| Tue 21 Dec 2010, 14:00 | | MMH - Miranda Mineral Holdings Limited - Miranda Coal Division: Glencoe Project |
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MMH
MMH
MMH - Miranda Mineral Holdings Limited - Miranda Coal Division: Glencoe Project
Area Valuation Update
Miranda Mineral Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/001940/06)
Share code: MMH ISIN: ZAE000074019
("Miranda" or "the Company" or "the Group")
Miranda Coal Division: Glencoe Project Area Valuation Update
1. Summary
The board of directors of Miranda has mandated Venmyn to complete independent
technical resource and valuation statements for six of the Mining and
Prospecting Rights held by its wholly-owned subsidiary Miranda Coal (Pty) Ltd.
This announcement summarises the results for three of the properties in Miranda
Coal`s Glencoe project area, namely Uithoek, Burnside and Boschhoek. All three
the original reports may be accessed on Miranda`s website at:
www.mirandaminerals.com.
The SAMVAL-compliant valuations attributed to respectively the Uithoek property,
on which a Mining Right was recently granted, and the Burnside and Boschhoek
properties, both holders of a Prospecting Right, are summarised underneath:
Valuation Miranda Miranda
of 100% Coal Attributable
of Project Interest Value
Uithoek ZAR 45.3m 74%* ZAR 33.5m
Burnside ZAR122.8m 60% ZAR 73.7m
Boschhoek ZAR 90.5m 52% ZAR 47.1m
Glencoe Project AreaZAR258.6m ZAR154.3m
* Subject to MPRDA Section 11 transfer - interest equivalent to current JV
arrangement of a 7.5% gross royalty payable to JV partner
2. SAMREC/ SAMVAL Compliance
The key features of the Uithoek, Burnside and Boschhoek projects, respectively,
have been prepared in the format of separate Short Form SAMREC Code compliant
Technical Resource and Valuation Statements, dated 31 May 2010. These Short-form
Technical Resource and Valuation Statements are based on the guidelines set out
in Table 1 of the SAMREC Code and Table 2 of the SAMVAL Code. A full SAMREC Code
Compliant CPR has not been compiled by Venmyn. SAMREC Table 1 and SAMVAL Table 2
checklists have been completed, respectively, for each of the Uithoek, Burnside
and Boschhoek projects.
3. Competent Persons and Valuators
The Technical Resource and Valuation Statements to which this announcement
refers, have been prepared by Venmyn and have been compiled for the purposes of
outlining the features, identifying potential risks and making recommendations
in respect to areas of potential downside and upside in the Uithoek, Burnside
and Boschhoek projects, respectively. In the preparation of the Statements,
Venmyn utilised the results of studies conducted by various consultants for
Miranda Coal. Where possible, Venmyn has verified this information after making
due enquiry into all material issues that are required in order to comply with
the SAMREC and SAMVAL Codes.
The Competent Persons and Valuators responsible for the Statements are:
Ms. Catherine A Telfer, B.Sc. Hons (Geol.), (DMS) Dip Bus Man, Pr. Sci. Nat.,
MGSSA, MAusIMM, Director, Venmyn; and
Mr. Derick R De Wit, Pr Tech Eng, B Tech (Chem Eng) (Cum Laude), MAP (WBS),
MIASSA, MSAIMM, MAusIMM, MECSA, Mineral Industry Analyst, Venmyn.
They were assisted by the following Key Technical Personnel:
Ms. Mpai M Motloung, B.Sc. Hons (Geol.), MGSSA, ASAIMM, Mineral Project Analyst,
Venmyn.
The Competent Persons and Valuators are independent, and approved the
information contained in this announcement in writing in advance of its
publication.
4. Uithoek
4.1 Introduction
Venmyn`s work considered the results of the areas where Miranda had been
actively drilling. Miranda has announced its intention to commence with a
feasibility study on the first phase, open pit operations of Uithoek and the
adjacent Burnside. Miranda is planning further exploration both on the Uithoek
Mining Right area and on the contiguous Burnside and Boschhoek Prospecting Right
areas.
4.2 Resource Statement
Historical Resource Statement
Gross Total Ave
Tonnes Geol. Tonnes Thick- Ave
In Situ Losses In Situ ness Depth
(mill) (%) (mill) (m) (m)
Top Seam
Block OC1 0.674 10 0.607 0.64 26.0
Block OC2 1.022 10 0.920 0.99 39.0
Block UG 1.497 10 1.348 1.09 115.0
Total Top Seam 3.194 10 2.874 0.91 60.0
Bottom Seam
Block OC1 1.143 10 1.029 0.63 23.2
Block OC2 2.505 10 2.254 0.98 53.0
Block UG 0.587 10 0.529 1.18 75.0
Total
Bottom Seam 4.235 10 3.812 0.93 50.4
Total 7.429 6.686
The entire SAMREC resource of 6.7 million tonnes was classified at measured
resource status. The following assumptions and modifying factors were taken into
account when creating the historical resource model:
* mined-out areas were excluded;
* raw RD for the seams in the open pit were laboratory determined and assumed to
be similar for underground areas;
* areas of low volatile content (Vols < 5%) were excluded;
* areas where seam thickness is below 0.5m were omitted;
* geological losses of 10% were assumed due to the complexity of the deposit;
and
* all tonnages and qualities are quoted air dry.
The historical resource statement on Uithoek was prepared in August 2008 by Mr
PC Meyer (Pr.Sci.Nat. 400025/03), a SAMREC-registered Competent Person, member
of the GSSA and Fossil Fuel Foundation, and proprietor of PC Meyer Consulting
CC, an independent geological consultancy.
Adjusted Resource Statement
Gross Total
Tonnes Geol. Tonnes
In Situ Losses In Situ SAMREC
(mill) (%) (mill) classify-
cation
Top Seam
Block OC1 1.280 15 1.088 Measured
Bottom Seam
Block OC1 3.713 15 3.156 Measured
Block UG1 1.380 15 1.173 Measured
Block UG2 0.682 20 0.545 Indicated
Block UG3 2.123 25 1.592 Inferred
Total Bottom Seam 7.897 18 6.466
Total 9.177 7.554
Notes to the Venmyn adjusted resource statement:
* According to SANS, reconnaissance resources cannot be included for JSE Limited
reporting purposes;
* A minimum seam thickness cutoff of 0.5m was applied, as per SANS, for opencast
resources;
* Coal intruded by dolerites was excluded;
* A dry ash free volatile cutoff of 26% was applied to take into account any
burning by dolerites;
* A seam thickness cutoff of 0.8m was applied to underground resources;
* Weathering, unknown dolerites and faults were taken into account in geological
losses;
* Delineation between opencast and underground resources was applied at a seam
depth from surface of 55m; and
* No strip ratio cutoff was applied to opencastable resources.
4.3 Valuation
Venmyn`s valuation of the Uithoek project is based on a 100% project value and
uses the Cost Approach and the Market Approach.
Cost Approach
The SAMVAL Code definition states that the Cost Approach relies on historical
and/or future expenditure on the Mineral Asset. In the case where insufficient
confidence exists in the technical parameters of the mineral asset, valuation
methods rely almost entirely on the principle of historical cost, implying that
an asset`s value is correlated to the money spent on its acquisition, plus a
multiple of expenditures. A prospectively enhancement multiplier (PEM) is a
factor applied to the total cost of exploration, at different stages of
exploration and project advancement. The magnitude of the PEM is determined by
the level of sophistication of the exploration for which positive exploration
results, applying the concept of successful efforts, have been obtained.
To date, Miranda Coal has spent ZAR4.962m on the Uithoek Project on in-fill
drilling, detailed coal analyses and washability testwork, establishing coal
qualities, market potential, detailed resource tonnage estimation, washabilities
and advanced inferred and indicated coal resource classification. The PEM
attributable to the Uithoek Project lies between an upper value of 20 and a
lower value of 11. Using the Cost Approach, a "fair" value for the Uithoek
Project of ZAR99.24m was determined with an upper value of ZAR99.24m and a lower
value of ZAR54.58m.
Market Approach
The Market Approach relies on the principle of "willing buyer, willing seller"
and requires that the amount obtainable from the sale of the asset is determined
as if in an arm`s length transaction. The Market Valuation Approach requires
comparison with relatively recent transactions of assets that have similar
characteristics to those of the asset being valued. It is generally based upon a
monetary value per unit of resource (where available) or per unit of defined
mineralisation.
Venmyn has compiled a Coal Valuation Curve on Income Graph, which represents
over 50 properties valued by Venmyn within the major South African coalfields
over the last four years. This approach is highly useful in setting the unit
values of different coal projects in different coalfields in South Africa that
have various combinations of Mineral Resource categories. The graph shows the
average values per tonne of coal that are likely to be paid in an arm`s length
transaction involving a willing buyer and willing seller.
Using the Mineral Resources of the Uithoek project and the above-mentioned
approach, Venmyn obtain an upper per tonne value of ZAR8.00 and lower per tonne
value of ZAR5.00. The total Mineral Resource tonnes attributable to the Uithoek
project are 7.554Mt. Using the Market Approach, a "fair" value for Uithoek of
ZAR45.32m was determined, with an upper value of ZAR60.43m and a lower value of
ZAR37.77m.
Concluding Opinion of Value
The table underneath summarises the "fair", upper and lower values of the
Uithoek project using the Cost Valuation and Market Approaches:
Method "Fair" Value Upper Value Lower Value
(ZARm) (ZARm) (ZARm)
Cost 99.24 99.24 54.58
Market 45.32 60.43 37.77
Venmyn`s database provides a comprehensive and reliable benchmark for recent
relevant transactions in the coal industry. Venmyn`s confidence in the Market
Approach, led the Competent Valuator to prefer the results of the Market
Approach versus the Cost Approach.
Consequently, the concluding opinion of the total value for the Uithoek Project,
calculated on a 100% basis and based on the Market Approach, is as follows:
* the upper and lower valuation range is ZAR60.43m and ZAR37.77m, respectively;
and
* a "fair" value is ZAR45.32m.
4.4 Conclusions and recommendations
This update of the coal resources of the Uithoek project quotes 9.2 Mt of gross
in situ coal resource at an RD of 1.67 and total in situ tannage of 7.6Mt at 18%
geological losses. This resource tonnage is based on a cut-off of 0.8m for
underground mining resources. Recommendations are that quality surveys be
carried out, with emphasis on acquiring calorific value and sulphur and moisture
content.
5. Burnside
5.1 Introduction
Venmyn`s work considered the results of the areas where Miranda had been
actively drilling. Miranda is planning further exploration both on the Burnside
Prospecting Right area and on adjacent and nearby Prospecting Right areas.
5.2 Resource Statement
Historical Resource Statement
Gross Total Ave
Tonnes Geol Tonnes Thick- Ave
In Situ Losses In Situ ness Depth
(mill) (%) (mill) (m) (m)
Top Seam
Block OC 4.283 15 3.641 0.85 9.6
Block UG1 7.903 15 6.718 0.83 49.3
Block UG2 4.233 15 3.598 0.99 93.8
Total Top Seam 16.419 15 13.956 0.89 50.9
Bottom Seam
Block OC 6.190 15 5.262 1.14 12.7
Block UG1 11.608 15 9.867 1.24 64.3
Block UG2 1.766 15 1.501 1.17 95.4
Block UG3 5.756 15 4.892 1.55 105.6
Total Bottom Seam 25.321 15 21.522 1.28 69.5
Total 41.740 35.478
The SAMREC resource was classified as follows: 18.9 million tonnes at indicated
resource status and 16.6 million tonnes at inferred resource status. The
following assumptions and modifying factors were taken into account when
creating the historical resource model:
* mined-out areas are excluded;
* raw RD for the seams were laboratory determined and assumed to be closely the
same for underground areas;
* areas of low volatile content were excluded (Vols <5%);
* areas where seam thickness is below 0.6m were omitted;
* geological losses of 15% were assumed due to the complexity of the deposit;
and
* all tonnages and qualities are quoted air dry.
The historical resource statement on Burnside was prepared in March 2009 by Mr
PC Meyer (Pr.Sci.Nat. 400025/03), a SAMREC-registered Competent Person, member
of the GSSA and Fossil Fuel Foundation, and proprietor of PC Meyer Consulting
CC, an independent geological consultancy.
Adjusted Resource Statement
Gross Total
Tonnes Geol. Tonnes
In Situ Losses In Situ SAMREC
(mill) (%) (mill) Classific-
ation
Top Seam
Block OC1 1.396 15 1.186 Measured
Block OC2 0.657 20 0.526 Indicated
Block OC3 2.339 25 1.754 Inferred
Block UG1 8.336 20 6.669 Indicated
Total Top Seam 12.728 20 10.135
Bottom Seam
Block OC1 3.611 15 3.069 Measured
Block OC2 1.027 20 0.822 Indicated
Block OC3 1.832 25 1.373 Inferred
Block UG1 19.130 20 15.304 Indicated
Total Bottom Seam 25.599 20 20.568
Total 38.328 30.703
Notes to the Venmyn adjusted resource statement:
* According to SANS, reconnaissance resources cannot be included for JSE Limited
reporting purposes;
* A minimum seam thickness cutoff of 0.5m was applied, as per SANS, for opencast
resources;
* Coal intruded by dolerites was excluded;
* A dry ash free volatile cutoff of 26% was applied to take into account any
burning by dolerites;
* A seam thickness cutoff of 0.8m was applied to underground resources;
* Weathering, unknown dolerites and faults were taken into account in geological
losses;
* Delineation between opencast and underground resources was applied at a seam
depth from surface of 55m; and
* No strip ratio cutoff was applied to opencastable resources.
5.3 Valuation
Venmyn`s valuation of the Burnside project is based on a 100% project value and
uses the Cost Approach and the Market Approach.
Cost Approach
The description of the Cost Valuation Approach followed by Venmyn was given
above.
To date, Miranda Coal has spent ZAR2.1m on the Burnside Project on in-fill
drilling, detailed coal analyses and washability testwork, establishing coal
qualities, market potential, detailed resource tonnage estimation, washabilities
and advanced inferred and indicated coal resource classification. The PEM
attributable to the Burnside Project lies between an upper value of 20 and a
lower value of 11. Using the Cost Approach, a "fair" value for the Burnside
Project of ZAR41.46m was determined with an upper value of ZAR41.46m and a lower
value of ZAR22.80m.
Market Approach
The description of the Market Valuation Approach followed by Venmyn was given
above.
Using the Mineral Resources of the Burnside Project and the Venmyn Coal
Valuation Curve on Income Graph, Venmyn obtained an upper per tonne value of
ZAR6.00 and lower per tonne value of ZAR3.00. The total Mineral Resource tonnes
attributable to the Burnside Silver Project are 30.70 million tonnes. Using the
Market Approach, a "fair" value for the Burnside Project of ZAR122.8m was
determined with an upper value of ZAR184.2m and a lower value of ZAR92.1m.
Concluding Opinion of Value
The table underneath summarises the "fair", upper and lower values of the
Burnside Project using the Cost and Market Valuation Approaches:
Method "Fair" Value Upper Value Lower Value
(ZARm) (ZARm) (ZARm)
Cost 41.5 41.5 22.8
Market 122.8 184.2 92.1
Venmyn`s database provides a comprehensive and reliable benchmark for recent
relevant transactions in the coal industry. Venmyn`s confidence in the Market
Approach led the Competent Valuator to prefer the results of the Market Approach
versus the Cost Approach.
Consequently, the concluding opinion of the total value for the Burnside
Project, calculated on a 100% basis and based on the Market Approach, is as
follows:
* the upper and lower valuation range is ZAR184.2m and ZAR92.1m respectively;
and
* with a "fair" value of ZAR122.8m.
5.4 Conclusions and recommendations
This update of the coal resources of the Burnside Project quotes 38.3Mt of gross
in situ coal resource at an RD of 1.61. This resource tonnage is based on a cut-
off of 0.8m. Underground mining resources usually utilise a cut-off of 0.8m.
Recommendations are that quality surveys be carried out, with emphasis on
acquiring calorific value, sulphur and moisture content. A fair market value of
ZAR122.8m has been estimated for this project.
6. Boschhoek
6.1 Introduction
Venmyn`s work considered the results of the areas where Miranda had been
actively drilling. Miranda is planning further exploration both on the Boschhoek
Prospecting Right area and on adjacent and nearby Prospecting Right areas.
6.2 Resource Statement
Historical Resource Statement
Gross Total Ave
Tonnes Geol Tonnes Thick-
In Situ Losses In Situ ness
(mill) (%) (mill) (m)
Top Seam
Block 1 14.232 15 12.097 0.98
Block 2 3.837 15 3.261 0.86
Block 3 9.478 15 8.056 1.10
Total Top Seam 27.546 15 23.415 0.98
Block 1 22.039 15 18.733 1.06
Block 2 4.247 15 3.610 0.97
Block 3 7.646 15 6.499 0.94
Bottom Seam - Total 33.932 15 28.842 0.99
Total 61.478 52.257
The entire SAMREC resource of 52.3 million tonnes was classified at indicated
resource status. The following assumptions and modifying factors were taken into
account when creating the historical resource model:
* raw RD for all the seams was assumed to be 1.58 for the Top Seam and 1.63 for
the Bottom Seam;
* areas of low volatile content were excluded (Vols <5%);
* bituminous coal was considered to have Vols>8% and anthracite coal Vols=6-8%;
* areas where seam thickness is below 0.6m were omitted;
* geological losses of 15% were assumed; and
* all tonnages and qualities are quoted air dry.
The historical resource statement on Boschhoek was prepared in May 2008 by Mr PC
Meyer (Pr.Sci.Nat. 400025/03), a SAMREC-registered Competent Person, member of
the GSSA and Fossil Fuel Foundation, and proprietor of PC Meyer Consulting CC,
an independent geological consultancy.
Adjusted Resource Statement
Gross Total
Tonnes Geol. Tonnes
In Situ Losses In Situ SAMREC
(mill) (%) (mill) Classific-
ation
Top Seam
Block 1 21.946 15 18.654 Indicated
Block 2 4.006 20 3.204 Inferred
Total Top Seam 25.952 16 21.858
Bottom Seam
Block 1 27.546 15 23.415 Indicated
Total 53.498 15 45.273
Notes to the Venmyn adjusted resource statement:
* According to SANS, reconnaissance resources cannot be included for JSE Limited
reporting purposes;
* Coal intruded by dolerites was excluded;
* A dry ash free volatile cutoff of 26% was applied to take into account any
burning by dolerites;
* A seam thickness cutoff of 0.8m was applied to underground resources;
* Weathering, unknown dolerites and faults were taken into account in geological
losses;
* Delineation between opencast and underground resources was applied at a seam
depth from surface of 55m; and
* No strip ratio cutoff was applied to opencastable resources.
6.3 Valuation
The valuation of the Boschhoek project is based on a 100% project value and uses
the Cost Approach and the Market Approach.
Cost Approach
The description of the Cost Valuation Approach followed by Venmyn was given
above.
To date, Miranda Coal has spent ZAR1.89m on the Boschhoek Project on in-fill
drilling, detailed coal analyses and washability testwork, establishing coal
qualities, market potential, detailed resource tonnage estimation, washabilities
and advanced inferred and indicated coal resource classification. The PEM
attributable to the Boschhoek Project lies between an upper value of 11 and a
lower value of 5. Using the Cost Approach, a "fair" value for the Boschhoek
Project of ZAR20.8m was determined with an upper value of ZAR20.8m and a lower
value of ZAR9.5m.
Market Approach
The description of the Market Valuation Approach followed by Venmyn was given
above.
Using the Mineral Resources of the Boschhoek Project and the Venmyn Coal
Valuation Curve on Income Graph, Venmyn obtained an upper per tonne value of
ZAR3.00 and lower per tonne value of ZAR1.00. The total Mineral Resource tonnes
attributable to the Boschhoek Silver Project are 45.3 million tonnes. Using the
Market Approach, a "fair" value for the Boschhoek Project of ZAR90.5m was
determined with an upper value of ZAR135.8m and a lower value of ZAR45.3m.
Concluding Opinion of Value
The table underneath summarises the "fair", upper and lower values of the
Boschhoek Project using the Cost and Market Valuation Approaches:
Method "Fair" Value Upper Value Lower Value
(ZARm) (ZARm) (ZARm)
Cost 20.8 20.8 9.5
Market 90.5 135.8 45.3
Venmyn`s database provides a comprehensive and reliable benchmark for recent
relevant transactions in the coal industry. Venmyn`s confidence in the Market
Approach led the Competent Valuator to prefer the results of the Market Approach
versus the Cost Approach.
Consequently, the concluding opinion of the total value for the Boschhoek
Project, calculated on a 100% basis and based on the Market Approach, is as
follows:
* the upper and lower valuation range is ZAR135.8m and ZAR45.3m respectively;
and
* with a "fair" value of ZAR90.5m.
6.4 Conclusions and recommendations
This update of the coal resources of the Boschhoek Project quotes 45.3Mt of
gross in situ coal resource at an RD of 1.45. This resource tonnage is based on
a cut-off of 0.8m. Underground mining resources usually utilise a cut-off of
0.8m. Recommendations are that quality surveys be carried out, with emphasis on
acquiring calorific value, sulphur and moisture content. The project has a fair
market value of ZAR90.5m.
Centurion
21 December 2010
Sponsor:
PricewaterhouseCoopers Corporate Finance (Proprietary) Limited
Corporate Adviser:
Touchstone Capital (Pty) Ltd
Date: 21/12/2010 14:00:02 Produced by the JSE SENS Department.
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