Sterkfontein Project: Coal Resource Statement March 2010.» powering up

Transcription

1 Sterkfontein Project: Coal Resource Statement March 2010» powering up

2 Coal Resource Statement GeoCoal Services ( Geocoal ) was appointed by Keaton Energy Holdings Limited ( Keaton Energy ) to complete a March 2010 Independent Competent Person s Report ( CPR ) on the coal bearing potential of the Sterkfontein Project area. This follows the March 2008 CPR completed by Coffey Mining (Pty) Ltd, on both the Sterkfontein and Delmas project areas. In both instances the Competent Person responsible was Mr David van Wyk. Map showing the relative geographic location of the Sterkfontein Project area Subsequent to the March 2008 CPR, Keaton Energy s 74% held subsidiary Labohlano Trading No. 46 (Pty) Ltd ( Labohlano ) acquired a prospecting right over hectares contiguous to the prospecting rights ( the Labohlano extension ) already held by Keaton Mining (Pty) Ltd, also a 74% held subsidiary of Keaton Energy. The areas under consideration in this Coal Resource Statement for Keaton Energy thus consists of 3 prospecting rights over a total of hectares, held by Keaton Mining and Labohlano in the Bethal district of Mpumalanga, South Africa.» 1» Keaton Energy Coal Resource and Reserve Statements 2010

3 The project area is located 143km east-southeast of the centre of Johannesburg. These properties are referred to collectively as the Sterkfontein Project area and are shown in following diagram. Total Sterkfontein project LEGEND Keaton Mining Keaton Mining Labohlano Pre-2009 campaigns 2009 campaign 0 1km 2010 campaign Subsequent to the acquisition of the Labohlano extension, a 93 hole drill campaign was planned. The first phase of this campaign has been completed, with 30 boreholes having been drilled during The purpose of the CPR is to provide an update on the coal bearing potential of the expanded project area based on the additional information from the first phase of the drilling campaign, combined with the data obtained from the 25 boreholes drilled by previous holders of the Labohlano prospecting right. The classification of the Coal Resources of the Sterkfontein Project is based on the South African Code for Reporting of Mineral Resources and Mineral Reserves ( the SAMREC Code ) prepared by the South African Mineral Resource Committee ( SAMREC ) under the auspices of The South African Institute of Mining and Metallurgy (2007). Under the SAMREC Code particular reference is taken of the South African National Standard (SANS 10320:2004), the South African guide to the systematic evaluation of coal resources. The Coal Resource estimations and classifications for the» 2» Keaton Energy Coal Resource and Reserve Statements 2010

4 Sterkfontein Project areas were prepared by Mr David van Wyk, a registered natural scientist with the South African Council for Natural Scientific Professions ( SACNASP ) (Reg. No /83), 280 Pretoria Street, Silverton which is a recognised body by SAMREC of which he is a member. Mr van Wyk is a Competent Person as defined in the 2007 edition of the SAMREC Code. Mr van Wyk has more than 25 years experience in the South African Coal industry and is also familiar with and adheres to the new South African Minerals and Petroleum Resources Development Act of 2002 (ACT No. 28 of 2002) ( MPRDA ) and the SAMREC code; namely SANS 10320:2004. Mr van Wyk resides at 26 Croyden Circle, Port Alfred. Mr David van Wyk has given his consent for the public reporting of the Coal Resource Statement. Prospecting rights of the Sterkfontein Project areas held by Keaton Mining and Labohlano Keaton Energy Holdings Limited Sterkfontein Project Summary of Beneficially Held Prospecting Rights Prospecting right Property Area Application Expiry (hectares) number date Sterkfontein Project Area Keaton Mining held Prospecting Rights Palmietfontein 307 IS, Portion 3 Sterkfontein 299 IS, Portion MP/30/5/1/1/2/443PR 18/12/2011 Kaffirskraal 148 IS, RE of Portion 3, Remaining Extent Wildan 577 IS, Remaining Extent Sterkfontein 299 IS, Portion 20, 21, 25, 26, 34 and RE Portion 4 Goedehoop 301 IS, Portion MP/30/5/1/1/2/444PR 09/11/2011 Sterkfontein Project Area Labohlano held Prospecting Rights Kaffirskraal 148 IS, Portion 1, 2, 5, 6, 8, 9, 10, 11, 12 Sterkfontein 299 IS, Portion 3, 5, 6, 8, 9, 10, 11, 12, 13, 15, 16, 17 18, 19, 22, 24, 30, 31, 32 and RE Portion MP/30/5/1/1/2/1720PR 05/05/2011 Keaton Mining and Labohlano have incurred exploration expenditure of R2.5 million and R13.85 million respectively to date at the Sterkfontein Project area. Keaton Mining and Labohlano intend to drill an additional 56 boreholes to further expand the Sterkfontein Project area resource base, and to increase confidence levels of the current resource estimates. The expected expenditure for the Sterkfontein Project area for the next 12 months. Sterkfontein Project Coal Exploration Budget 2010 Project area Planned Activity Number of boreholes Cost (R million) Sterkfontein Exploration and infill drilling Keaton Energy, to the best of its knowledge, is unaware of any land claims over any parts of the project areas and is unaware of any outstanding legal proceedings that could prevent any prospecting and mining activities planned on the properties listed above. Labohlano has agreed with the Govan Mbeki Municipality to apply to the Department of Mineral Resources to amend prospecting right MP/30/5/1/1/2/1720PR to exclude a small portion of the prospecting right adjacent to Extension 6 of the Mzinoni Township. This amendment does not affect the resource blocks identified in this Resource Statement.» 3» Keaton Energy Coal Resource and Reserve Statements 2010

5 COAL RESOURCES The geological investigation is at advanced exploration stage with about 50% of the resources drilled to a measured resource. The resource would be suitable for export quality coal or to supply the Eskom power stations in the vicinity. One hundred and ninety two boreholes have been drilled to date, with 176 having full analyses. All boreholes were drilled vertically by means of diamond drilling using TNW (60mm) or NQ (47.6mm) core size. Core recoveries were good and the quality of the drilling was acceptable. There were a number of minor data discrepancies which could not be rectified, however these discrepancies were not material to the overall conclusion of the report. Coal samples were analysed at Inspectorate M&L. In the Sterkfontein Project area the No. 4 Seam is the only coal seam of economic interest. The No. 5 Seam is present in most of the holes at an average depth of 132m and forms a thin (usually less than 30cm) dull coal seam, which is a prominent marker horizon, between 15m to 60m above the No. 4 Seam. The No. 4 Seam occurs as a composite seam with a number of different coal zones identified. In places the No. 4 Seam is split by a sandstone or siltstone parting, creating No. 4 Upper and No. 4 Lower Seam. Typically the quality of the No. 4 Lower Seam is better than that of the No. 4 Upper Seam. The No. 4 Seam is on average 1.9m thick across the property. In the south the No. 4 Seam is thicker with an average width of 3.0m. Intra-seam partings are common, although are mostly of insignificant widths (<0.30cm) except for in the southeast of where the parting reaches a maximum thickness of 2.5m. The drilling status for the area where the 4L seam width is greater than 60 cm Area (sq m) Volume (cu m) Raw RD GTIS Boreholes Hectares Ha/bh 48,125,067 75,622, ,484, , As at March 2010, the Gross Tonnes In Situ (GTIS) of 82 million tonnes for the No. 4 Seam in the 3 resource blocks identified on Sterkfontein Project area was estimated using 1.40m as a minimum seam width. Geological losses ranging from 10% to 20% were assumed depending on the density of geological data and a Mineable Tonnes In Situ (MTIS) Coal Resource of 69 million tonnes has been estimated. No material risk factors have been identified that could impact on the Coal Resource Statement. The Coal Resource Statement was prepared using SANS 10320ED South African guide to the systematic evaluation of coal resources and coal reserves section 6 and the definitions from section 3.» 4» Keaton Energy Coal Resource and Reserve Statements 2010

6 The coal resources of the Sterkfontein Project area Block Area Volume Ave RD GTIS Geological MTIS SAMREC (sq m) (cu m) width (m) (g/cc) Loss Classification North 01 3,070,006 7,974, ,645,274 20% 10,116,219 Indicated South 01 10,855,009 22,380, ,868,823 20% 28,695,058 Indicated South 02 9,055,022 21,448, ,499,169 10% 30,149,252 Measured Total 22,980,037 51,803,998 82,013,266 68,960,529 Modifying factors: Minimum seam width 1.4 meters Minimum dry ash free volatiles 26% Geological losses 10% to 20% Maximum raw uncontaminated ash of 50% The weighted average theoretical borehole yield for the three resource blocks is 44.22% for an export 27 CV (MJ/kg) product and 35.29% for a 19.5 CV (MJ/kg) Eskom type product. The diagram below shows the limits of the 3 resource blocks identified on Sterkfontein Project area Limits of the 3 resource blocks indentified on Sterkfontein Project area LEGEND North 01 10Mt MTIS South 01 28Mt MTIS South 02 30Mt MTIS Pre-2009 campaigns 2009 campaign 0 1km 2010 campaign 40000» 5» Keaton Energy Coal Resource and Reserve Statements 2010