Somkhele Anthracite Mine

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 mining and prospecting areas:

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

Reserves and Resources:

SAMREC-compliant Resources of 51Mt and an additional 24Mt SAMREC-compliant Resource declared in June 2009

Total cost of developing mine and plant from 2006 - 2010:

R672.7 million

Date of commissioning:

June 2007

Type of operation:

Open pit

Current production level:

1.3m ROM tonnes a year

Plant nominal capacity:

1.4m ROM tonnes a year, bulk mining

Mining rights status:

New order mining rights for Area 1 valid for 27 years; application submitted for conversion of old order mining rights for Areas 2 and 3; new order prospecting rights for Areas 4 and 5 granted on 30 June 2010

Total number of employees:

338 (including contractors), 80% from local communities

Current markets:

Half exported to iron ore pelletising and sintering markets; half supplied to local ferro-alloy industry

Competitive advantage:

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

Capital expenditure FY2010:

R81.4 million

Somkhele Anthracite Mine produced 1.1 million ROM tonnes of anthracite 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 550,000 saleable tonnes per year. A second plant, which will double this capacity, is under construction and is due to be commissioned in the second half of 2011.

Somkhele has one of the largest open-pittable anthracite reserves in the country, with Measured and Indicated Resources of over 51 million tonnes, Proved and Probable Reserves of over 24 million tonnes and a further 23,000 hectares under exploration.

In June 2009, the mine completed an accelerated exploration drilling programme, in accordance with the guidelines of the SAMREC Code and verified by Snowden Mining Industry Consultants in their report of that month.

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 2010. (PDF – 215KB)