empowerment in the NuCoal context
must be regarded as substituted for the Coal of Africa Limited black
economic empowerment arrangements presented at the time of the application
for Section 11 approval.
Mining must also be conducted in accordance with a mine work programme
submitted to the Department of Mineral Resources at the time of application,
or as amended, and must be conducted in accordance with the Environmental
Management Programme approved by the Department of Mineral Resources at the
time of application, or as amended. A number of significant environmental
issues were identified during the risk review and these include legal
compliance, water pollution and discharge, rehabilitation funding and
planning for closure. Coal of Africa Limited has however put various action
plans in place to mitigate against these risks.
Although previous models and resource estimates existed for Zonnebloem,
Hartogshoop, Klipbank and Opgoedenhoop (Ngobeni, 2009a-d), the coal
resources for each project were reviewed and remodelled and independently
estimated by CCIC. Coal Resources are reported in accordance the South
African Code for Reporting of Mineral Resources and Mineral Reserves (the
SAMREC Code, 2007), with particular reference to South African National
Standard SANS 10320:2004.
The coal resources at each of the four properties under consideration were
remodeled based on the available data at the time, and the tonnages so
obtained are presented in Table 1.1 below. The coal resources are divided
into logical blocks based on the geometry of the coal deposits, their
structure and the coal rights holdings.
The cut-off and effective date for this report is the 14th of June
2010.these include legal compliance, water pollution and discharge,
rehabilitation funding and planning for closure. Coal of Africa Limited has
however put various action plans in place to mitigate against these risks.
Table 1.1: Resource table for the Zonnebloem (Vuna), Hartogshoop, Klipbank
and Opgoedenhoop projects. Note: as the Zonnebloem, Hartogshoop and Klipbank
projects have operational collieries, these figures are only correct as at
the 31st of January 2010, and have not been depleted for subsequent
extraction.
Asset Coalfield Block avg RAW avg
RD (g/cm3) Thickness
(m)
VUNA Witbank #1+#2 NORTH 1.67 6.39
#1+#2 SOUTH 1.67 4.10
TOTAL #2 + #1
HARTOGSHOOP Witbank #2 NORTH 1.50 3.48
#2 SOUTH 1.50 2.74
TOTAL #2
Witbank #1 NORTH 1.46 1.69
#1 SOUTH 1.46 1.81
TOTAL #1
TOTAL #2 + #1
KLIPBANK Witbank #2 1.66 1.73
#1 1.59 0.85
TOTAL #2 + #1
OPGOEDENHOOP Ermelo A 1.63 1.44
B 1.64 1.27
C 1.72 2.46
TOTAL A+B+C
Table 1.1: (continued)
Asset Coalfield Block Area (m2) Volume (m3) GTIS cut-off*
VUNA Witbank #1+#2 332 075.00 2 121 480.23 3 542 900.00
NORTH
#1+#2 1 202 787.00 4 927 967.31 8 229 710.00
SOUTH
TOTAL 1 534 862.00 7 049 447.53 11 772 610.00
#2 +
#1
HARTOGSHOOP Witbank #2 111 668.00 389 131.90 582 700.00
NORTH
#2 42 708.00 116 827.60 165 100.00
SOUTH
TOTAL 154 376.00 505 959.51 747 800.00
#2
Witbank #1 125 646.00 212 940.30 310 000.00
NORTH
#1 61 395.00 110 857.73 161 850.00
SOUTH
TOTAL 187 041.00 323 798.03 471 850.00
#1
TOTAL 341 417.00 829 757.54 1 219 650.00
#2 +
#1
KLIPBANK Witbank #2 2 321 027.00 4 006 924.59 6 645 100.00
#1 890 436.00 760 182.07 951 000.00
TOTAL 3 211 463.00 4 767 106.66 7 596 100.00
#2 +
#1
OPGOEDENHOOP Ermelo A 3 223 481.00 4 648 555.24 5 365 790.00
B 4 390 214.00 5 571 246.59 5 064 560.00
C 4 358 046.00 10 722 16 977 650.00
690.87
TOTAL 11 971 741.00 20 942 27 408 000.00
A+B+C 492.70
Resource Total 47 996 360.00
Table 1.1: (continued)
Asset Coalfield Block Geol Loss MTIS (t) Category
VUNA Witbank #1+#2 10.00% 3 188 610.00 Measured
NORTH
#1+#2 7 406 739.00 Measured
SOUTH
TOTAL 10 595 Measured
#2 + 349.00
#1
HARTOGSHOOP Witbank #2 524 430.00 Measured
NORTH
#2 148 590.00 Measured
SOUTH
TOTAL 673 020.00 Measured
#2
Witbank #1 279 000.00 Measured
NORTH
#1 145 665.00 Measured
SOUTH
TOTAL 424 665.00 Measured
#1
TOTAL 1 097 685.00 Measured
#2 +
#1
KLIPBANK Witbank #2 15.00% 5 648 335.00 Indicated
#1 808 350.00
TOTAL 6 456 685.00 Indicated
#2 +
#1
OPGOEDENHOOP Ermelo A 4 560 921.50 Measured
B 4 304 876.00
C 14 431 Indicated
002.50
TOTAL 23 296 Measured &
A+B+C 800.00 Indicated
Resource 41 446
Total 519.00
*Cut-offs = seam >0.5m, ash <50%; Opgoedenhoop cut-offs = seam >1.3m, DAF
Vols >26%
Note: A minimum seam thickness of 0.5m was utilized as the seam thickness
cut-off and the coal quality cut-off for all projects was raw ash less than
50% on a dry basis. For Opgoedenhoop a greater than 26% dry-ash free
volatile (DAFV) and 1.3 m minimum mining height was also applied. No
geological modeling estimation error has been applied. Coal resources are
quoted on an air dried
moisture basis.
ANNEXURE C: MINCORP SUMMARY REPORT
14 June 2010
Ref: C-COA-MER-944-590/DRYch
Mr S Farrell
Managing Director
Coal of Africa Limited
P O Box 1401
Kelvin 2054
SOUTH AFRICA
sjfarrell@bigpond.com
Dear Mr Farrell
SUMMARY OF THE RESOURCES OF THE VELE, MOOIPLAATS AND MAKHADO PROJECTS
1 INTRODUCTION
Coal of Africa Limited (CoAL) holds beneficial interests in three coal
projects in the Limpopo and Mpumalanga Provinces of South Africa through
100% wholly owned South African registered companies. The assets under
consideration comprise the Vele Project, located in the Limpopo Province and
bordering Zimbabwe, the Mooiplaats Project, located in the Mpumalanga
Province near the town of Ermelo, and the Makhado Project located in the
Limpopo Province, between the towns of Musina and Makhado.
CoAL is presently listed on the JSE Ltd, the Australian Stock Exchange (ASX)
and the Alternative Investment Market (AIM) of the London Stock Exchange
(LSE).
The Mineral Corporation Consultancy (Pty) Limited (The Mineral Corporation)
has been mandated by the Directors of CoAL to prepare a Mineral Expert`s
Report (MER) addressing the above coal projects. The MER is currently in
preparation and will be completed on receipt of the results of analyses and
specialised testwork conducted on a number of bulk samples obtained from
large diameter boreholes drilled on the Makhado Project. The laboratory
expects this information to be made available in July 2010.
This report summarises the findings documented in the MER. The Mineral
Corporation is of the opinion that the results of any testwork currently in
progress will not materially affect the resource quantity and quality
estimates stated here.
2 SCOPE OF WORK
The Mineral Corporation has reviewed project data supplied by CoAL in
accordance with the scope of work and reporting has been based on the
following:
- Appraisal of the exploration and resource estimation methodologies
employed by CoAL and other parties;
- Verification, to the extent possible, of the reliability of data used
in the assessments;
- Geological and resource modelling undertaken by The Mineral Corporation
using data supplied by CoAL;
- Review of previous geological interpretations and Coal Resource
estimates;
- Inspection visits to the properties under consideration;
- Liaison with CoAL personnel and independent consultants acting on
behalf of CoAL, and;
- Instructions from CoAL to The Mineral Corporation to limit the MER to
the level of Coal Resource estimation only.
3 OVERVIEW OF THE MINERAL CORPORATION AND INDEPENDENCE
The Mineral Corporation operates as an independent technical advisor and
consultant, providing mineral resource evaluation, mining engineering and
mine valuation services to the mining industry.
The technical personnel of the Company are registered with various
professional organisations including the Southern African Institute of
Mining and Metallurgy, the Geological Society of London, the Society of
Economic Geology, the Geological Society of South Africa, the Australian
Institute of Mining and Metallurgy, the Institute of Quarrying, and the
South African Council for Natural Scientific Professions.
The Mineral Corporation has extensive experience in the evaluation of coal
projects and in particular the preparation of Competent Person`s Reports,
due diligence studies and fatal flaw analyses.
The Mineral Corporation will be paid a professional fee for the preparation
of the MER in accordance with normal professional consulting practices.
Neither The Mineral Corporation nor its directors, employees or associates
who contributed to the MER has any material interest in CoAL or the assets
reviewed.
4 REPORT QUALIFICATIONS
The Mineral Corporation places reliance on the Directors and the consultants
of CoAL that all technical information supplied to The Mineral Corporation
is valid. Although this data has been verified to the extent possible, The
Mineral Corporation does not accept any responsibility for information used
which, unknown to The Mineral Corporation, was factually incorrect or
inaccurate, or for any actions that may arise as a consequence thereof. The
Mineral Corporation also places reliance on CoAL that information relating
to the legal aspects of CoAL and the status of corporate transactions and
prospecting, mining and surface rights are accurate at the time of
compilation of this report.
VELE PROJECT
1 SUMMARY
The Mineral Corporation has estimated total gross tonnage in situ (GTIS)
resources of 813Mt, of which 171Mt are measured and 453Mt indicated.
Targeted opencast and underground GTIS resources amount to 333Mt and 212Mt
respectively in all categories.
Analysis of slim core samples indicates an overall average theoretical
yield of 16.7% for a 12% ash coking coal product in the targeted mining
areas. The results of analysis conducted on large diameter (LD) core samples
indicate that product yields in the practical mining situation are likely to
be significantly higher than those indicated by slim core testwork, in some
cases by more than 90%. In particular, LD samples from the better quality
Middle and Bottom Lower Seams have achieved yields of over 40%.
Free Swelling Indices determined on a 12% ash product derived from LD bulk
samples are relatively high, ranging from 7.5 to 8.5, while Gray King and
Roga Indices are similarly high, ranging from G8 to G11 and 84 to 90
respectively.
On the basis of bulk sampling testwork, the Vele product could be classed as
a high volatile, soft (blend) coking coal.
2 INTRODUCTION
The exploration work currently being conducted by CoAL is aimed at
confirming sufficient Coal Resources to support an initial open-cast mine
producing approximately one million tonnes per annum (Mtpa) of coking coal,
ramping up to 5Mtpa with the subsequent development of an underground mine.
3 LOCATION
The Vele Project is located 40km west of the town of Musina in the Limpopo
Province of South Africa. The project area is bounded in the north by the
Limpopo River which defines the international frontier with Zimbabwe. The
Project is well situated with respect to the major infrastructural aspects
of rail, road and power.
4 MINERAL RIGHTS
A New Order Mining Right (NOMR) has been granted over the greater part of
the Vele Project area in the name of Limpopo Coal Company (Pty) Ltd, a
wholly owned subsidiary of CoAL. The remainder of the Project area is held
under a New Order Prospecting Right (NOPR) granted to CoAL.
5 GEOLOGY
The Vele Project is located in the Limpopo Coalfield which comprises the
southern portion of the greater Tuli Coalfield that extends northwards from
South Africa into Zimbabwe and Botswana.
Within the Vele Project area, the Main Coal Zone averages about 16.5m in
thickness and comprises interlaminated carbonaceous shales, mudstones and
coal in varying proportions. Three principal coal units have been recognised
within the Main Coal Zone and named from the base upwards: Bottom Seam,
Middle Seam and Top Seam. The Top and Bottom Seams can be further
differentiated into sub-seams, these being; Bottom Lower, Bottom Upper, Top
Lower, Top Middle and Top Upper. The latter two coal seams are not
considered economic.
The average thicknesses of seams targeted for extraction are listed below.
- Top Lower Seam 1.52m
- Middle Seam 1.05m
- Bottom Upper Seam 1.98m
- Bottom Lower Seam 3.68m
The dip of the coal seams is generally between 1 and 2 but can increase to
10 in the vicinity of faults, a number of which have been identified. A
series of dolerite dykes trend east-west across the Project area and coal
occurring in proximity to the intrusions is invariably devolatilised.
6 EXPLORATION
Southern Sphere Mining and Development Company Limited undertook exploration
in the area during the late 1970s and early 1980s through a programme of
cored and percussion drilling, down-hole geophysical investigations and
airborne magnetic and gravity surveys.
CoAL commenced exploration in January 2008 and to date a total of 188 slim
core boreholes and 28 large diameter boreholes have been completed. Aerial
magnetic and radiometric surveys have also been undertaken.
7 ENVIRONMENTAL
Environmental Impact Assessment (EIA) and Environmental Management Plan
(EMP) reports for the Vele Project were completed in May 2009. The NOMR,
including approval of the EMP, became effective in March 2010. The Vele
Project is located in close proximity to the Mapungubwe National Park and
World Heritage Site. An appeal has been lodged by a number of environmental
and conservation pressure groups against the granting of the NOMR, however,
the Directors of CoAL believe that the EMP has sufficiently addressed
mitigation
measures to deal with any possible impacts on the environment.
8 RESOURCE LIMITS AND DISCOUNT FACTORS
The following criteria were by applied by The Mineral Corporation to define
the GTIS resources:
- Prospecting or Mining Rights boundaries
- Seam sub-outcrop
- Minimum seam thickness cut-off of 0.5m
- Resource extrapolation limits
- Limit of oxidation
Geological and modelling losses were applied to the GTIS resources to arrive
at mineable tonnage in situ (MTIS) resource estimates. The discount allows
for loss of coal due to dykes, faults, burnt coal zones and seam washouts.
Losses of 10%, 15% and 20% respectively were applied to measured, indicated
and inferred resources.
No allowance was made for possible sterilisation of resources by physical,
geographical or statutory constraints.
9 RESOURCE CATEGORIES
Resource categories have been defined in accordance with the JORC Code and
The Australian Guidelines for the Estimating and Reporting of Coal, Coal
Resources and Coal Reserves (the Australian Coal Guidelines).
Only Points of Observation with seam quality data were used to define
resource categories. Resources have been classed separately for each seam on
the basis of the following criteria:
- The Measured Resource limit was set at a maximum of 500m between Points
of Observation with the proviso that Measured Resources cannot be
extrapolated more than 250m beyond the limit of Points of Observation
data for any seam.
- The Indicated Resource limit was set at a maximum of 1 000m between
Points of Observation with the proviso that Indicated Resources cannot
be extrapolated more than 500m beyond the limit of Points of
Observation data for any seam.
- The Inferred Resource limit was set at a maximum of 4 000m between
Points of Observation. For any seam, the resource limits were
extrapolated no more than 500m beyond the last line of Points of
Observation.
10 RESOURCE ESTIMATES - THE MINERAL CORPORATION
GTIS resources have been estimated for the Top Lower, Middle, Bottom Upper,
and Bottom Lower Seams. The Top Middle and Top Upper Seams are not
considered economic and have been excluded from the resource base. The GTIS
resources have been divided into potential opencast and underground sectors
on the basis of a study conducted by MRM Mining Services (Pty) Limited
(MRM).
All boreholes with seam intersection data were used to generate the seam
physical models on which the estimates of seam volumes were based. Average
raw coal relative densities were weighted by volume while average raw coal
qualities were weighted by GTIS. Estimates of yields and qualities were also
generated for a washed product with a theoretical ash content of 12% (adb).
Average product yields were weighted by GTIS while average product qualities
were weighted by GTIS and yield.
The Mineral Corporation has estimated that the Vele Project contains total
GTIS and MTIS resources of 813t and 690Mt respectively. The deposit is
considered to be amenable to exploitation by opencast and underground mining
methods. The potential opencast GTIS resources in all four targeted seams
total 333Mt. Only the Bottom Lower, with a GTIS resource of 212Mt, is
currently targeted for underground extraction.
Table 1 presents the estimated in situ tonnages, raw coal qualities, and
theoretical yields and qualities for a washed coal product with an ash
content of 12%. Resources have been categorised as measured, indicated or
inferred according to JORC Code guidelines and all tonnages and qualities
are quoted on an uncontaminated, air-dried basis (adb). The resources have
also been sub-divided into proposed underground and opencast sectors.
Table 1: Coal Resource Statement - The Mineral Corporation
For the announcement with complete tables, please refer to the Company`s
website: www.coalofafrica.com/-Reports-.html
11 PREVIOUS RESOURCE ESTIMATES
A resource upgrade statement was released by CoAL on 18 June 2008. It listed
GTIS resources in measured, indicated and inferred categories of 133.8Mt,
76.6Mt and 131.5Mt respectively. According to information from CoAL, the
estimates were based solely on information from historical boreholes drilled
by Southern Sphere and limited to an area comprising two conceptual open
cuts. No potential underground-mineable resources were included.
On 30 September 2008, CoAL released a Consolidated Resource Statement which
listed a total resource of 720.8Mt comprising measured, indicated, inferred
and reconnaissance resources of 177.4Mt, 417.0Mt, 62.2Mt and 64.3Mt
respectively. According to information from CoAL, these revised estimates
were based on information from historical boreholes, plus a number of new
boreholes drilled by CoAL. The estimates also reflected a change in mining
strategy which took into account a revision of the stripping ratio limits
and the inclusion of underground-mineable resources.
The current estimate of 813.5Mt generated by The Mineral Corporation shows
an increase in the GTIS tonnage of approximately 93Mt from the previous CoAL
estimate of 720.8Mt. Additional exploration drilling since September 2008
has allowed resources previously classed by CoAL as reconnaissance to be
elevated to inferred or indicated categories.
The difference between measured resource estimates generated by The Mineral
Corporation (171.4Mt) and CoAL (177.4Mt) is attributable to the additional
drill information and the application of differing criteria used to define
resource categories, i.e. the SAMREC Code
versus the JORC Code.
12 COAL QUALITIES AND PROPERTIES
It is generally accepted that reliable estimates of coking coal product
yields are often not achievable from laboratory testing of slim core samples
and that results obtained from large diameter (LD) core samples are
considered more realistic. Table 2 below compares average product yields for
each seam, based on the analysis of samples from LD and slim core boreholes.
Table 2: Comparison of product yields for LD and slim core samples
SAMPLE SOURCE COAL SEAM
Top Lower Middle Bottom Upper Bottom Lower
East - LD 15.8 43.2 25.1 34.7
Bulk
Central - LD 16.5 38.1 33.9 25.8
Bulk
West - LD 12.0 32.8 18.9 42.0
Bulk
Average - LD 14.8 38.0 25.9 34.2
Bulk
Average - 9.6 22.7 14.4 17.9
Slim core
Difference 54% 68% 80% 91%
Table 2: Comparison of product yields for LD and slim core samples
The Middle and Bottom Lower Seams exhibit superior qualities with
theoretical yields of over 40% achievable from LD core. It can be seen that,
although the yields from the LD borehole samples are variable within and
between seams, they are in all cases significantly higher than the slim core
equivalent; in some cases over 90% greater. This strongly suggests that
actual yields achieved in the production situation will be much higher than
those indicated by the results of slim core testwork. On the basis of the
information currently available, it is difficult to reliably predict the
practical yields that will be obtained but it is expected that this will be
quantified through processing of a mined bulk sample in a pilot plant.
Table 3 shows selected coal qualities and coking properties for the LD bulk
samples. The category designated `Upper Seams` comprises a composite of coal
from the Top Lower, Middle and Bottom Upper Seams. The Bottom Lower Seam has
been treated separately as it is the only seam targeted for underground
extraction but will also be mined during opencast operations.
Table 3: CoAL LD bulk sample properties
COAL QUALITIES AND COKING UNIT BOTTOM LOWER SEAM
PROPERTIES
WEST CENTRAL EAST
Inherent Moisture (ad) % 1.1 1.6 1.8
Ash (ad) % 12.8 11.7 11.5
Volatile Matter (db) % 36.5 36.0 35.6
Sulphur (db) % 0.98 0.88 0.92
Phosphorus* 0.008 0.012 0.006
FSI 8.5 7.5 8.5
Roga 87 87 90
Gray King Index G11 G8 G9
Fluidity (max) ddpm 6515 3925 1189
Fluidity (solidification) Degrees 468 467 460
celsius
Dilatation (max) % 112 64 54
Dilatation (max contraction) % 37 34 35
Vitrinite % 83.4 84.7 86.3
RoV max % 0.77 0.79 0.80
Total Inerts % 13.3 12.3 10.5
CRI Index % 36.0 47.9 50.6
CSR Index % 35.1 20.5 16.4
Table 3: CoAL LD bulk sample properties (continued)
COAL QUALITIES AND COKING UNIT UPPER SEAMS
PROPERTIES
WEST CENTRAL EAST
Inherent Moisture (ad) % 1.7 1.8 1.9
Ash (ad) % 14.6 11.8 11.4
Volatile Matter (db) % 36.3 37.2 36.0
Sulphur (db) % 1.28 1.11 1.04
Phosphorus* 0.044 0.017 0.021
FSI 8.0 8.0 8.0
Roga 84 86 87
Gray King Index G11 G9 G8
Fluidity (max) ddpm 5241 2417 566
Fluidity (solidification) Degrees 465 463 461
celsius
Dilatation (max) % 89 79 56
Dilatation (max contraction) % 29 34 34
Vitrinite % 83.9 85.4 88.4
RoV max % 0.78 0.77 0.79
Total Inerts % 12.2 11.2 8.7
CRI Index % 43.1 45.6 51.0
CSR Index % 18.2 21.1 16.4
* Derived from phosphorus in ash
The product has low moisture, high volatile matter and moderate sulphur
contents. Internationally traded coking coals typically have an ash content
of around 10% or less. However, the 12% ash content of the Vele product is
considered acceptable by South African consumers.
The Free Swelling Indices (FSI) determined on LD bulk samples are relatively
high, ranging from 7.5 to 8.5. However, FSI measurements on slim core
material may exhibit lower values which could be attributable to oxidation
of samples acquired during the earlier phases of exploration, prior to the
introduction of refrigerated storage.
Bulk sample analyses indicate Gray King and Roga Indices in the upper ranges
of G8 to G11 and 84 to 90 respectively. The high average vitrinite content
of about 85% is attractive as a commercial premium is often placed on coking
coals with an elevated vitrinite percentage.
The Coke Strength after Reaction (CSR) measurements are relatively low but
are commensurate with the average RoVmax of 0.78%. As there is an inverse
relationship between CSR and Coke Reactivity Index (CRI), the latter values
are correspondingly high.
Examination of values for maximum Fluidity, maximum Dilatation, CRI and CSR
values suggests that there is a propensity for the coking properties in all
seams to increase from east to west across the property. However, the
relatively consistent volatile matter content suggests that this phenomenon
is not an effect of coal rank.
On the basis of bulk sampling testwork, the Vele product could be classed as
a high volatile, soft (blend) coking coal. This was also the opinion of coal
consultants, Wood Mackenzie, in a report prepared for CoAL in April 2009.
MOOIPLAATS PROJECT
1 SUMMARY
The Mineral Corporation has estimated total GTIS and MTIS resources for the
B Upper Seam of 56.3Mt and 53.3Mt respectively, of which more than 95% are
classed as measured. A seam thickness cut-off of 1.4m was used to define
potentially mineable resources as this is considered the minimum underground
mining height from practical and economic aspects.
An MTIS resource estimate of 74.5Mt was previously generated by SRK
Consultants, based on a 1.0m seam thickness cut-off. Employing the same
minimum seam thickness parameters, The Mineral Corporation has estimated a
comparable MTIS resource of 79.4Mt.
Based on a 1.4m seam thickness limit, average theoretical yields of 61% and
47% respectively are indicated for bituminous and lean coal products with a
calorific value of 27.5MJ/kg.
2 INTRODUCTION
The Mooiplaats Project is an operating underground coal mine exploiting the
B Upper Seam. Production commenced in November 2008 and a wash plant was
commissioned in May 2009. The first coal shipment was loaded during January
2010 and by the end of March 2010 the company had exported 132Kt of thermal
coal.
3 LOCATION
The Project area is located approximately 17km south of the town of Ermelo
in the Mpumulanga Province of South Africa. The mine property, which is
adjacent to Camden Power Station, lies 2km west of the N2 National road and
is traversed by a railway. Power is supplied to the mine from the Eskom grid
and water is sourced from boreholes.
4 MINERAL RIGHTS
A NOMR over Portions 1 and 9 of Mooiplaats 290 IT was granted in September
2007 in the name of Langcarel (Pty) Limited, a wholly owned subsidiary of
CoAL. The NOMR is valid for a period of thirty years. An application for an
extension to the NOMR to allow for development of the Mooiplaats South
Project was lodged in March 2009 over Portions 2, 3 and the Remaining Extent
of Klipbank 295 IT and Portions 1, 2 and Remaining Extent of Adrianople 296
IT. NOPRs over the latter properties are also held by Langcarel (Pty)
Limited.
5 GEOLOGY
The Mooiplaats Project is located in the Ermelo Coalfield which typically
hosts five major coal seams within an 80 to 90m thick stratigraphic
interval. The seams are labelled from the base upwards, E, D, C, B and A.
Coal seam distribution and thickness was controlled by pre-Karoo palaeo-
topography as well as syn- and post-depositional events. In late Jurassic
times, the Karoo strata were invaded by dolerite dykes and sills which
resulted in seam displacement and devolatilisation of coal over extensive
areas.
All five major coal seams are present at Mooiplaats but the A, C, D and E
Seams are not considered to be of economic significance for reasons of
either limited thickness or unattractive quality. The B Upper Seam,
averaging 1.5m in thickness, represents the primary mining target and
comprises interbanded dull and bright coal with occasional shaley partings.
A number of dolerite sills are present and coal seams occurring in proximity
to the intrusions are invariably devolatilised. Depending on the spatial
relationships of the seams to the sill, the effects of heat may produce
coals with rank characteristics ranging from lean, through anthracitic, to
burnt.
6 EXPLORATION
In the general area, major exploration programmes were conducted in the
1970s and 1980s by Goldfields Mining and Development Limited and Ingwe Coal
Corporation Limited. CoAL commenced drill investigations in 2007 and to date
over 500 cored and percussed boreholes have been completed. The drill
programme is ongoing.
7 ENVIRONMENTAL
Mooiplaats is an operational coal mine with an EMP approved by the South
African Department of Mineral Resources (DMR). An amendment EIA and EMP was
submitted to the DMR in September 2009 for the Mooiplaats South Project,
which is an extension to the existing NOMR, and approval is awaited.
Mooiplaats Mine has a temporary water use licence with water currently being
sourced from boreholes. The application process for an Integrated Water Use
Licence for the Mooiplaats South Project is underway.
Financial guarantees regarding provisions for closure and rehabilitation
liabilities of current mining operations were lodged in September 2007. An
EMP amendment, submitted to the DMR, allocated R4.2 million (excluding
taxes) for closure and rehabilitation of the Mooiplaats
South Project.
8 RESOURCE LIMITS AND DISCOUNT FACTORS
At the request of CoAL, resource estimates were restricted to the B Upper
Seam contained within the Mining and Prospecting Rights holdings on the
farms Mooiplaats, Klipbank and Adrianople.
In certain areas, the heat effects of igneous intrusions have resulted in
either destruction of the coal by burning, a reduction in the volatile
content to lean coal, or an enhancement of the coal rank to anthracite. The
coals have been differentiated into three rank types on the basis of raw
volatile matter (VM) content (adb):
- Anthracite VM <10%
- Lean coal VM 10 - 20%
- Bituminous coal VM >20%
The following criteria were applied to define GTIS resources:
- Prospecting or Mining Rights boundaries
- Minimum seam thickness cut-offs of 1.0m and 1.4m
- Dolerite intrusions and burnt coal zones were excluded
In order to arrive at MTIS resource estimates, geological losses of 5%, 10%
and 15% respectively were applied to measured, indicated and inferred GTIS
resource tonnages. These figures include modelling losses.
Resources were firstly estimated for a 1.0m seam thickness cut-off in order
to compare the results with previous resource estimates based on the same
thickness parameter. Estimates were then generated using a thickness cut-off
of 1.4m which is considered an appropriate minimum underground mining height
from practical and economic aspects. No allowance was made for possible
sterilisation of resources by physical, geographical or statutory
constraints.
9 RESOURCE CATEGORIES
Resource categories have been based on the South African Code for Reporting
of Mineral Resources and Mineral Reserves (the SAMREC Code, 2007) prepared
by the South African Mineral Resource Committee (SAMREC), under the auspices
of the South African Institute of Mining and Metallurgy (2007), with
particular reference to South African National Standard SANS 10320:2004 (the
South African Guide to the Systematic Evaluation of Coal Resources and Coal
Reserves). The SAMREC Code and SANS 10320:2004 Guidelines satisfy the
reporting requirements of, and are in accordance with, with the JORC Code
and the Australian Coal Guidelines.
In terms of SANS 10320:2004 Guidelines, the coal resources at Mooiplaats can
be classified as a multiple seam type deposit. Resource categories were
based on the number of boreholes per unit area for which quality data are
available, these being 8 boreholes per 100 hectares (ha) for measured, 4
boreholes per 100ha for inferred and 1 borehole per 100ha for inferred.
10 RESOURCE ESTIMATES - THE MINERAL CORPORATION
The full thickness of the B Upper Seam was modelled as no selective mining
is anticipated. The B Upper Seam resources were divided into two blocks
which are separated by a zone of dolerite intrusions and burnt coal. These
are:
- North Block - contained on the farm Mooiplaats 290 IT where mining is
currently taking place.
- South Block - contained on the farms Klipbank 295 IT and Adrianople 296
IT which represent the Mooiplaats South Extension
GTIS resources were further subdivided into anthracitic, lean and bituminous
coal on the basis of the volatile matter content of the raw coal.
The GTIS resources in all categories for the B Upper Seam with a minimum
thickness of 1.0m amount to 84.5Mt (Table 4)
Table 4: In situ Coal Resources (minimum BU Seam thickness of 1.0m)
PROPERTY RESOURCE CATEGORY GTIS total MTIS total
Mt Mt
Measured Indicated Inferred
Mt Mt Mt
Mooiplaats 21.1 - - 21.1 20.1
Klipbank 40.9 1.0 1.6 43.5 41.1
Adrianople 12.1 1.5 6.3 19.9 18.2
Totals 74.2 2.5 7.9 84.5 79.4
The GTIS and MTIS resource estimates for B Upper Seam with a minimum
thickness of 1.4m thickness are presented in Table 5. Also shown are
estimates of qualities for raw coal and a washed product with a calorific
value of 27.5MJ/kg. All tonnages and qualities are on an airdried basis and
no allowance has been made for contamination or dilution.
Table 5: Coal Resource estimate (minimum BU Seam thickness of 1.4m)
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It can be seen from the above tables that reducing the minimum seam
thickness from 1.0m to 1.4m results in a decrease in the GTIS from 84.5Mt to
56.3Mt. Most of the coal excluded from resources based on the 1.4m cut-off
is lean or anthracitic as devolatilisation has resulted in shrinkage of the
seam thickness to less than 1.4m. Resources in all categories in the North
Block are measured while approximately 95% of resources in the South Block
fall into the measured category.
11 PREVIOUS RESOURCE ESTIMATES
Table 6 shows resource estimates generated by SRK Consulting (SRK) and
presented in a document prepared for CoAL entitled `Note for the Record -
Mooiplaats Update as of 6 March 2008`. The GTIS estimates were reproduced by
CoAL in a Consolidated Resource Statement released on 30 September 2008.
Table 6: Coal Resource estimate - SRK, March 2008
PROPERTY RESOURCE CATEGORY GTIS total MTIS total
Mt Mt
Measured Indicated Inferred
Mt Mt Mt
Mooiplaats 25.3 - - 25.3 23.0
Klipbank 49.0 - - 49.0 42.3
Adrianople 13.9 - 13.9 27.8 9.2
Buhrmansvallei - - 11.1 11.1 -
Totals 88.2 25.0 113.2 74.5
The SRK estimate included resources on the farm Buhrmansvallei however, at
the request of CoAL, The Mineral Corporation did not generate resource
estimates for coal deposits on this farm as the B Upper Seam thickness in
the area does not achieve the minimum mining height
of 1.4m.
For resources contained only on the farms Mooiplaats, Klipbank and
Adrianople, and using similar resource limits and the same 1.0m seam
thickness cut-off, The Mineral Corporation and SRK generated comparable
total MTIS resource estimates of 79.4Mt and 74.5Mt respectively. Differences
in the GTIS estimates can be attributed mainly to the exclusion by The
Mineral Corporation of burnt coal zones and the use of additional borehole
information gained since 2008.
12 COAL QUALITIES
A theoretical yield of 61% can be achieved for a bituminous product with an
`A Grade` calorific value of 27.5MJ/kg. The average theoretical yield for a
lean coal product with an equivalent calorific value is somewhat lower at
47%. Average sulphur contents for both coal types are
moderate to relatively high, ranging from about 1.4% to 1.8% for the washed
product.
The raw quality of combined uncontaminated bituminous and lean coal
comfortably satisfies typical Eskom minimum specifications of 20% volatile
matter content and 20MJ/kg calorific value.
MAKHADO PROJECT
1 SUMMARY
CoAL and the Rio Tinto Group (Rio Tinto) are in the process of undertaking a
`Farm Swap` in order to better consolidate the Mineral Right holdings of
each company.
The Mineral Corporation has estimated a total unconstrained GTIS resource of
947Mt for the coal deposits contained on the contiguous farms Tanga, Fripp,
Salaita and Telema (held by CoAL) and Windhoek and Lukin (held by Rio
Tinto). The opencastable GTIS resources, to a maximum depth of 140m, total
311.5Mt and comprise 244.4Mt measured and 27.1Mt indicated.
The results of analyses for slim core samples from CoAL boreholes indicate
an overall average yield of 19.5% for a coking coal product with an ash
content of 12%. However, average product yields from LD bulk samples are
higher.
The product has low inherent moisture content and moderate sulphur content
of 1.1%. Based on the initial results received from LD bulk sample testwork,
the product exhibits high Free Swelling and Roga Indices of 9 and 89
respectively while the vitrinite content ranges from 79% to 88% with an
average vitrinite reflectance of RoVmax1.0. Maximum fluidities of over 14
000 ddpm have been recorded.
The vitrinite reflectance, FSI and volatile matter contents suggest that the
Makhado product could be classed as a medium volatile, semi-hard, coking
coal. This is expected to beconfirmed when further results of specialised
testwork are received.
2 INTRODUCTION
CoAL is in the process of consolidating their coal holdings in the Makhado
Project area. A programme of exploration and evaluation is ongoing and CoAL
plan to develop an opencast mine with a targeted production of 5Mtpa of
coking coal product.
3 LOCATION
The Project is located between the towns of Makhado and Musina in the
Limpopo Province of South Africa. The area is traversed by major roads,
power lines and a railway.
4 MINERAL RIGHTS
CoAL and Rio Tinto have submitted a joint application, under Section 102 of
the Mineral and Petroleum Resources Development Act 2002, to give effect to
an exchange of NOPRs pursuant to a `Farm Swap` agreement. In terms of
Section 102 applications, properties incorporated into NOPRs held by CoAL
and its subsidiaries will be "abandoned" and simultaneously incorporated
into existing NOPRs held by Rio Tinto subsidiaries. At the same time certain
other properties incorporated into NOPRs held by Rio Tinto subsidiaries will
be "abandoned" and simultaneously incorporated into existing NOPRs held by
CoAL and its subsidiaries.
CoAL`s current NOPRs include the farms Fripp 645 MS, Tanga 648 MS, Salaita
188 MS and Telema 190 MS, on which the Coal Resources have been extensively
drill-defined.
5 GEOLOGY
The Project area is located in the Mopane Sector of the Soutspansberg
Coalfield. Within the area targeted for opencast mining, six potentially
mineable seams have been identified within a 30 to 40m thick carbonaceous
zone of the Madzaringwe Formation and named from the top downwards; Upper
Seam, Middle Upper Seam, Middle Lower Seam, Bottom Upper Seam, Bottom Middle
Seam and Bottom Lower Seam. The Bottom Middle Seam usually comprises
predominantly mudstone and for this reason it has not been included in the
resource base but, in certain areas, it is sufficiently coaly to be
considered a potential mining target.
The seams comprise interbanded carbonaceous mudstones and coal. The coal
component is usually bright and brittle and contains a high proportion of
vitrinite. Dips average 12 and a number of major faults have been
identified.
Drilling indicates that a dolerite sill, up to 50m in thickness,
transgresses from a position above the Coal Zone to a stratigraphic level
below the Coal Zone. Coal in proximity to the sill has been devolatilised
and, where the sill cuts through the Coal Zone, the coal has been burnt.
6 EXPLORATION
The Soutspansberg Coalfield was extensively explored by the South African
Iron and Steel Industrial Corporation (ISCOR) in the 1970s and 1980s. The
ISCOR dataset, containing information from 1 250 boreholes, was purchased by
CoAL in 2007 and data from 23 boreholes drilled by Rio Tinto were provided
to CoAL as part of the `Farm Swap` agreement.
Exploration drilling by CoAL began in 2007 on the farm Fripp 645 MS. By May
2010 a total of 185 drillholes had been completed, including 24 large
diameter (LD) boreholes for bulk sampling purposes.
7 ENVIRONMENTAL
A draft environmental scoping study was completed in November 2008 and in
April 2010, the DMR granted permission to mine a bulk sample on the farm
Tanga 648 MS.
Current environmental liabilities are limited to historical mining and
exploration activities, which include an old box-cut and overburden dumps as
well as a rehabilitated excavation used for extraction of road-building
material.
8 RESOURCE LIMITS AND DISCOUNT FACTORS
CoAL is currently targeting only opencast resources for the Makhado Project.
CoAL envisage a final pit depth of about 140m, based on a strip ratio of 7
to 1 (BCM waste : tonnes coal), although this depth may be exceeded in
places. This however does not preclude the future underground exploitation
of additional resources.
A number of resource estimates were generated, using differing cut-off
criteria, in order to compare current and previous resource estimates and
the results are discussed in the following section. However, on the basis of
recommendations from CoAL and MRM, the following parameters were applied to
delimit potentially mineable resources:
- Prospecting Rights boundaries
- Faulting which defines resource limits along strike
- Limit of oxidation
- Maximum depth of 140m
- Minimum seam thickness of 0.5m
- Minimum product volatile matter content of 20%
The application of a minimum volatile matter content cut-off was introduced
by The Mineral Corporation as it was recognised that the coking properties
of coal in proximity to the transgressive dolerite sill may be deleteriously
affected. A minimum volatile matter content of 20% for the washed product
was adopted as it is evident that coal with lesser volatiles exhibits swell
indices that are too low to be considered suitable for coking usage.
Geological losses of 10% and 15% respectively were applied to the GTIS
resources in measured and indicated categories to arrive at estimates of the
MTIS resources. The discount allows for coal losses due to dolerite
intrusions, faults, burnt coal zones and seam washouts and includes
modelling losses. No allowance was made for possible sterilisation of
resources by physical, geographical or statutory constraints.
9 RESOURCE CATEGORIES
Resource categories have been defined in accordance with the JORC Code and
The Australian Coal Guidelines. Only Points of Observation with seam quality
data were used to define resource categories. After due consideration, the
Mineral Corporation is of the opinion that, although the quality data
contained in the historical ISCOR dataset is in certain respects limited, it
satisfies the requirements of the JORC Code in that sampled and analysed
seam intersections can be regarded as Points of Observation for coal
quality. Resources have been classed separately for each seam on the basis
of the following criteria:
- The Measured Resource limit was set at a maximum of 500m between Points
of Observation with the proviso that Measured Resources cannot be
extrapolated more than 250m beyond the limit of Points of Observation
data for any seam.
- The Indicated Resource limit was set at a maximum of 1 000m between
Points of Observation with the proviso that Indicated Resources cannot
be extrapolated more than 500m beyond the limit of Points of
Observation data for any seam.
- The Inferred Resource limit was set at a maximum of 4 000m between
Points of Observation.
10 RESOURCE ESTIMATES - THE MINERAL CORPORATION
Resources have been estimated for the coal deposits contained on the farms
Tanga 648 MS, Fripp 645 MS, Salaita 188 MT and Telema 190 MT (held by CoAL)
and Windhoek 649 MS and Lukin 643 MS (held by Rio Tinto).
GTIS and MTIS resources have been estimated for the full seam thicknesses
subject to the cut-off parameters previously stated. The Mineral Corporation
considers that deficiencies in the data sourced from ISCOR do not allow in
situ raw coal qualities over the entire resource
area to be estimated at this time.
Theoretical yields and volatile matter contents have been estimated for a
12% ash product. It is considered that deficiencies in the ISCOR data do not
allow other product quality parameters such as calorific value and total
sulphur to be reliably estimated over the entire resource area.
Table 7 presents the estimated in situ tonnages to 140m depth, and the
theoretical yields and qualities for a washed coal product with an ash
content of 12%. It is based on data from historical boreholes drilled by
ISCOR, representing 80% of the total boreholes with quality data, and new
boreholes completed by CoAL which comprise 20% of the total. However,
attention is drawn to the discussion of product yields in Section 12 which
suggests that, due to the dominant influence of ISCOR data, the yields
tabulated below may be underestimated. Tonnages and qualities are on an
uncontaminated air-dried basis and average qualities are weighted by GTIS.
All resources are either measured or indicated.
Table 7: Coal Resource estimate to 140m depth - The Mineral Corporation
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The Mineral Corporation has also reviewed ISCOR data for the block
comprising the farms Mount Stewart 153 MT, Terblanche 155 MT and Septimus
156 MT and is of the opinion that the integrity of the database at the
present time does not support modelling and therefore an estimation of
resources has not been conducted. However, it is clear that coal does exist
on the farms and that following further investigations, a resource estimate
could be generated in due course.
A significant number of ISCOR boreholes were completed on the farm Voorburg
503 MS. CoAL is currently drilling on the property to confirm the ISCOR data
but the analytical results are not yet available.
11 PREVIOUS RESOURCE STATEMENTS
In a Resource Upgrade Statement released on 22 July 2008, which was also
reported in a Consolidated Resource Statement dated 30 September 2008, CoAL
declared a JORC compliant in situ resource of 1 035 Mt (excluding resources
in the reconnaissance category). The upgrade was based on information from
402 historical boreholes drilled by ISCOR plus additional data from the
results of drilling conducted by CoAL. The resource upgrade involved the
modelling of five coal-rich horizons as opposed to the three broader coal
horizons that were previously modelled.
Table 8: Coal Resource estimate - CoAL, September 2008
RESOURCES IN SITU TONNAGE OPENCAST TONNAGE
CATEGORY RESOURCES Mt PROPORTION % RESOURCE Mt PROPORTION %
Measured 230.06 17.23 208.36 37.85
Indicated 548.64 41.09 201.79 36.69
Inferred 250.69 18.78 25.45 4.61
Reconnaissance 305.66 22.89 114.77 20.85
TOTALS 1 335.06 100.00 550.37 100.00
CoAL estimated that a 19.9% yield could be achieved for a primary coking
coal product with 12% ash content, a FSI of >8 and a sulphur content of
0.97%. A yield of 33.7% was estimated for a secondary middlings thermal coal
product with a 35% ash content, calorific value of 21.03MJ/kg and volatile
matter content of 21.5% (adb).
Coal contained within a surficial weathered zone extending to a depth of 18m
below surface was excluded from the resources by CoAL. The in situ
resources, as defined by CoAL, represent coal contained in seams occurring
in the zone between the depth of weathering and the property boundaries. At
the property boundaries the Coal Zone may occur at depths
of over 550m and is consequently uneconomic to mine by opencast methods.
Therefore the opencastable resources were limited to a depth of 140m below
surface.
The Mineral Corporation, on the basis of new analytical data, determined
that oxidised coal often exists below the weathered zone although the coal
physically appears fresh. Thus a limit of oxidation extending 30m below
surface was applied. New exploration drilling and downhole geophysical data
has also allowed a complete reassessment of the seam intervals and an
extensive regeneration of seam physical and quality models. The Mineral
Corporation also applied a volatile matter content cut-off of 20% to
discount devolatilised coal and a minimum seam thickness cut-off of 0.5m
which is considered to be the thinnest cut that could be selectively mined
in the kind of large scale opencast operation envisaged. A depth limit of
140m was applied to define opencastable resources.
The introduction by The Mineral Corporation of additional cut-offs, and
revisions to the geological models, do not allow direct comparison between
current and previous resource estimates. However, The Mineral Corporation
has estimated, using the same modeling methodology as CoAL, a total GTIS
resource of 947Mt which is within 10% of the 1 035Mt previously estimated by
CoAL.
The Mineral Corporation considers that the resource tonnage estimates
generated by CoAL in 2008 were reasonable given the limited amount of data
available at that time.
12 COAL QUALITIES AND PROPERTIES
In view of the ISCOR data deficiencies mentioned previously, Table 10 below
shows the average product qualities based only on results from 81 CoAL
boreholes which amount to less than 20% of the total boreholes for which
quality data is available. While the results may not be representative of
the resource as a whole, they can be considered indicative. It should be
noted that the farm Telema 190 MT was excluded as CoAL have yet to drill on
this property.
Table 10: Product qualities based on CoAL borehole data (adb)
SEAM YIELD M % ASH % VM % FC % CV S %
% MJ/kg
Upper 13.2 1.6 12.0 32.4 54.7 30.25 1.16
Middle upper 16.1 1.5 12.0 29.2 57.3 30.50 1.43
Middle lower 21.0 1.3 12.0 29.8 56.9 30.73 1.39
Bottom upper 28.5 1.3 12.0 28.8 57.9 30.55 1.01
Bottom lower 17.9 1.2 12.0 28.8 58.1 30.88 1.00
TOTALS 19.5 1.4 12.0 29.4 57.3 30.61 1.16
It is significant that, on the basis of analytical data from the ISCOR
boreholes only, an overall average theoretical yield of 15% is indicated as
opposed to 19.5% for the CoAL boreholes. It is considered that the CoAL
yield figures are more reliable than the ISCOR results as the CoAL
exploration programmes utilised modern wireline, triple-tube drilling
techniques to obtain HQ and PQ size core whereas ISCOR are likely to have
historically employed conventional and less efficient drill techniques to
obtain core of smaller diameter NQ or NX size. This would probably have
resulted in ISCOR achieving lesser core recoveries with a greater
preferential loss of the brittle, vitrinitic, coking coal component of the
seams. As the ISCOR data represents over 80% of the total slim core quality
information currently available, the yield figures shown in Table 7 are
probably underestimated.
CoAL has received the initial results of testwork conducted on the first
batch of 10 LD boreholes. Table 11 compares average seam yields and
qualities (weighted by thickness) for a 12% ash washed product from LD
borehole samples and the equivalent values for samples from the slim core
pilot borehole around which the LD boreholes were clustered.
SEAM YIELD % M % VM % FC % CV MJ/kg S %
LARGE DIAMETER BOREHOLES
Upper 12.8 1.1 18.5 68.4 30.69 1.10
Middle upper 16.5 0.9 28.8 58.3 30.92 1.55
Middle lower 36.9 0.7 30.7 56.5 31.35 1.24
Bottom upper 31.5 0.8 30.4 56.8 31.05 0.84
Bottom lower 24.4 0.7 31.4 55.8 31.33 0.95
AVERAGE 22.7 0.9 27.5 59.6 31.01 1.17
SLIM CORE BOREHOLE
Upper 11.5 1.3 17.7 68.9 30.64 1.08
Middle upper 13.4 1.0 28.6 58.3 30.98 1.51
Middle lower 18.5 0.9 31.5 55.5 31.01 1.31
Bottom upper 30.9 1.0 30.7 56.3 31.14 0.86
Bottom lower 26.6 0.7 31.4 55.8 31.33 0.95
AVERAGE 18.8 0.9 27.0 58.0 31.00 1.14
It can be seen that the average product yield obtained from LD borehole
samples is greater than that achieved from the slim core.
Table 12 below shows, on a seam-by-seam basis, qualities and coking
properties for a 12% ash washed product derived from LD bulk samples. The
results of testwork on the Upper Seam have not yet been received.
Table 12: CoAL LD boreholes - Product qualities and properties
COAL QUALITIES AND COKING UNIT SEAM
PROPERTIES
BOTTOM BOTTOM MIDDLE MIDDLE
LOWER UPPER LOWER UPPER
Calorific Value MJ/kg 31.06 30.81 31.09 30.55
Inherent Moisture (ad) % 0.8 1.5 0.9 1.2
Ash (ad) % 12.3 11.9 12.1 12.1
Volatile Matter (ad) % 30.3 29.2 30.3 28.4
Fixed Carbon (ad) % 56.6 57.4 56.7 58.3
Sulphur (ad) % 0.92 0.83 1.24 1.56
FSI 9 9 9 9
Roga 90 89 91 86
Fluidity (softening) Degrees 391 396 398 418
celsius
Fluidity (max fluid) Degrees 454 450 450 452
celsius
Fluidity (max) ddpm 493 485 488 483
Fluidity (solidification) Degrees 10,109 5,493 14,277 150
celsius
Dilatation (softening) Degrees 365 362 368 387
celsius
Dilatation (max contraction) Degrees 406 411 408 432
celsius
Dilatation (max dilatation) Degrees 490 490 502 476
Celsius
Dilatation (max contraction) % 32 37 34 38
Dilatation (max dilatation) % 281 237 268 66
Vitrinite % 79.3 77.9 82.6 88.1
RoV max % 0.98 1.01 1.01 1.03
Total Inerts % 17.3 17.2 13.6 23.5
It can be seen from the above table that the inherent moisture content is
low and the arithmetic average sulphur content of 1.1% is moderate. The
arithmetic average Roga and Free Swelling Indices are high at 9 and 89
respectively and these values concur with equivalent results from ISCOR and
Rio Tinto boreholes.
The above table also indicates that a 12% ash coking product exhibits a
vitrinite content ranging from 79% to 88% with an average vitrinite
reflectance of RoVmax1.0. Testwork conducted by Rio Tinto on a 10% ash
product indicated identical average reflectance values with vitrinite
content generally in the range 88% to 95%.
With the exception of the Middle Upper Seam, maximum fluidities determined
on CoAL samples ranged from 5 493 to 14 277 ddpm while Rio Tinto testwork
recorded maximum fluidities of up to 13 000 ddpm. The lower fluidity values
recorded for the Middle Upper Seam possibly relate to the lower volatile
matter content suggesting that the coal has been partially affected by heat.
It is significant that in this area the overlying Upper Seam is
devolatilised by a dolerite sill located above the Coal Zone.
The vitrinite reflectance, FSI and volatile matter contents suggest that the
Makhado product could be classed as a medium volatile, semi-hard coking
coal. This is expected to be confirmed when further results of specialised
testwork are received.
ANNEXURE D: MINCORP INITIAL COKING COAL ANALYSIS OF MAKHADO PROJECT
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Date: 15/06/2010 09:50:03 Produced by the JSE SENS Department.
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