RIETKUIL

Delta Mining is held by Anglo African Capital Limited, the majority holding company, in conjunction with the Avalon Trust (Avalon) and Mikakor CC. Ashante Mineral Resources (Pty) Ltd (Ashante), a subsidiary of Delta Mining, as well as Ashante Investment Holdings (Pty) Ltd (AIH) hold the valid Mining Right (MP/30/5/1/1/5/1492PR) over the Rietkuil 249 IR farm. DMC Energy (Pty) Ltd (DMC), a wholly owned subsidiary of Delta Mining, completed three phases of exploration on the Nsele Project. The Nsele Project has a vast coal resource with a total Coal Resource of 158.03Mt of minable coal.

Drilling for phase 1 was undertaken from April to June 2008, Phase 2 from July to November 2008 and Phase 3 from December 2008 to August 2009. A total of 228 drillholes have been completed, in all three phases. All the drillholes drilled by DMC were drilled vertically and only drillholes with core recoveries exceeding 95% were used in the resource database, satisfying the minimum requirement in accordance with the South African Code for Reporting of Mineral Resources and Mineral Reserves (SAMREC Code) and the Systematic Evaluation of Coal Resources and Coal Reserves, (SANS) 10320:2004 Guidelines. A total of three drillholes were excluded from the resource database.

 

The coal deposit for the Nsele Project was modelled and estimated by DMC using Datamine™ Studio 3 software. The general modelling approach involved, firstly modelling the controlling structures, such as the dolerite sills and dykes as well as the palaeo-topography and then employing a combination of grid modelling, manual editing and wireframing to model the seam structures. Burnt coal or anthracite was classified under SANS 10320:2004 for the Nsele Project. The block models produced were used as the controlling mechanism for quality modelling. Inverse distance cubed was employed to interpolate the coal qualities. A search radius of 500m was used in all instances. A hard boundary was created around occurrences of coal considered uneconomic and the areas were removed from the block model. Additional model fields were created to define such items as resource category and stripping ratio. The historical completed exploration programmes have generated sufficient drillhole information to confidently support SAMREC Code definition of Measured and Indicated Coal Resources.

 

The Nsele Project is proposed to be an opencast operation making use of the conventional truck and shovel roll-over mining technique for the extraction of the coal seams. The current mine design and production schedule for the Nsele Project originated from work done by VBKom Consulting Engineers (Pty) Ltd (VBKom) in December 2015, in the form of a Mining Technical Study. Although feasibility studies had been performed previously, the focus of the 2015 has been to simulate the production of local thermal coal as opposed to B-grade export primary wash and a thermal coal as secondary product which had been the strategy in previous feasibility studies. The RoM coal from the production schedule is therefore indicative in nature and does not constitute a reserve according to the SAMREC code.

 

For  the first phase of the project, mining is planned to take place east of the wetland/100 year flood line in the Nsele Project lease area. This eastern block is traversed by a railway line, on either side of which the five proposed pits are located. Contract mining operations are planned to take place over a 25 year life of mine (LoM). Mining will take place at an average steady state waste stripping rate of 8.7Mbcmpa and 3Mtpa coal of coal mining, resulting in a stripping ratio of 3.0bcm/t. With first phase of the mine planning completed for the Nsele Project east of the R50 road, Venmyn Deloitte, wishes to note that Nsele management have the intention to carry out an additional mining technical study, Phase 2 of the Nsele Project, on the resource block west of the R50 road. Additional mine planning in the western block of the lease area will contribute significantly to the overall LoM of the Nsele Project. A total of 68.19Mt is planned to be mined from the five pits, with 65.69Mt meeting the greater than 14.5% volatile matter specification to produce a 21.5CV product and being processed to produce a total of 37.07Mt of thermal coal.

Venmyn Deloitte was commissioned by Delta Mining to perform an independent valuation of the Nsele mineral asset using the South African Code for the Reporting of Mineral Asset Valuation (SAMVAL Code). To this end, appropriate valuation methods will be used and the mineral asset will be examined on its merits and demerits. Venmyn Deloitte concludes that the Preferred Value of the mineral assets attributable to the Nsele Project is ZAR302.12m with a lower value of ZAR213.07m and an upper value of ZAR391.17m.

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