2.   THE MINING ASSETS

2.6.1  

Grootegeluk Mine

Grootegeluk Mine is situated in the Magisterial District of Lephalale in the Limpopo Province of South Africa, some 240km northwest of Pretoria (Tshwane) and 70km south of the border with Botswana. Located at latitude 23°39’S and longitude 27°43’E, the site is accessed via a tarred road, the R517, between Modimolle (formerly Nylstroom) and Lephalale (formerly Ellisras).

Exploration history in the Waterberg Coalfield dates from 1920, although larger scale exploration did not commence until the 1940’s. Following intensive exploration by Iscor, beginning in 1973, a mining lease was granted in 1979. In 1980 Grootegeluk Mine was established as the first and to date the only coal mine in the Waterberg Coalfield. Total mine production (including discard) since 1980 is some 561Mt rendering some 282Mt of saleable coal (refer to Table 2.17). Grootegeluk Mine is a conventional open-pit operation. Processing is through five coal preparation plants with a combined operating capacity of 2,979ktpm. A sixth coal plant is under construction. Saleable products include semi-soft coking coal, metallurgical coal and thermal coal, with the latter predominating as a dedicated supply to the Matimba Power Station. Metallurgical coal is primarily supplied to Mittal steel mills, with certain semi-soft coking coal exported via ports at Durban and Richards Bay in the KwaZulu-Natal Province of South Africa.

Table 2.18 below gives summary details of the infrastructure currently servicing Grootegeluk Mine, type of operation and projected life.

2.6.2

Leeuwpan Mine

Leeuwpan Mine is situated in the Magisterial District of Delmas in the Mpumalanga Province of South Africa some 80km east of Johannesburg. Located at latitude 26°08’S and longitude 28°41’E, the site is accessed via a tarred road, the R50, between Delmas and Leandra.

Exploration, development and production history in the area dates from 1988 leading to commencement of mining operations in 1992. Total mine production since 1992 is estimated at some 25Mt yielding some 14Mt of saleable coal (Table 2.20).

Leeuwpan Mine comprises two conventional open-pit operations, processing through a jig plant and separate coal washing facility, with operating capacity of 215ktpm. The saleable product is metallurgical and steam coal which is supplied to the domestic steel mills, other local distributors and exported via port facilities at Matola and Durban, as well as thermal coal which is supplied to Eskom’s Majuba power station.

Table 2.21 provides summary details of the infrastructure currently servicing Leeuwpan Mine, type of operation and projected life.

Historical operating statistics for the past four years for Leeuwpan Mine are summarised in Table 2.22.

2.6.3

Tshikondeni Mine

Tshikondeni Mine is situated in the Magisterial District of Thohoyandou, in Limpopo Province, South Africa, some 140km east of Musina (formerly Messina) and 15km south of the border with Zimbabwe. Located at latitude 22°30’S and longitude J’ 30°50’E, the site is accessed via a tarred road, the R525 some 100km east of Tshipise.

Exploration in the Pafuri eastern sector of the Soutpansberg Coalfield dates from 1950, although larger scale exploration did not take place until the 1970’s. In 1973 Iscor began an extensive exploration program. Mining operations at Tshikondeni Mine subsequently commenced in 1983, and to date it remains the only coal mine in the Soutpansberg Coalfield. Total mine production since 1983 is some 10.7Mt RoM yielding some 6.1Mt of saleable coal (Table 2.23).

Tshikondeni Mine comprises an underground mining operation, accessed by four surface declines, processing through a single coal preparation plant with an operating capacity of 75ktpm. The saleable product is coking coal, which is supplied solely to Mittal steel mills.

Tshikondeni Mine is effectively a Mittal captive operation, which operates on a cost plus 3% management fee basis.

Table 2.24 provides summary details of the infrastructure currently servicing Tshikondeni Mine, type of operation and projected life.

Historical operating statistics for the past four years for Tshikondeni Mine are summarised in Table 2.25.

2.6.4

Arnot Colliery

Arnot Colliery is situated approximately midway between the towns of Middelburg and Carolina in the Mpumalanga province. The colliery is approximately 43km by road from Middelburg, 65km by road from Carolina and 25km by road from Hendrina. Arnot Colliery has been in operation since 1972. Total mine production (including discard) since 1972 is some 157Mt. Historical production information appears in Table 2.26.

(C) Calendar Year ended 31 December.

Arnot Colliery is a long life asset with an operating capacity of 5,700ktpa of coal. It produces mainly thermal coal, which it supplies on contract to Eskom. The underground operations of Arnot Colliery are contracted to supply 5,000ktpa of thermal coal to Eskom’s Arnot power station.

Arnot Colliery currently has three primary long life facilities: No. 3 Shaft, No. 8 Shaft and No. 10 Shaft. Details on Arnot Colliery’s infrastructure appear in Table 2.27 and details of Arnot Colliery’s historical operating statistics appear in Table 2.28.

(C) Calendar Year ended 31 December.

The progressive increase in working costs at Arnot can be attributed to:

• Annual wage increases;
• Higher staff complements due to additional new sections; and
• Increase in extraordinary costs mainly due to replacement/repairs of underground equipment.

2.6.5

Matla Colliery

Matla Colliery is located in the Kriel District of Mpumalanga, approximately 20km west of Kriel, 50km southwest of Witbank and 30km south of Ogies. The mine was founded towards the end of 1973 to supply Eskom’s 3,600 MW Matla Power Station. Total mine production (including discard) since 1978 is some 284Mt.

Historical production information appears in Table 2.29.

(C) Calendar Year ended 31 December.

Matla Colliery is contracted to supply 10Mtpa bituminous coal to Eskom’s Matla Power Station. The current rate of production is between 12.5 – 13.5Mtpa, depending on Matla Power Station’s requirements. Matla extracts bituminous coal from the No. 2 and No. 4 Seams. This coal is mined from underground mines at Matla Mine 1, Mine 2 and Mine 3.

Matla Colliery also supplies a further 2Mtpa of coal to Sasol at Eskom’s request over a period of four years. Mine 1 (No. 4 Seam) produces approximately 3Mtpa of coal from three Continuous Miner sections, Mine 2 (No. 2 Seam) produces 2.5Mtpa of coal from one development section and one short-wall section, and Mine 3 (No. 4 Seam) produces approximately 7Mtpa of coal from three development sections and one short-wall section. The No. 2 Seam and No. 4 Seam contributions to the total Matla annual production is maintained at approximately 30% and 70%, respectively.

Details on Matla Colliery’s infrastructure appear in Table 2.30 and details on Matla Colliery’s historical operating statistics appear in Table 2.31.

(C) Calendar Year ended 31 December.

Matla has in the past mined approximately 15Mtpa. The additional 3Mtpa in 2003 and 2004 reflects a planned increase in production following a request for coal to be supplied to Eskom’s Majuba and Tutuka Power Stations (2.5Mtpa) and to Sasol (0.5Mtpa).

2.6.6

New Clydesdale Colliery

New Clydesdale Colliery is located approximately 140km east of Johannesburg, in the province of Mpumalanga. It is one of the oldest mines in South Africa, having been worked on sporadically since 1949. Total mine production since 1981 is some 29Mt of coal yielding 17Mt of saleable coal. Historical production information appears in Table 2.32.

(C) Calendar Year ended 31 December.

New Clydesdale Colliery is primarily an export colliery which currently produces coal for both the export and domestic markets. It mines the Nos. 1, 2, 4 and 5 Seams in the Vaalkrans North opencast operation and No. 2 Seam from the pillars in the Vaalkrans South underground Area.

New Clydedale Colliery produces A-grade coal for sale on both the export and domestic markets. It exports, through the Richards Bay Coal Terminal, steam coal with a high calorific value, high volatiles and medium sulphur. Some A-grade product is sold on the domestic market. Future underground mining will take place in the Diepspruit Nos. 1 and 2 Seams.

Details on New Clydesdale Colliery’s infrastructure appear in Table 2.33 and details of New Clydesdale Colliery’s historical operating statistics appear in Table 2.34.

The plant feed during 2003/2004 is double that of 2005 as a consequence of coal buy-ins from third parties and the stooping of underground pillars. New Clydesdale Colliery is geared to serve the current Richards Bay Coal Terminal (“RBCT”) entitlement (common user entitlement) and supplies approximately 180kt of A grade product to the inland market. The budget is compiled to serve these markets. To meet these budget requirements, the product is a function of the plant feed and yield. Therefore, the higher the quality of raw coal supplied, the higher the yield in the plant. New Clydesdale Colliery currently has various production sources resulting in yields ranging from approximately 55% to 72%. This will determine the rate of plant feed required.

2.6.7

North Block Complex

The North Block Complex comprises the following:

• Glisa Colliery;
• Strathrae Colliery;
• Eerstelingsfontein Project; and
• Belfast Project.
  

The operations in the North Block Complex are situated in Mpumalanga Province between the towns of Carolina, Arnot and Machadodorp. Since 2001 North Block Complex has produced some 8.6Mt of coal. Historical production information appears in Table 2.35.

Glisa Colliery is situated approximately 280km east of Johannesburg, near the town of Belfast, in the Province of Mpumalanga. The colliery produces a D-grade product which is mainly supplied to the domestic market. Glisa Colliery consists of opencast operations, which produce thermal coal for Eskom, and underground operations, which produce D-grade coal. The underground at Glisa Colliery will be depleted by March 2006 and the opencast at Glisa will be depleted by June 2006.

Strathrae Colliery is located approximately 200km northeast of Johannesburg and approximately 15km south of Wonderfontein on the Carolina – Wonderfontein road, in the Province of Mpumalanga. It is a relatively new acquisition by Eyesizwe that was refurbished and commissioned in October 2004. The colliery produces thermal coal for Eskom and metallurgical B-grade coal. Strathrae Colliery is an opencast operation, with a four-year LoM. Strathrae Colliery expects to reclaim 355kt of material from a dump, which will be sold to Eskom, over a 12-month period.

The Eerstelingsfontein Project area is located approximately 230km north-northeast of Johannesburg and 20km south from the town of Belfast. Eerstelingsfontein will be mined by means of an opencast operation using the strip mining method and RoM coal will be transported by road to the Strathrae plant.

The Belfast Project reserve area is located approximately 220km north-northeast of Johannesburg near the town of Belfast. A feasibility study has been conducted on this project.

(C) Calendar Year ended 31 December.

Details on the North Block Complex’s infrastructure appear in Table 2.36 and details of the North Block Complex’s historical operating statistics appear in Table 2.37.

(C) Calendar Year ended 31 December.

2.6.8

Twistdraai Colliery

The Twistdraai Colliery is located in the centre of the Highveld Coal field, some 11km east of Secunda in the Mpumalanga Province. The region is typified by low rolling hills typical of the Karoo Sequence of the Highveld region. The Colliery is situated predominantly on the farms Goodehoop 290IS, Grootvlei 293IS, and Frischgewaagd 294IS in close proximity to the Sasol Synfuels factory in Secunda. The export mine at Twistdraai was commissioned in 1996. A total of 27.88Mt of coal has been exported, beneficiated from 76.05Mt at the Twistdraai Export Plant from 1996 through to 30 June 2005. During January 2006 Sasol signed a Memorandum of Understanding with Eyesizwe to acquire a 35% stake in Twistdraai Colliery.

2.6.9

Sintel Char Project

Kumba Coal was given board approval to commence with construction of a Sintel Char Plant in the vicinity of the Grootegeluk coal mine. Construction is set to commence in 2006 with commissioning planned for the latter half of 2007. The objective of the Sintel Char Plant is to convert metallurgical suitable coal to a high carbon product by taking out all unwanted volatiles and tars and carbonising the product to a desired hardness and reactivity. The sintel char to be produced is used in the South African ferrochrome industry, which uses a blend of coal as a reductant in the smelting process.

The Sintel Char Project is expected to commence production in 2007 and ramp up to full production by 2009, processing some 210ktpa to produce some 138ktpa of Lumpy Char and some 11ktpa of Char (<20mm). Estimated real capital expenditures for the project are expected to be some ZAR182m.

2.6.10

Inyanda Project

The Inyanda Project is located on the farm Kalbasfontein 284JS, Witbank district, 14kms north of Witbank. Kumba Coal owns the surface rights to Portion 21 of the farm Kalbasfontein 284 JS. An application for a “new order” Mining Right for the Remaining Extent of Portion 20, Portion 21 and Portion 22 of the farm Kalbasfontein 284 JS was submitted to the DME on 27 October 2004. The Inyanda Project is an equal joint venture between Eyesizwe and Kumba Coal. The project has been approved by both the Kumba Coal and Eyesizwe Boards.

The Inyanda Project is expected to commence production in 2007 and ramp up to full production by 2008, processing some 1.4Mtpa to produce an average of 1Mtpa of A-grade export steam coal. Estimated real capital expenditures for the project are expected to be some ZAR257m.

2.6.11  

Mafube JV Phase II Project

Mafube Colliery is a 50 : 50 joint venture between Anglo Coal and Eyesizwe. Mafube Colliery is located approximately 180km east of Johannesburg, between the towns of Middleburg and Belfast, in the Province on Mpumalanga.

The No. 1 and No. 2 Seams at the colliery will be exploited in two phases:

• Mafube JV Phase I is currently expected to supply approximately 1,180ktpa of coal to Eskom’s Arnot power station until 2007.
• The Mafube JV Phase II Project will be a large opencast mine supplying an average of 6Mtpa RoM to a coal processing plant to produce an average of 2.7Mtpa of “A” grade export quality thermal coal and supply an average 2.1Mtpa of middlings coal to Eskom’s Arnot power station. The project is expected to commence production in 2007 and ramp up to full production by 2008. Anglo coal commenced with the Phase II Project feasibility study in August 2004.
  

According to the agreement Exxaro will only participate in the Mafube JV Phase II Project and the FM and associated NPVs in Section 14 reflect Phase II only. Estimated real capital expenditures for the project are expected to be some ZAR2,000m. Two scenarios are presented in the CPR, Scenario I excludes Nooitgedacht Inferred Resources and Scenario II includes Nooitgedacht Inferred Resources.

2.6.12  

Belfast Project

The Belfast Project is located approximately 7km to the south of the town of Belfast. The project area is linked to the N4 national road and the main railway line to Maputo. It is also connected via Carolina with the Richards Bay line. The project will mine export and thermal coal using opencast and underground mining methods.

The Belfast Project is expected to commence production in 2008 and ramp up to full production by 2010, processing some 2Mtpa to produce an average of 1.2Mtpa of washed coal and 0.7Mtpa of coal for supply to Eskom. Estimated real capital expenditures for the project are expected to be some ZAR188m.

2.6.13  

Ingcambu Project

The Ingcambu Project is situated 5km north east of Ermelo in the Province on Mpumalanga. Ingcambu is a joint venture between Ingcambu Investment (Proprietary) Limited (40%); Eyesizwe (50%) and Anglo Khula Mining Fund (10%). The project mines export and thermal coal using opencast and underground mining methods.

The Ingcambu Project has commenced production in 2005 and is expected to process some 0.7Mtpa to produce some 0.25Mtpa of Eskom middlings and 0.25Mt of export steam coal in 2006. The level of confidence in the data is limited and therefore SRK have restricted the LoM to 2006 (the LoM is limited to access to portion 26 of the farm Uitgevallen – for further details refer to Section 3.3.5).

2.6.14  

Exploration Potential

Kumba Coal and Eyesizwe have eight coal exploration projects in various development stages as indicated in Table 2.38 below.

Table 2.39 to Table 2.46 provide summary details of the coal exploration projects.