CPR 4 Coal Resources 01apr08

151

4. COAL RESOURCES

4.1 Sample Data Assumptions for Modelling Purposes

All the diamond boreholes completed for this report were drilled vertically and, as the regional dip of the

Vryheid Formation strata is below 5°, the apparent thickness of the intersected coal seams closely

approximates the true thickness. Where less than 95% recovery was obtained through any coal seam, these

were discounted and not included for estimation purposes and the drilling contractor was requested to re-

drill the hole. In total three holes were re-drilled on the Delmas Project area and no holes on the Sterkfontein

Project area.

In compiling the data for the physical and analytical models the following procedures were used. All the

physical data from the borehole logs and tables in the geological reports were verified and captured into an

Excel database and all hard copy borehole logs were checked against the digital database. This database was

made read-only to prevent any of the data being corrupted.The physical databases consisted of the borehole

name, the X and Y co-ordinates, the collar elevation, the depth to the roof and floor of each seam, the sample

name and from and to depths for each sample. From this information the thicknesses of each seam as well

as the elevations of the roof and floor of each seam could be calculated. A number of check algorithms were

run to check for negative seam thicknesses and partings. The analytical data was captured in a similar

manner, but in three Comma Separated Values (“CSV”) files, a header record, a samples record and an

analyses record. These files were also made read-only to prevent data being corrupted. This data was then

given to Gemecs to be used in their MINEX proprietary modeling software. The algorithms standardise wash

fractions, calculate raw RD’s from the proportion of raw ash in the samples as well as using the standard

methodologies for composting samples using thickness and raw RD.

The laboratory results were read into Excel files and then into a verification, compositing and washing

simulation database. Using the proprietary Washproduct Software® software numerous check routines were

run to verify the data, composite the samples as well as to simulate and report quality outputs.Washproduct

Saftware® uses standard accepted methodologies to composite samples using the RD and width of each

sample and then weighted by the yield at each fraction to calculate the composited quality for each seam

at every wash density. Washproduct Software® will also check laboratory reported RD’s (often a source of

error against calculated RD’s).

These data were given to Gemecs to be used in their MINEX proprietary modeling software. Tables 4.1_1

to 4.1_3 give examples of physical borehole results, sample files, and analyses files.

An example of a representative composite for two calorific values namely a primary wash of 27 MJ/kg and a

secondary wash of 20 MJ/kg are shown in Table 4.1_4.

152

Table 4.1_1

Keaton Energy Holdings Coal Projects

An Example of Physical Borehole Results

X Y BHID Collar LOW 5 dbsrf 5 dbsfl 4L dbsrf 4L dbsfl 2 dbsrf 2 dbsfl

–17590.93 –2898709.90 VG07–01 1586.11 6.26 15.63 16.46 56.48 60.33 73.73 81.36

–17605.46 –2897992.44 VG07–02 1584.10 11.55 31.25 38.70 53.94 58.68

–17575.29 –2896371.17 VG07–04 1597.33 17.62 29.22 30.98 45.15 55.52 62.34 71.72

–16785.14 –2895614.28 VG07–05 1595.89 14.67 85.34 86.95 103.86 104.47 107.77 111.73

–16834.41 –2896250.65 VG07–06 1605.77 15.14 40.33 40.95 59.90 65.61 73.17 73.50

–16811.40 –2897187.38 VG07–07 1579.20 5.90 35.86 41.17 53.70 61.49

–16799.10 –2898051.96 VG07–08 1569.94 9.25 21.80 25.57 38.89 44.48

–16760.23 –2898656.96 VG07–09 1573.99 30.60 36.25 37.72 48.00

–16015.35 –2897988.56 VG07–11 1560.31 5.36 20.67 20.97

–16002.96 –2897197.70 VG07–12 1572.62 6.55 24.00 26.97

–15985.39 –2896434.08 VG07–13 1587.44 0.50 36.00 36.86 59.25 62.45 77.76 81.32

–16101.03 –2895598.29 VG07–14 1592.77 7.25 39.57 40.87 60.69 69.46 74.21 82.20

–15262.21 –2895633.32 VG07–15 1584.13 5.50 14.94 16.69 43.80 51.77 57.57 62.57

–15197.21 –2896395.05 VG07–16 1574.81 13.22 25.59 26.83 50.20 58.16 65.23 72.10

–15201.93 –2897188.40 VG07–17 1572.96 11.57 27.33 33.78

Table 4.1_2


Example of a Sample File

BH ID From To Sample ID Seam Raw RD

SK07–03 184.03 184.52 TC005 4 1.7

SK07–03 184.52 184.96 TC006 4 1.49

SK07–03 184.96 185.35 TC007 4 2.28

SK07–03 185.35 185.97 TC008 4 1.52

SK07–03 185.97 186.79 TC009 4 1.46

SK07–12 166.49 168.61 TC010 4 1.7

SK07–12 168.61 168.97 TC011 4 1.95

SK07–12 168.97 169.99 TC012 4 1.47

SK07–04 173.31 174.29 TC013 4 1.63

SK07–04 174.29 174.87 TC014 4 2.34

SK07–04 174.87 176.21 TC015 4 1.4

153

Table 4.1_3


Example of the Analyses Files

Sample ID RD Cum moi Cum ash Cum vols Cum FC Cum S Cum CV Cum Yield

TC005 1.4 3.4 11.8 32.7 52.1 1.82 27.79 4.98

TC005 1.45 3.22 13.55 31.98 51.25 2.08 27.22 9.03

TC005 1.5 3.07 15.24 30.72 50.97 2.15 26.64 11.94

TC005 1.55 2.98 17.78 28.23 51.01 2 25.69 17.96

TC005 1.6 3.09 21.31 23.95 51.65 1.73 24.16 35.67

TC005 1.65 3.09 23.43 22.2 51.28 1.63 23.35 52.54

TC005 1.7 3.09 24.81 21.38 50.72 1.62 22.82 63.71

TC005 1.75 3.03 26.48 20.87 49.62 1.79 22.2 75.23

TC005 1.8 3 27.37 20.68 48.95 1.86 21.88 79.75

TC005 2 2.82 32.04 20 45.15 3.85 20.21 100

TC006 1.4 3.3 11.2 36.1 49.4 1.55 28.24 27.26

TC006 1.45 3.22 13.54 34.89 48.36 1.51 27.44 46.8

TC006 1.5 3.11 15.2 34.03 47.65 1.51 26.83 62.06

TC006 1.55 3.07 15.89 33.44 47.59 1.65 26.58 68.64

TC006 1.6 3.02 17.13 32.63 47.21 1.71 26.13 78.17

TC006 1.65 2.97 18.47 31.89 46.67 1.74 25.64 86.31

TC006 1.7 2.93 19.25 31.4 46.42 1.77 25.36 90.77

TC006 1.75 2.9 19.83 31.14 46.12 1.87 25.15 93.18

TC006 1.8 2.9 20.02 31.07 46.02 1.86 25.08 93.97

TC006 2 2.79 22.47 30.44 44.3 2.38 24.21 100

154

Tab

le 4

.1_4

Ke

ato

n E

ne

rgy

Ho

ldin

gs

Co

al

Pro

ject

s

Se

lect

ed

Re

pre

sen

tati

ve

Co

mp

osi

ted

An

aly

sis

Re

sult

s

Co

mb

ine

dP

rim

ary

wa

sh 2

7 C

VS

eco

nd

ary

wa

sh 2

0 C

VY

ield

Ho

le I

DS

ea

mR

aw

RD

Mo

istu

reA

shV

ola

tile

sFC

Su

lph

ur

CV

Yie

ldM

ois

ture

Ash

Vo

lati

les

FC

Su

lph

ur

CV

Yie

ld

SK

07

–0

14

1.5

23

.47

15

.43

32

.88

48

.22

1.7

42

74

8.6

12

.99

28

.36

24

.84

2.7

81

.83

21

.39

51

.39

10

0

SK

07

–0

24

1.5

43

.85

13

.43

3.1

94

9.5

61

.42

27

51

.75

3.3

32

.82

2.0

44

1.8

61

.69

20

48

.25

10

0

SK

07

–0

34

1.6

43

.22

13

.91

32

.65

50

.22

1.2

12

74

82

.72

33

.16

21

.28

42

.84

1.7

12

03

2.0

48

0.0

4

SK

07

–0

44

1.6

73

.16

14

.22

32

.55

50

.07

1.3

82

74

7.1

92

.82

33

.15

21

.91

42

.13

1.7

92

02

6.0

77

3.2

6

SK

07

–0

54

1.5

23

.33

13

.97

33

.14

9.6

1.0

42

76

9.2

62

.93

33

.02

22

.82

41

.23

1.2

32

01

3.6

88

2.9

4

SK

07

–0

64

1.5

72

.98

15

.03

34

47

.99

1.2

92

73

6.4

82

.51

32

.49

23

.39

40

.21

1.6

20

.71

63

.52

10

0

SK

07

–0

74

1.5

64

.05

13

.69

32

.74

49

.52

1.3

27

21

.39

3.7

92

7.8

52

3.0

14

4.8

81

.56

21

.16

78

.61

10

0

SK

07

–0

84

1.6

4.2

81

1.1

33

3.3

95

1.2

1.0

42

73

6.0

33

.73

1.0

72

1.8

14

3.4

31

.97

20

60

.18

96

.21

SK

07

–0

94

1.6

44

.27

13

.08

31

.69

50

.95

1.4

82

74

9.4

23

.57

31

.97

23

.77

40

.69

1.6

72

02

9.2

77

8.6

9

SK

07

–1

04

1.5

94

.26

13

.15

32

.78

49

.81

2.1

22

74

2.6

3.5

93

0.9

82

5.6

43

8.6

82

.27

20

.23

57

.41

00

SK

07

–1

00

41

.63

2.9

21

0.3

73

3.6

55

3.0

61

.35

27

24

.51

3.3

30

.51

24

.38

41

.81

1.4

52

06

5.4

78

9.9

8

VG

07

–0

12

1.7

2.2

61

7.3

42

0.8

55

9.5

50

.42

71

7.4

12

.76

32

.79

15

.14

9.3

40

.32

05

8.8

97

6.3

VG

07

–0

22

1.7

73

.11

18

.53

10

.86

67

.51

0.8

12

76

.67

4.2

53

4.3

28

.41

53

.02

0.4

62

05

8.8

56

5.5

2

VG

07

–0

82

1.7

92

.71

11

.27

.99

78

.10

.63

27

1.1

3.4

72

9.6

47

.57

59

.32

0.6

12

03

9.8

14

0.9

1

VG

07

–1

42

1.6

74

.89

10

.62

9.7

35

4.7

80

.52

73

1.1

74

.09

29

.27

21

.17

45

.47

0.5

82

03

3.3

86

4.5

5

VG

07

–2

62

1.6

53

.95

12

.52

31

.08

52

.46

0.9

62

72

5.8

3.4

23

1.1

20

.93

44

.54

0.8

12

04

8.7

74

.5

VG

07

–1

54

1.7

25

.51

1.8

33

2.4

95

0.1

71

.26

27

12

.58

4.9

53

2.3

52

1.2

84

1.4

20

.46

20

62

.99

75

.57

VG

07

–1

64

1.6

84

.82

15

.27

29

.77

50

.14

0.8

82

73

3.5

4.4

33

0.1

12

1.5

54

3.9

0.4

20

30

.97

64

.47

VG

07

–1

74

1.6

72

.56

14

.81

8.7

26

3.9

20

.96

27

12

.34

3.3

37

.65

16

.52

42

.54

1.1

82

08

7.6

61

00

VG

07

–1

94

1.6

4.7

21

2.7

53

1.2

25

1.3

20

.92

27

40

.84

4.0

83

0.9

12

1.2

24

3.7

90

.76

20

34

.86

75

.7

VG

07

–2

04

1.6

63

.69

15

.03

20

.93

60

.35

0.4

92

72

4.7

44

.03

31

.18

14

.76

50

.03

0.4

42

05

9.1

38

3.8

7

VG

07

–2

65

1.7

43

.22

15

.06

15

.79

65

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1.3

62

78

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3.8

82

9.1

11

5.6

95

1.3

20

.97

20

49

.95

8.5

7

VG

07

–3

15

1.5

32

.98

15

.79

25

.49

55

.75

0.6

72

78

0.3

60

80

.36

VG

07

–3

25

1.5

64

.47

13

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28

.65

3.4

10

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27

66

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3.4

32

20

.97

43

.63

0.4

62

09

.74

75

.78

VG

07

–6

15

1.5

83

.21

4.2

52

8.7

95

3.7

60

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27

64

.84

3.8

30

.66

18

.35

47

.18

0.1

22

01

3.1

77

8.0

1

155

4.2 Methodology

The methodology used with respect to resource estimation is outlined below:

A database was created of all the available data (including survey, geological, geophysical and analytical data)

and this information was cross-referenced to all the data for the major lithological units. A suite of validation

algorithims were performed on the data set in order to check for internal consistency. A MINEX borehole

database was then created from the cleaned data. This is a fully relational database that allows for the

correct compositing of data over geological intervals.

All relevant horizons were interpolated into each borehole to allow for washouts, underdrilling and erosion.

Correlation of the coal seams and/or horizons in each project area was undertaken by stratigraphic

interpretation, sedimentological package identification, from the geophysical logs and by the use of various

cross-sections. From this database, all the relevant map/geometry data (such as surface DTM’s, depth of

softs, depth of weathering, dolerite intersections, potential fault planes, depth to basement) were created.

Posting plans were then created and the structural information was validated as to stratigraphic integrity. All

the relevant information was then gridded, with the grids terminated at the relevant truncating horizons. All

the analytical information was then imported and validated. All seam information was composited.

Coal seam quality grids were created and all the potential economic coal extents were determined, with

potential mineable areas defined. From this a resource statement was generated in compliance with the

guidelines laid out in the SAMREC Code (SANS 10320:2004).

Various modifying factors were taken into account for geological and mining losses and were applied to

determine a mineable in-situ tonnage (“MTIS”) for each resource block.

Qualities and yields were simulated using the Washproduct Software®. Yields and raw qualities for each

resource block were simulated and then tabulated.

4.2.1 Data Verification

Table 4.2.1_1 documents the repeat samples sent to Witlab in order to check on the preparation and

coal analyses performed by the Inspectorate M&L. A portion of the 1.5 float fraction from 12 samples

was sent for duplicate proximate analysis. The results from Inspectorate M&L, with minor exceptions,

compared well with those of Witlab.(refer to Table 4.2.1_1 for the samples submitted for comparative

analysis and Table 4.2.1_2 for the results).

Table 4.2.1_1


Repeat Analyses for the Projects

Batch No. Borehole ID Sample ID M&L Reference Seam Property

3 SK07–13 TC018 07/1992M 4 Sterkfontein

3 SK07 TC019 07/1992M 4 Sterkfontein

3 SK07 TC020 07/1992M 4 Sterkfontein



VG3 VG07–05 X309 08/3511M 4 Delmas

VG3 VG07 X310 08/3511M 4 Delmas

VG3 VG07 X311 08/3511M 2 Delmas

VG7 VG05–65 X581 08/3799M 2 Delmas

VG7 VG05 X582 08/3799M 2 Delmas

VG7 VG05 X583 08/3799M 2 Delmas

VG7 VG05 X584 08/3799M 2 Delmas

156

Tab

le 4

.2.1

_2

Ke

ato

n E

ne

rgy

Ho

ldin

gs

Co

al

Pro

ject

s

An

aly

ses

Co

mp

ari

son

HO

LE

SA

MP

LEM

ois

ture

(%

)A

sh (

%)

Vo

lati

les

(%)

Fixe

d C

arb

on

(%

)C

alo

rifi

c V

alu

e (

MJ/

kg

)S

ulp

hu

r(%

)

IDID

W

itla

bM

&L

Wit

lab

M&

LW

itla

bM

&L

Wit

lab

M&

LW

itla

bM

&L

Wit

lab

M&

L

SK

07

–1

3T

C0

18

3.2

3.6

19

.62

0.4

29

.32

9.9

47

.94

6.1

24

.92

4.5

1.5

1.4

SK

07

–1

3T

C0

19

4.0

4.2

17

.81

7.9

32

.82

4.7

45

.45

3.2

25

.72

4.9

0.9

0.8

SK

07

–1

3T

C0

20

2.5

3.8

20

.42

0.1

29

.42

7.5

47

.74

8.6

24

.92

4.4

1.3

1.2

SK

07

–2

3T

C3

23

4.0

3.7

18

.51

8.9

31

.73

0.9

45

.84

6.5

25

.02

5.8

2.0

1.9

SK

07

–2

3T

C3

24

4.5

4.1

14

.81

5.1

26

.82

7.4

53

.95

3.4

25

.92

6.2

0.8

0.7

VG

07

–0

5T

C3

09

5.9

5.2

18

.41

6.0

26

.92

6.1

48

.85

2.8

24

.72

5.0

0.8

0.8

VG

07

–0

5T

C3

10

5.7

5.2

15

.51

6.1

26

.62

6.8

52

.25

2.0

25

.12

5.1

0.4

0.5

VG

07

–0

5T

C3

11

4.0

3.9

18

.41

8.5

30

.52

9.9

47

.14

7.7

25

.22

5.5

1.6

1.5

VG

07

–6

5T

C5

81

3.7

2.8

20

.22

0.3

17

.31

5.7

58

.86

1.2

25

.02

6.0

1.6

1.4

VG

07

–6

5T

C5

82

4.3

3.0

20

.32

0.8

13

.51

3.3

61

.96

2.8

25

.42

6.3

0.6

0.6

VG

07

–6

5T

C5

83

3.8

2.7

17

.91

8.2

14

.31

6.3

64

.06

4.8

26

.22

7.6

0.9

0.8

VG

07

–6

5T

C5

84

3.5

2.8

14

.91

5.3

9.5

9.7

72

.17

2.3

28

.22

8.9

1.6

1.5

157

The Delmas Project area data set included 41 historical boreholes received from the Geosciences

Council. Not all these boreholes fell within the permitted area. Between October and December 2007

KEH drilled an additional 85 boreholes of which several of these boreholes were positioned on or near

the historical boreholes. The historical and new boreholes had good correlations; however 10 old

boreholes were discarded for geological modelling purposes as the variances were too high. The

database contained 116 boreholes. Due to the rapid changes in floor topography and seam depths

and thicknesses it was expected that boreholes close to each other would show significant variations.

Table 4.2.1_3 shows a comparison of old and new boreholes that were drilled in close proximity to

each other.

Table 4.2.1_3


A Comparison of Old and New Boreholes

X Y BHID 5 depth 5 depth 4L depth 4L depth 2 depth 2 depth

to roof to floor to roof to floor to roof to floor

–16101.03 –2895598.29 VG07–14 39.57 40.87 60.69 69.46 74.21 82.20

–16077.00 –2895376.00 39/61 36.90 38.35 54.42 62.05 69.18 75.74

–15985.39 –2896434.08 VG07–13 36.00 36.86 59.25 62.45 77.76 81.32

–16103.00 –2896441.00 36/61 28.50 29.74 53.54 58.95 75.18 81.43

–13571.46 –2897202.23 VG07–26 24.15 29.50 43.41 47.85

–13453.00 –2897300.00 22/61 22.73 29.72 44.75 49.02

For the Sterkfontein Project area there was so little historical geological data that only the new data

was used for geological modelling. A few boreholes in the north were discarded because of obvious

data errors. The number of boreholes used for geological modelling was 119 on the Sterkfontein

Project area.

4.2.2 Geological Modelling

Three-dimensional geological wireframe models were not created for the project areas as in coal a

much better estimation of the resource is achieved using gridding software such as Minex.

Minex software is well documented in various publications and uses a gridding algorithm that

forecasts into grid values from boreholes and analytical values. Grid manipulation after coal cut-off

parameters, structural parameters and other limiting factors (farm boundaries etc.) have been applied

and is used to generate area, volumes tonnages and qualities for any parameter specified by the user.

The author also used Surfer software to validate the outputs from the Minex model to ensure that

the Minex model was robust. Surfer uses a similar forecasting methodology as Minex but creates

single grids for each of the physical or analytical parameters. Areas of no coal or unmineable coal are

then blanked out in the grids and volumes are calculated by subtracting the floor elevation grid from

the roof elevation grid. Surfer’s gridding algorithms can also be set by the user, e.g. krigging or inverse

square distance.

Washproduct Software® was used to calculate analytical qualities in preference to Minex as the

process of validation, standardisation and compositing is more transparent using the Washproduct

Software®. Washing simulation can also easily be re-iterated using Washproduct Software®.

4.2.3 Coal Resource Estimation

Estimation of the resource was achieved using the gridding software MINEX. Volume calculations

were based on the figures derived from the models created in MINEX. Checks on these calculations

were undertaken in Surfer, using the original data generated in MINEX.

158

4.3 Gross In-situ Coal Resource Volumes

In terms of the SAMREC Code portions of a deposit that do not have a reasonable prospect for eventual

economic extraction must not be included as coal resources.

In regard to estimating coal volumes for the estimation of Gross Tonnes In-Situ (“GTIS”) coal resources, a

number of factors were considered as cut-off criteria.

In the Sterkfontein Project area these parameters are:

No. 4 Seam Bituminous

• Minimum height 1.40 metres

• Dry ash-free volatiles 26%

In the Delmas Project area these factors were different for each of the seams:

No. 5 Seam Bituminous


• Dry ash-free volatiles 30%

No. 4 Seam bituminous


• Dry ash-free volatiles > 26%

No. 4 Seam pseudo anthracite


• Dry ash-free volatiles < 26%

No. 2 Seam bituminous


• Dry ash-free volatiles > 24%

No. 2 Seam pseudo-Anthracite


• Dry ash-free volatiles < 24%

The following sections give details of the coal characteristics for the deposits of the Delmas and Sterkfontein

Project areas:

4.3.1 Delmas Project Area

4.3.1.1 Introduction

The potentially economic seams encountered in the project area are the No. 5, No. 4 and

No. 2 Seams in descending stratigraphic order. Sections generated for geological modelling

show that the dykes are not vertical and intersect the seams at different positions, resulting

in different traces when projected horizontally.

Figure 4.3.1.1_1 shows the map with the 116 boreholes used for the geological model,

including 41 historical boreholes.

159

Figure 4.3.1.1_1

Boreholes Used for Geological Modelling – Delmas Project Area

160

4.3.1.2 No. 5 Seam

Four resource areas were defined for the No. 5 Seam in the Delmas Project area, these being

the southwest (SWest), northwest (NWest), central (Central) and east (East)

(Figure 4.3.1.2_1).

Figure 4.3.1.2_2 shows that the No. 5 Seam, as presently understood, is restricted in its aerial

extent. The No. 5 Seam can be mined by underground mining or opencast methods with the

strip ratios determining the most economical mining method. The depth below surface will

also be a limiting factor when determining mining methods.

Figure 4.3.1.2_1

Map Showing the Four Resource Areas Defined for No. 5 Seam at the Delmas Project Area

161

Figure 4.3.1.2_2

Map Showing the Depth to Roof Contours for No. 5 Seam at the Delmas Project Area

162

The No. 5 Seam floor elevation contours (Figure 4.3.1.2_3) indicate that there are steep dips

to the north indicating that either the palaeo-floor has an influence on the coal parameters,

or that there could be some dislocations of the seam due to dolerite intrusions.

Figure 4.3.1.2_3

Map Showing the Floor Elevation Contours for No. 5 Seam at the Delmas Project Area

163

Based on 29 intersections, the No. 5 Seam thickness (Figure 4.3.1.2_4) varies from less than

0.13m to a maximum of 2.19m, with an average of 1.33m. The seam is best developed in the

northwest of the project area.

Figure 4.3.1.2_4

Map Showing the Thickness Contours for No. 5 Seam at the Delmas Project Area

164

The raw calorific values for the No. 5 Seam vary from 5.1 to 26.26 MJ/kg with an average

of 22.75 MJ/kg and that the overall value is best for the Central and East resource

area (Figure 4.3.1.2_5).

Figure 4.3.1.2_5

Map Showing the Raw Calorific Values for No. 5 Seam at the Delmas Project Area

165

The entire No. 5 Seam coal resource has a dry ash free volatile matter percentage greater

than 26%, thereby meeting one of the minimum quality parameters for Eskom coal

(Figure 4.3.1.2_6). The dry ash-free volatiles vary from 46.5% to 15% with an average of

34.4%. The limit used to define bituminous is 30% dry ash free volatiles and shows the best

bituminous coal to occur in the NWest and East resource areas.

Figure 4.3.1.2_6

Map Showing the Dry Ash-Free Volatile Matter Content for No. 5 Seam at the Delmas

Project Area

166

4.3.1.3 No. 4 Seam

Figure 4.3.1.3_1 gives the resource areas defined for No. 4 Seam at the Delmas Project area.

The No. 4 Seam in the Delmas Project area is a composite seam comprising up to four

different coal seams.

The depth to roof contours for No. 4 Seam and the thickness contours are represented in

Figures 4.3.1.3_2 and 4.3.1.3_4, respectively. The seam is shallowest in the southern parts of

the East, Central and West resource areas and for the most part will be able to be extracted

via opencast mining methods with only the northern parts of the East and Central resource

areas being too deep for opencast mining. The No. 4 Seam is best developed in the northern

and central parts of the West resource area and in the northern parts of the Central and East

resource areas (Figure 4.3.1.3_4).

Figure 4.3.1.3_1

Map Showing the Three Resource Areas Defined for No. 4 Seam at the Delmas Project

Area

167

Figure 4.3.1.3_2


168

Figure 4.3.1.3_3

Map Showing the Floor Elevation for No. 4 Seam at the Delmas Project Area

169

Based on 61 intersections, the seam varies from a minimum thickness of only 0.6m, to a

maximum of 10.4m, averaging 5.8m.

Figure 4.3.1.3_4


170

The raw CV for the No. 4 Seam varies from 4.0 MJ/kg to 25.81 MJ/kg with an average of

17.24 MJ/kg (Figure 4.3.1.3_5). The raw CV allows mainly for an Eskom product.

Figure 4.3.1.3_5


171

The dry ash-free volatile matter for the No. 4 Seam varies from 14.3 % to 40.2% with an

average of 30.8% (Figure 4.3.1.3_6). The sub-division of the No. 4 Seam resources into

bituminous coal and pseudo-anthracite was based on a 26% dry ash-free limit.

Figure 4.3.1.3_6

Map Showing the Dry Ash –Free Volatile Matter Content for No. 4 Seam at the Delmas

Project Area

172

4.3.1.4 No. 2 Seam

Figure 4.3.1.3_1 gives the three resource areas defined for No. 2 Seam at the Delmas Project

area. The areas shown as 2 SWest and 2 NWest are referred to in this report as the West

resource areas.

The depth to roof contours for No. 2 Seam and the thickness contours are represented in

Figures 4.4.1.4_2 and 4.4.1.4_4, respectively. The depth to the roof of No. 2 Seam varies

between 8.4m below surface to 107.7m below surface with an average depth of 58.4m. The

seam is shallowest in the eastern parts of the East and Central resource areas and the

southern part of the NWest resource area. The seam’s distribution seems to be controlled by

the nature of the Dwyka topography with the seam absent over basement highs. The No. 2

Seam is best developed in the northern and central parts of the East resource area and on

the boundary between the Central and NWest blocks.

Figure 4.3.1.4_1

Map Showing the Three Resource Areas Defined for No. 2 Seam at the Delmas Project

Area

173

Figure 4.3.1.4_2


174

The floor elevation of the No. 2 Seam is controlled by the Dwyka/karst topography.The floor

elevation varies from 1,484 mamsl to 1,520 mamsl with an average elevation of

1,520 mamsl.

Figure 4.3.1.4_3

Map Showing the Floor Elevation for No. 2 Seam at the Delmas Project Area

175

Based on 59 intersections, the seam varies from a minimum thickness of only 0.3m, to a

maximum of 11.2m, averaging 5.4m.

Figure 4.3.1.4_4


.

176

The seam is shallowest in the eastern parts of the East and Central resource areas and the

southern part of the NWest resource area.The seam’s distribution is controlled by the nature

of the Dwyka topography/karst topography of the underlying dolomite, with the seam

absent over basement highs.

The raw CV’s vary from 3.0 MJ/kg to 24.7 MJ/kg with an average of 16.9 MJ/kg

(Figure 4.3.1.4_5). Based on these values the best areas of the No. 2 Seam occur in the

southern Central and eastern West resource areas.

The dry ash-free volatiles vary from 13.5% to 43% with an average of 31.5%. A 24% dry

ash-free volatile limit was used to delineate the No. 2 Seam bituminous coal from the

pseudo-anthracite in the Delmas Project area (Figure 4.3.1.4_6). It is evident that the

pseudo-anthracite covers almost the entire West resource area as well as parts of the Central

resource area.

Figure 4.3.1.4_5


177

Figure 4.3.1.4_6

Map Showing the Dry Ash-Free Volatile Matter Content for No. 2 Seam at the Delmas

Project Area

178

4.3.1.5 Raw Coal Qualities for the Delmas Project Area

Table 4.3.1.5_1 gives the raw coal qualities for the various seams at the Delmas Project area.

Table 4.3.1.5_1


Average Raw Coal Qualities for the Various Seams at the Delmas Project Area

Seam Moisture Ash Volatiles DAF Vols Sulphur CV

(%) (%) (%) (%) (%) (MJ/kg)

No. 5 Bituminous 4.01 26.02 23.98 34.40 1.38 22.75

No. 4 Bituminous 3.93 38.93 18.57 33.17 1.08 17.24

No. 2 Bituminous 3.71 40.34 17.31 32.51 0.84 16.50

No. 4 pseudo-

Anthracite 3.98 41.00 13.48 24.51 1.07 17.43

Table 4.3.1.6_1 gives the coal volumes for the Delmas Project area seams.

Table 4.3.1.6_1


Coal Volumes for the Delmas Project Area

Average

Resource Area Size Thickness Volume

(Hectares) (metres) (m3)

Bituminous Coal – Delmas Project Area

No. 5 Seam – SWest 20.20 1.39 284,300

– Central 95.71 1.48 1,394,600

– NWest 24.55 1.51 731,800

– East 24.29 1.53 368,500

No. 5 Seam Bituminous 2,779,200

No. 4 Seam – Central 258.70 7.00 18,229,500

– East 109.70 6.32 6,827,400

– West 261.24 6.73 16,236,300


No. 2 Seam – Cent 321.74 6.78 21,826,500

– East 180.47 4.07 7,049,000

– West 196.89 6.73 14,450,100


Pseudo-Anthracite – Delmas Project Area

No. 4 Seam 382.38 5.22 18,801,200

No. 2 Seam 329.91 5.44 17,332,200

Pseudo-Anthracite 36,133,400

179

4.3.2 Sterkfontein Project Area

4.3.2.1 Introduction

The No. 4 Seam is the only potentially economic seam on the Sterkfontein Project area.

For the Sterkfontein Project area, three distinct resource areas have been defined based on

their geographic locations, borehole densities and geological understanding. These are

referred to from north to south as the North 1, North 2 and South resource areas,

respectively (Figure 4.3.2.1_1). The North 1 resource area includes the farms Kaffirskraal

148 IS and Wildan 557 IS, the North 2 resource areas Sterkfontein 299 IS (Portions 4, 20, 21, 25

and 34) and Goedehoop 301 IS (Portion 4). The South resource area is covered by the farms

Sterkfontein 299 IS (Portion 1) and Palmietfontein 307 IS (Portion 3).

A large area of the farm Kaffirskraal 148 IS of the Sterkfontein Project area was not evaluated

due to the fact that KEH was not permitted surface access to this farm. Due to time

constraints, KEH chose not to pursue this portion in the first phase of exploration drilling,

but will conduct exploration drilling in a subsequent exploration drilling phase. It should be

noted that under the MPRDA, KEH is entitled to prospect and to carry out all other activities

incidental to prospecting (see Appendix 2 for more details). In addition, there are no legal

proceedings preventing any prospecting.

Figure 4.3.2.1_1 and Figure 4.3.2.1_2 show the maps for respectively the Sterkfontein North

and Sterkfontein South blocks with the locations of the 119 boreholes used for the

geological model.

180

Figure 4.3.2.1_1

Boreholes Used for Geological Modelling – Sterkfontein North Block

181

Figure 4.3.2.1_2

Boreholes Used for Geological Modelling – Sterkfontein South Block

182

Figure 4.3.2.1_3

Map Showing the Coal Resource Blocks for No. 4 Seam at the Sterkfontein Project Area

4.3.2.2 Characteristics of No. 4 Seam at Sterkfontein Project Area

The No. 4 Seam is the only seam of economic importance in the entire Sterkfontein Project

area. The depth to roof of the No. 4 Seam varies from 107m below surface to 204m below

surface and averages 160m below surface.The roof elevation averages 1,477.9m above mean

sea level with a maximum of 1,535.0m and a minimum of 1,455.9m.

The south central region of the North 2 resource area is slightly deeper than the eastern or

western regions.

183

Figure 4.3.2.2_1

Map Showing the Depth to Roof Contours for No. 4 Seam at the Sterkfontein Project

Area

184

Figure 4.3.2.2_2

Map Showing the Floor Elevation for No. 4 Seam at the Sterkfontein Project Area

Based on a total of 82 intersections the seam has a minimum thickness of 0.2m and a

maximum of 2.9m with an average of 1.9m. In the North 1 resource area the seam is thin

(less than 1m thick) in the eastern blocks (Figure 4.3.2.2_3), thickening to nearly 3m in the

central area.

185

In the North 2 and South resource areas the No. 4 Seam is thin (less than 1m thick) in the

far east of these areas. The No. 4 Seam is particularly well-developed in the central regions

of these areas, where seam thickness may reach 3.4m. For the whole project area the area

of thickest development seems to form an arcuate pattern stretching from the south west

in the North 1 resource area, through the central North 2 resource area to the western South

resource area.

Figure 4.3.2.2_3

Map Showing the Thickness Contours for No. 4 Seam at the Sterkfontein Project Area

Figure 4.3.2.2_4 illustrates that the North 1 resource area has a distinctly higher raw CV than

the rest of the project area.

186

Figure 4.3.2.2_4

Map Showing the Raw Calorific Values for No. 4 Seam at the Sterkfontein Project Area

187

Figure 4.3.2.2_5 gives the raw volatile matter content and shows that the values are clearly

higher for the two North resource areas compared to the South resource area.

188

4.3.2.3 Raw Coal Qualities for the Sterkfontein Project Area

Table 4.3.2.3_1 gives the raw coal qualities for the No. 4 Seam at the Sterkfontein

Project area.

Table 4.3.2.3_1


Raw Coal Qualities for the No. 4 Seam at the Sterkfontein Project Area

Seam Moisture Ash Volatiles Sulphur CV

(%) (%) (%) (%) (MJ/kg)

No. 4 3.41 26.94 26.72 1.42 21.85

4.3.2.4 Coal Volumes for the Sterkfontein Project Area

Table 4.3.2.4_1 presents the coal volumes estimated at the Sterkfontein Project area for

No. 4 Seam.

Table 4.3.2.4_1


Coal Volumes for the Sterkfontein Project Area

Average

Resource Area Size Thickness Volume

(Hectares) (Metres) (m3)

No. 4 South 438 2.82 12,350,217

No. 4 North 1 149 1.70 2,539,843

No. 4 North 2 559 1.87 10,455,918

Total No. 4 Seam 25,345,978

4.4 Gross In-situ Resources

4.4.1 Relative Density

Table 4.4.1_1 summarises the relative densities used for the various seams to convert calculated coal

volumes to gross in-situ tonnage (“GTIS”) resources. The values are derived from the raw relative

densities reported by the laboratories. All the samples that make up a seam are then composited for

each seam and for each borehole. Where there are missing lab RD’s, the relative densities are derived

from washing algorithms that calculate the relative densities from the percentage raw ash in the

seam. The composited seam value is then averaged using seam thickness as a weighting factor to

arrive at average relative densities for each seam.

189

Table 4.4.1_1


Relative Densities Used for the Various Seams

Area Relative Density Used

Delmas Project Area – Bituminous Coal

No. 5 Seam – S West 1.55

– Central 1.60

– N West 1.57

– East 1.55

No. 4 Seam – Central 1.68

– East 1.71

– West 1.65


– East 1.71

– West 1.77

Delmas Project Area – Pseudo-Anthracite


– East 1.67

– West 1.74


– East –

– West 1.75

Sterkfontein Project Area

No. 4 Seam – South 1.55

– North 1 1.56

– North 2 1.59

4.4.2 Statement of Gross In-situ Resources

Table 4.4.2_1 presents the estimated gross in-situ tonnes for each area and coal seam based on the

contoured drill results and the assumed relative densities reflected in Table 4.4.1_1.

The table shows that there are 148.3Mt bituminous coal and 64.7Mt of pseudo-anthracite at the

Delmas Project area and 39.8Mt of bituminous coal at the Sterkfontein Project area.

190

Table 4.4.2_1


Gross In-Situ Tonnage for the Project Areas

Relative

Resource Area Volume Density Tonnage

(m3) (’000 tonnes)

Delmas Project Area*

No. 5 Seam – S West 284,300 1.55 400

– Central 1,394,600 1.60 2,200

– N West 731,800 1.57 1,000

– East 368,500 1.55 600

No. 5 Seam Bituminous 2,779,200 4,200

No. 4 Seam – Central 18,229,500 1.68 30,900

– East 6,827,400 1.71 11,700

– West 16,236,300 1.65 28,000


No. 2 Seam – Central 21,826,500 1.65 36,000

– East 7,049,000 1.71 12,100

– West 14,450,100 1.77 25,300


Sub Total Bituminous 87,398,000 148,200

No. 4 Seam – Central 3,663,800 1.78 6,200

– East 661,200 1.67 3,400

– West 14,476,200 1.74 25,200

No. 4 Seam pseudo-Anthracite 18,801,200 34,800

No. 2 Seam – Central 5,465,100 1.67 9,100

– East – –

– West 11,867,100 1.75 20,700

No. 2 Seam pseudo anthracite 17,332,200 29,800

Sub-Total pseudo anthracite 36,133,400 64,600

Total Delmas Project Area 123,531,400 212,800

Sterkfontein Project Area@

No. 4 South 12,350,200 1.55 19,200

No. 4 North 1 2,539,800 1.56 4,000

No. 4 North 2 10,455,900 1.59 16,600

Sub-Total 25,345,900 39,800

Grand Total 148,877,300 252,600

@ UG = Underground

* OC= Opencast

191

4.5 Mineable In-situ Resources

4.5.1 Geological Loss

The geological losses applied to the various seams are summarised in Table 4.5.1_1 for the various

areas. The estimated losses are based on industry standards for geological losses depending on the

level of confidence in the estimated GIST with 10% applicable for a drill density for Measured Coal

Resources to 30% for Inferred Coal Resources.

A larger loss of 30% has been used for the pseudo anthracite as this is a dolerite affected coal and

high coal losses are expected due to possible structural complexities.

Table 4.5.1_1


Geological Losses Applied to the Various Seams in the Various Areas

Geological Losses

Area Seam Assumed

(%)

Delmas Project Area Bituminous 5 15

4 15

2 15

Delmas Project Area pseudo-Anthracite 4 30

2 30

Sterkfontein Project Area

North 1 4 15

North 2 4 15

South 4 10

4.5.2 Minimum Mining Parameters

In regard to estimating the Mineable In-Situ Tonnage (“MTIS”), anticipated mining tonnages, coal

qualities, plant recoveries, operating costs or forecast revenue were not considered other than to test

the reasonable and realistic prospect of the coal projects.

A mining width of 1.4m was determined to be the minimum width allowable for mobile mining

equipment and economic extraction. This mining cut-off was confirmed with KEH’s mining

consultants, Ukwazi Mining Group.

To convert the GTIS coal resource estimates to MTIS coal resource estimates only the geological

losses listed in Table 4.5.1_1 were applied.

4.5.3 Mining and Geotechnical Considerations

No consideration has been made with respect to mining factors or assumptions.

4.5.4 Results of Washability Tests

4.5.4.1 Delmas Project Area

Figure 4.5.4.1_1 illustrates that No. 5 Seam yields are generally in excess of 70% when

washed to a 25% ash content with the best yield towards the east of the No. 5 Seam

resource.

Figure 4.5.4.1_2 shows the washing yield of the No. 4 Seam is generally in excess of 50%,

when washed to a 25% ash content, except for a central region and the far western portion

of the resource.

192

Figure 4.5.4.1_3 shows the washing yield of the No. 2 Seam is generally in excess of 50%,

when washed to a 25% ash content, except for a southwestern portion and in the far

northeast of the resource.

Figure 4.5.4.1_1

Yield Contours for No. 5 Seam Coal at the Delmas Project Area Washed to a 25% Ash

Content

193

Figure 4.5.4.1_2

Yield Contours for No. 4 Seam Coal at the Delmas Project AreaWashed to a 25% Ash

Content

194

Figure 4.5.4.1_3

Yield Contours for No. 2 Seam Coal at the Delmas Project Area Washed to a 25% Ash

Content

195

4.5.4.2 Sterkfontein Project Area

Figure 4.4.4.2_1 gives the primary washing yield for the No. 4 Seam in the Sterkfontein

Project area. The yields are reasonable over large areas and the quality of the No. 4 Seam in

the Sterkfontein Project area lends itself to beneficiation. The coal, once beneficiated, could

produce an export quality prime product at an average theoretical yield of 50% with a

middlings product at a theoretical yield of 33% (Figure 4.4.4.2_2) that is suitable for local

power stations.

Figure 4.5.4.2_1

Primary Washing Yield Contours for No. 4 Seam Coal at the Sterkfontein Project Area

196

Figure 4.5.4.2_2

Yield Contours for No. 4 Seam Middlings at the Sterkfontein Project Area Washed to a

20CV/kg Product

197

Table 4.5.4.2_1 gives the raw coal qualities for the No. 4 Seams at the Sterkfontein Project

area.

Table 4.5.4.2_1


Washed Coal Qualities for the No. 4 Seam at the Sterkfontein Project Area

Product Moisture Ash Volatiles Fixed Carbon Sulphur CV Yield

% % % % % (MJ/kg) %

Primary

Washed 3.82 11.94 33.17 51.07 1.15 27.5 50.17

Middling

Washed 3.46 20.26 23.42 42.88 1.34 20.5 33.45

4.5.5 Summary of Assumptions Underlying the Mineable Coal Resource Estimation

For the Delmas No. 5 Seam the following assumptions and modifying factors have been applied to

convert GTIS to MTIS:

• Raw RD based on forecast RD’s using MINEX proprietary software.

• Dry ash-free volatile cut-off for coal resource estimation was 30% (which is the range in which the

No. 5 Seam shows devolatilisation due to dolerite intrusions).

• Minimum seam thickness of 1.25m.

• Geological losses of 15%.

• All tonnages and qualities are quoted air dry.

For the Delmas No. 4 Seam and No. 2 Seam the following assumptions and modifying factors have

been applied to convert GTIS to MTIS:

• Raw RD based on forecast RD’s using MINEX proprietary software.

• Dry ash-free volatile cut-off for coal resource estimation was 26% for the No. 4 Seam (which is

the level below which the No. 4 Seam shows devolatilisation due to dolerite intrusions) and 24%

for the No. 2 Seam (which is the level below which the No. 2 Seam shows devolatilisation due to

dolerite intrusions).

• Coal below the dry ash-free volatile cut-off was reported in the pseudo-anthracite category. Coal

above this value was classified as bituminous coal.

• Minimum seam thickness of 2.0m.

• Geological losses of 15% for bituminous coal and 30% for pseudo-anthracite.


• To convert the GTIS to MTIS, the following assumptions and modifying factors have been applied

to the Sterkfontein No. 4 Seam:

• Raw RD is based on forecast RD’s using MINEX proprietary software.

• Dry ash-free volatile cut-off for coal resource estimation is 26%, which is the accepted value

for South African coal when unaffected by weathering or dolerite intrusions.

• Minimum seam thickness of 1.4m based on the minimum practical mining width commonly

applied in South Africa.

• Geological losses between 10% and 15%.


4.5.6 Mineable Coal Resource Statement and Classification

The Mineable Coal Resource estimate for the Delmas and Sterkfontein Projects areas is presented

below in Table 4.5.6_1 together with the associated SAMREC Code classification. The classifications

are based on the Competent Person’s view of the complexity of the geology, coal qualities and the

drill density expressed in hectares per borehole as summarised in Table 4.5.6_2.

198

Table 4.5.6_1


Mineable In-Situ Tonnage for the Various Properties

Resource Area Gross In-Situ Mineable In-Situ

Tonnes Geological Tonnes

(‘000 tonnes) (%) (‘000 tonnes) Classification

Delmas Project

No. 5 Seam – S West 400 15 300 Inferred

– Central 2,200 15 1,900 Indicated

– N West 1,000 15 900 Measured

– East 600 15 500 Measured

No. 5 Seam Bituminous 4,200 3,600

No. 4 Seam – Central 30,900 15 26,300 Indicated

– East 11,700 15 10,000 Measured

– West 28,000 15 23,800 Indicated



– East 12,100 15 10,300 Measured

– West 25,300 15 21,500 Measured


Sub-Total Bituminous 148,200 126,200


– East 3,400 30 2,400 Measured

– West 25,200 30 17,600 Indicated

No. 4 Seam Pseudo-

Anthracite 34,800 24,400


– East

– West 20,700 30 14,500 Measured

No. 2 Seam Pseudo-


Sub-Total Pseudo-


Total Delmas Project 212,800 171,500

Sterkfontein Project

No. 4 South 19,200 10 17,300 Measured

No. 4 North 1 4,000 15 3,400 Indicated

No. 4 North 2 16,600 15 14,100 Indicated

Sub-Total 39,800 34,800

Grand Total 252,600 206,300

Table 4.5.6_2 only includes boreholes within the defined mineable in-situ resource blocks to calculate

the drill density as per the guidelines in Table 3.2.2_1 for defining resource categories.

199

Because of the complexity of the geology at the Delmas Project area, 10 hectares per borehole was

taken as the maximum figure for classification of resources into the Measured Mineral Resource

category.Analyses of the coal intersected on 65 of the 85 new drilled boreholes were received in time

for inclusion in the analytical modelling. A number of boreholes were negative (no coal intersected)

and a few were burnt by dolerite intrusions.

In the Sterkfontein Project area, of 89 boreholes which intersected the No. 4 Seam analyses were

received in time for inclusion in the analytical modelling. There were sufficient boreholes with both

physical and analytical data to be classified according to the SAMREC Code as per Table 3.2.2_1. The

South resource block has been classified as a Measured Mineral Resource even though its drill density

falls just short of the guideline, because of the good geological continuity, the consistency of the coal

qualities and lack of geological complications.

Table 4.5.6_2


Drill Density for the Various Properties

Boreholes Hectares Hectares/borehole

Delmas Project

No. 5 Seam – S West 3 131.84 43.9

– N West 2 2.55 1.3

– Cent 11 123.76 11.3

– East 9 54.32 6.0

No. 4 Seam – Central 18 258.70 14.4

– East 16 109.98 6.9

– West 23 263.55 11.5

No. 2 Seam – Central 24 321.74 13.4

– East 18 180.47 10.0

– West 23 203.05 8.8

Sterkfontein Project

No. 4 South 34 437,82 12.9

No. 4 North 1 8 149,36 18.7

No. 4 North 2 14 559,11 39.9

5. CONCLUDING REMARKS

The Delmas and Sterkfontein Projects areas contain combined mineral resources of 206Mt, of which 77Mt are in

the Measured Mineral Resources category; 128Mt are Indicated Mineral Resources; and 0.3Mt are Inferred Mineral

Resources in terms of the SAMREC Code.

A large portion of the Delmas Project area is exploitable from surface mining methods. It is anticipated that the

Delmas Project area will produce multiple products: a low grade power station product, a pseudo-anthracite

product with potential for a small proportion of high grade export product (No. 5 Seam). It is recommended that

KEH conduct further in-fill drilling to increase the Measured Mineral Resource category for the potential opencast

areas of the project. In addition, it is recommended that further exploration drilling is conducted on the No. 5 Seam.

The Sterkfontein Project area contains a mineral resource of 35Mt of which 17Mt is in the Measured Mineral

Resource category and 17Mt is in the Indicated Mineral Resource category. Further investigation is recommended

to establish the viability of underground mining of this measured mineral resource. Furthermore, additional

exploration drilling is suggested in the northern section of Sterkfontein to increase the mineral resource and

confidence levels.

Documents

CPR 4 Coal Resources 01apr08