Somkhele

Date of acquisition:

November 2005 in pre-feasibility stage

Location:

85km north-east of Richards Bay, KwaZulu-Natal Province

Commodity:

High-quality Anthracite

Extent of prospecting of mining areas:

23 000ha of land under exploration in Areas 4 and 5, current mining operation located in Area 1, 2 and 3 covering 1 400ha

Extent reserves and resources of orebody:

24 million tonnes of proven and probable reserves in areas 1 and 2. Additional resources of 24 million tonnes delineated and verified by Snowden Mining Industry consultants in June 2009. Coal reserves and resources underlain by four coal seams

Total cost of developing mine & plant from 2006 - 2009:

R672.7 million

Date of commissioning:

June 2007

Type of operation:

Open pit

Current ROM production:

1.1 million tpa

Plant nominal capacity:

1.4 million tpa, bulk mining

Mining rights status:

New order mining right over Area 1; new order prospecting right over Areas 4 and 5; old order right over Areas 2 and 3 (awaiting approval of conversion of miming right application)

Total number of employees:

375 (including contractors)

Markets:

Global metallurgical industry

Competitive advantage:

Anthracite products with low phosphorus and sulphur contaminants, and very high vitrinite content; proximity to Richards Bay (85km); 600,000-tonne dedicated export facility secured at Richards Bay Dry Bulk Terminal; 23,000ha of land under exploration

Capital expenditure FY 2009:

R263.41 million

Somkhele Colliery produced 1.1 million run of mine (ROM) tonnes of athracite in its first full year of production. The mine has a series of open pits and a coal processing plant, which is fully operational at a nominal capacity of 1.44 million ROM tonnes per year.

Somkhele has one of the largest resources of open-pittable anthracite reserves in the country, at 23 million tonnes, with a further 23,000 hectares under exploration.

The mine conducted an accelerated exploration drilling programme which was completed in June 2009 in accordance with the guidelines of the SAMREC Code and verified by Snowden Mining Industry Consultants in their report dated June 2009.

The drilling programme resulted in 24 million tonnes of resources being delineated as follows:

• 11.9 million tonnes of measured resources in the Luhlanga area;
• 3.4 million tonnes of indicated resources in the Luhlanga area;
• 0.2 million tonnes of inferred resources in the Luhlanga area; and
• an additional 8.5 million tonnes of inferred resources in the Kwaqubuka and Emalahlene areas, all of which are contiguous with current operations.

Somkhele’s product is low in phosphorus, sulphur and calcium, which makes it a viable reductant in the titanium and ferrochrome industries in South Africa and its unsized product is much in demand for the pelletising and sintering of iron ore.

View the Directors’ review on Somkhele in the Annual Report 2009. (PDF – 134KB)