5.   MINING

5.2  

Iron Ore

5.2.1    

Sishen Mine

Mining Methods: Sishen Mine is a large, mature opencast mine established in 1953 to develop the extensive local iron mineralisation and resources in the area. All the RoM ore is beneficiated and, after blending to specification on product stockpiles, is railed to Saldanha Bay for the international export sales markets or inland to the domestic customers. The Mineral Resources and Mineral Reserves have historically been derived from >60%Fe material and lower grade iron ore was stockpiled or classified as waste. An investigation into mining and processing lower grade material has been completed by Kumba and the SEP Phase I is being constructed to process >58.5%Fe material.

The regional topography is flat and access into the pit areas is provided by a number of haul roads that are generally constructed to a minimum width of 30m and at a maximum gradient of 8%. Mining operations are widespread and take place over the full area of the deposit. The pit can broadly be divided into a North, Central and South pit area. Waste dumps are located on the east and west sides of the pit, and some backfilling of mined out pit areas has already commenced in the Central and South pit area. In the longer term a greater opportunity for backfilling exists.

An in-pit crusher located in the North pit area is used to reduce haul distances and crushed ore is conveyed from the in-pit crusher to the beneficiation plant.

Mining benches are cut at 12.5m intervals although smaller equipment has been introduced to enable the mining operation to mine more selectively from the bench and flitches. The mining operation is conducted using a large fleet of conventional open pit mining equipment comprising blast hole drilling rigs, electric face shovels, and 170t and 190t off-highway trucks supported by appropriate ancillary mining equipment. Where appropriate, electric trolley assist for truck haulage is used improving the up-hill truck speeds on in-pit haul roads and roads to the waste dumps. A small proportion of the waste rock can be free dug (16%) but the majority of the rock to be mined requires drilling and blasting. The ore material consists of haematite in enriched banded iron formation. These rocks are very hard and have a high specific gravity. The mining duty is considered to be heavy.

The mining equipment fleet is maintained on an ongoing basis, with interim major overhauls and rebuilds planned during the life of each of the primary units of mining equipment. Provision is made to replace the equipment as justified by higher maintenance costs as each unit ages. The final pit as planned will require the relocation of certain surface infrastructures due to the expansion of the open pit westwards and a 500m blasting perimeter. The likely costs for infrastructure relocations have been provided for in the capital planning and have been utilised in the open pit optimisation exercises.

Dilution, Mining Losses and Reconciliation: A mining block size of 10m x 10m x 6.25m is used for ore definition in terms of the different material categories used at the mine. These blocks can be aggregated to form a bench of 12.5m in vertical height. A block is classified according to the material type in which the centroid of the block falls. The block includes estimates for dilution and for mining loss only where the centroid of both blocks falls outside the ore zone. Sishen Mine has traditionally used six material codes to derive the Mineral Reserve estimates although product quality algorithms are used to determine the likely product. An allocation percentage is attributed to each of the material codes. The six material type codes include: four for ore to define blocks above and below a grade of 64.5%Fe as well as above and below a phosphorous content of 0.08%; one for the high density (RD>3.6) hangingwall waste; and one for the low density (RD<3.6) footwall waste. Dilution and ore loss is incorporated in the two waste material categories where the orebody outline transgresses the block boundary. From reconciliation with the actual plant feed the proportion of these material categories reporting as actual plant feed is quantified and used in defining the Mineral/Ore Reserves. The latest reconciliation indicated that the following proportions report as ore: 100% of the ore blocks with low phosphorous; 58% of the ore blocks with high phosphorous; 25% of the high density hangingwall waste and 60% of the low density footwall waste. For the latest Mineral/Ore Reserves the material codes have been expanded to some 14 categories principally to include the different combinations associated with introducing the SEP plant and to formalise the contribution from selective mining. In terms of iron ore grades the material greater than 64.5%Fe is planned to report exclusively to the Main Plant whilst material between 61%Fe and 64.5%Fe can be treated at the Main Plant or SEP Plant. Ore with a grade of some 40%Fe to 61%Fe is planned to be treated exclusively at the SEP Plant. These material codes are used in the scheduling algorithms and not all the material that is defined as ore is necessarily treated in the period of the LoM Plan. A certain amount of SEP material located towards the base of the open pit remains at the end of the LoM Plan due to the treatment capacities of the two plants. This indicates the potential for increased SEP production as envisaged by Kumba in the SEP Phase II project for later expansion.

Mine Planning and Scheduling: Sishen Mine utilises standard industry techniques for the open pit design, scheduling and planning commencing with an open pit optimisation exercise that assists in the determination of the “optimum” pit for design purposes. The optimisation and design process is extensive and incorporates sufficient investigation of technical and economic parameters such as pit slope angles, existing infrastructure, boundaries, ore, stockpile and waste dumps and operating and capital costs. The reserve footprint extends for approximately 12km on strike and up to 3km on dip and ultimately the final pit is expected in parts to be 410m deep.

The open pit optimisation exercise that supports the Mineral Reserves presented in this CPR, are based on the Main Plant (=60%Fe) ore only. The SEP ore that has been included in the current Mineral Reserve statement has been derived from the material that exists below this grade but above 58.5% beneficiated Fe and is planned to be processed through the new SEP facility over the life of the Main Plant. The SEP ore was considered as waste type material for this open pit optimisation exercise. The 2006 open pit optimisation exercise will consider the SEP material as ore instead of waste. This should materially increase the size of the optimised pit, hence increase RoM reserves but also increase waste stripping costs.

The current LoM Plan reports a remaining mine life of 24 years, based on the in-situ Mineral Reserves defined and depleted with an existing SEP stockpile of some 44Mt. Sishen is thus projected to be a long life mine. The total anticipated production of ore during the LoM is some 1,200Mt of RoM ore at an overall stripping ratio of 2.8:1. A contribution of 670Mt is anticipated from Main Plant ore and 350Mt from SEP ore resulting in total headfeed of some 1,021Mt over the LoM Plan. The stockpile of 179Mt accounts for the difference between the RoM and the total plant headfeed. The annual RoM production to the Main Plant is scheduled to increase to some 33Mtpa from the current 32Mtpa from improvements to the process facility leading to product production of some 29Mtpa. The SEP ore is planned to commence production from 2007 leading to a product production of 13Mtpa in 2015. Waste stripping requirements range from some 64Mtpa to 105Mtpa over the LoM Plan. The waste stripping schedule is not undertaken according to minimum requirements and SRK consider that there exists flexibility in the planning requirements. The average stripping ratio is 2.8 : 1 and significantly less than that required (3.4 : 1) before the SEP ore was defined. However, the total material mined increases to some 183Mtpa from 2014 which is some 93Mt (100%) more than historically achieved (90Mt in 2004) and capital is included for additional mining equipment and re-builds.

5.2.2

Sishen South Project

Mining Methods: The regional topography is medium to flat in terms of topography and access into the various pit is provided by a number of haul roads to the crushing and screening facility and waste dumps. Mining operations are widespread and have taken place over the full area of the deposit. Production is planned from the four open pits of Welgevonden North, Welgevonden South, Kapstevel North and the Leeuwfontein pit. The Welgevonden and Kapstevel open pits are adjacent and within a strike distance of 4km. Mining benches are planned to be cut at 10m heights but loading can, if necessary, be undertaken on 5m flitch heights. The mining operation is to be conducted using a large fleet of conventional open pit mining equipment comprising blast hole drilling rigs and 100t off-highway trucks supported by appropriate ancillary mining equipment. The smaller sized truck units and comparable shovels and/or front end loaders have been selected to assist in selectivity and blending requirements as well as the more restricted working areas planned at the base of the final open pits.

All mining equipment is planned to be diesel driven and electrical power is only planned to be installed for de-watering purposes. The equipment complements have been derived through a simulation exercise using the haul parameters derived from the pit optimisation and mine design. The ore material consists of haematite and ironstone in the banded iron formation.

These rocks are very hard, and have a high specific gravity. The mining duty is considered to be heavy. The haul road design is based on ramps of 25m width at Leeuwfontein and 21m at Welgevonden and Kapstevel installed at a 10% gradient. A minimum mining width of 40m is planned and was used in the pit optimisation exercise. A total of three waste dumps are planned at the site and according to common design criteria.

In summary the waste dumps are planned to a maximum height of 40m and at a final slope angle of 18º with the location being adjacent to the open pits but not closer than 100m. Mining operations and maintenance are planned to be owner operated although certain supervision assistance on maintenance will be obtained from the original equipment manufacturer. Workshops and service bays are planned to be installed at site although the reconditioning and repair of components will be undertaken off-site.

Dilution, Mining Losses and Reconciliation: The modifying factors of dilution and ore loss used as part of the Sishen South open pit optimisation exercise and in the derivation of Mineral Reserves are based on a mining block size of 10m x 10m x 5m. The grade of the mining block is the same as the underlying resource block but at the ore and waste contacts the weighted average grade is calculated. The waste that is incorporated into a reserve block is defined as waste dilution and the quantity of material that does not meet the %Fe criteria defines the ore loss. The cut-off decision is based on achieving the product quality specification for Lump ore and Fine ore rather than those blocks that exceed a certain minimum specification. The average ore loss and dilution factors resulting from the application of this approach to the Sishen South orebodies are given in below:

Mine Planning and Scheduling: Sishen South have developed the mine design and scheduling aspects of the feasibility study using standard industry techniques commencing with an open pit optimisation exercise to determine the “optimum” pits. The optimisation exercise was undertaken on two areas that encompass the Leeuwfontein project area and the Welgevonden/Kapstevel project areas. The open pit optimisation exercise that supports the Mineral Reserves presented in this CPR are based on Mineral Resources that have been defined > 55%Fe ore. The optimisation and design process has been undertaken on a greenfields basis and has used geotechnical slope angles according to the different rock types and lithological units. The geotechnical assumptions are based on the results of test performed on samples and the results of specific geotechnical boreholes. Due to the high rock strength of the material at Sishen South large scale failures are unlikely. Small failures may be associated with the intersection of small scale geological features for which there is currently insufficient structural information to predict. SRK considers that it incorporates sufficient investigation of the technical and economic parameters such as pit slope angles, ore, stockpile and waste dumps and operating and capital costs. The pit shell, at each of the sites, that represented the maximum un-discounted cash flow, was selected as a basis for the mine design.

A computerised scheduling package was used to assist in generating the LoM Plan production profiles. The general methodology of the scheduling was driven by the Lump ore and Fine ore product specification and ore from the various pits and pit benches was blended and/or stockpiled to achieve these qualities. The use of RoM stockpiles is critical to the mining operation supplying product of the correct specification and RoM stockpiles of up to some 0.8Mtpa are built depending on the product qualities derived from the open pit faces. RoM re-handling is consequently planned at 100%. The current LoM Plan reports a mine life of 22 years, based on the Mineral Reserves defined and depleted at present. Sishen South is thus projected to be a long life mine. The total anticipated production of ore during the LoM is 65Mt at an overall stripping ratio of 2.2 : 1. The annual RoM production to the screening plant is planned at 3Mtpa and use is made of a RoM stockpile as a buffer between the open pits. Production is maintained from at least two open pits over the LoM Plan. The majority of the production is obtained from the Leeuwfontein open pit, some 53Mt or 82%. Four interim pits are planned over the life of the Leeuwfontein open pit. Waste stripping requirements range average some 7Mtpa over the LoM Plan.

5.2.3

Mining Methods: Thabazimbi Mine is a mature operation that has been in production since 1934. It uses surface mining methods to produce haematite ore as feed to a beneficiation plant, which produces particularly high specification lump and fine iron ore for steel production. Underground mining operations ceased in 1998 and Thabazimbi Mine now mines entirely from three existing open pits and plans to develop two additional pits during the remaining mine life. Reserves are shown to be fully depleted in 2010.

The deposits are located in mountainous topography, and the hard iron formations constitute the high ridges in the region. Suitable mining haul roads have been constructed to access and develop the deposits and the ore is generally hauled downhill (maximum gradients of 6%) to one of two crushing plants. The haulage distance from the pits to the plants varies between 7km and 13km. Production is currently sourced from the Donkerpoort West, Buffelshoek West and Kwaggashoek East open pits. The Donkerpoort West pit is nearly depleted.

Mining benches are planned at 10m heights. The mining operation is conducted using conventional open pit mining equipment comprising blast hole drilling rigs, electric face shovels and 170t off-highway trucks supported by appropriate ancillary mining equipment. All the rock mined requires drilling and blasting, with the majority of the waste comprising banded ironstone formation. The ore consists of haematite and ironstone within the banded iron formation. These rocks are very hard and have a high specific gravity. The mining duty may be described as heavy.

The mining equipment fleet is ageing and the majority has been acquired second-hand from Kumba’s Sishen Mine. Thabazimbi Mine has implemented a cost effective programme for refurbishing this mining fleet and the production that is being achieved with these units is competitive. The haul road and general housekeeping conditions observed at site were very good.

Within each pit, access is maintained by a single haul road that is located on stable pit walls. In-pit road gradients can be up to 10% and the standard ramp width is 25m.

Dilution, Mining Losses and Reconciliation: The block size used as the basis for ore definition is 10m x 10m x 10m. Ore definitions at Thabazimbi Mine are given in terms of six classifications at Donkerpoort and at Buffelshoek totalling 12 principal categories. The categories have different quality parameters associated with them that are carried through using algoritms in the reserving process. Thabazimbi Mine has the benefit of a large amount of historical performance data and reconciliations in which to improve and optimise the ore definitions and beneficiation algorithms. There has also been a focus on improved selectivity at the mine over the last five years and blocks can be categorised in terms of their minimum mining thickness, morphology and the type of loading equipment planned to optimise the ore definitions.

Mine Planning and Scheduling: Thabazimbi Mine utilises standard industry techniques for the open pit design, scheduling and planning commencing with an open pit optimisation exercise that assists in the determination of the “optimum” pit for design purposes. The optimisation and design process is considered by SRK to incorporate sufficient investigation of technical and economic parameters such as pit slope angles,

existing infrastructure, boundaries, ore, stockpile and waste dumps and operating and capital costs. The reserve footprint extends over a number of separate areas and ultimately the final pits are relatively shallow and haul distances generally improve as the mountainous deposit is progressively mined.

The open pit optimisation exercise that supports the Mineral Reserves presented in this CPR are based on the >60%Fe ore only. The current LoM Plan reports a remaining mine life of five years, based on the Mineral Reserves defined and depleted at present. Thabazimbi Mine is thus projected to be a short life mine. The total anticipated production of ore during the LoM is some 13.3Mt of RoM ore at an overall stripping ratio of 3.1 : 1. The LoM Plan reflects pits being developed and/or re-opened at Donkerpoort-Nek and Bobbejaanwater. The majority of the LoM reserves will be mined from Buffelshoek West (4.4Mt) and Kwaggashoek East (5.1Mt). In addition to the RoM ore some 1.1Mt is planned to be treated from stockpiles. The annual RoM production to the Main Plant is scheduled to be maintained at some 3Mtpa for the duration of the LoM Plan. Waste stripping requirements decline from some 18Mtpa required in 2006 over the LoM Plan.

Thabazimbi has a number of projects under investigation that may offer the opportunity to extend the life of the operation. These include:

• Recovery of a fines product from tailings materials;
  
• Re-opening and development of underground resources;
  
• Processing of the banded iron formation such as that envisaged for the Phoenix Project; and
  
• Regional exploration drilling.