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DIRECTORATE SOUND MINING HOUSE
P POTGIETER, B Ing Mynbou 2A Fifth Ave Rivonia 2128
D VAN BUREN, BSc (Hons) Geology PO Box 97194 Petervale 2151
M LOTRIET, BSc Min Eng (Hons), PMP, FSAIMM Tel No : +27 (0) 11 234 7152
G P STRIPP, BSc Min Eng (Hons), MSc PhD, FSAIMM, FMVSSA Reg No : 2002/002265/07
Website : www.soundmining.co.za
CONSULTANTS TO THE MINING INDUSTRY
INDEPENDENT TECHNICAL REPORT
ZANDFONTEIN TAILINGS RETREATMENT
PROJECT TO RECOVER CHROME
FOR
EASTERN PLATINUM LIMITED
Report No: SMS/0708/17 1 September 2017
ITR for Zandfontein Tailing Retreatment Project to Recover Chrome
Report No.: SMS/0708/17
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Prepared by: SOUND MINING SOLUTION (PTY) LTD
Sound Mining House, 2A Fifth Avenue Rivonia, 2128
South Africa P O Box 97194, Petervale, 2151
South Africa
Tel: (011) 234 7152, Fax: (011) 234 8912
Compiled by:
Kayleigh Cooper
Reviewed and Approved by:
Vaughn Duke
Client Company: Barplats Mines Limited
Contact Person: Anton Lubbe
COPYRIGHT
This technical report enjoys copyright protection and the copyright vests in Sound Mining Solution (Pty) Ltd unless otherwise agreed to in writing. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder. Should any reproduction, electronically or otherwise, be made of this document, Sound Mining Solution (Pty) Ltd is indemnified against any consequence which may arise. While all reasonable efforts were taken by Sound Mining Solution (Pty) Ltd to verify the information contained in this report, Sound Mining Solution (Pty) Ltd does not accept responsibility for any inaccuracies in this regard, nor any action which might arise as a consequence.
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TABLE OF CONTENTS
1. Summary ............................................................................................................ 16
1.1. Introduction and Terms of Reference .................................................................. 16
1.2. Property Description, Title Status and Land Tenure ............................................ 16
1.3. Encumbrances, Environmental Liabilities and Permits ........................................ 17
1.4. History ................................................................................................................. 17
1.5. Geology ............................................................................................................... 18
1.6. Exploration, Drilling and Data Integrity ................................................................ 18
1.7. Mineral Processing and Metallurgical Testing ..................................................... 19
1.8. Mineral Resources and Mineral Reserves ........................................................... 19
1.9. Mining and Recovery Methods and Project Infrastructure ................................... 20
1.10. Marketing, Costs and Economic Analysis ............................................................ 20
1.11. Adjacent Properties ............................................................................................. 21
1.12. Interpretations and Conclusions .......................................................................... 21
1.13. Recommendations............................................................................................... 22
2. Introduction ....................................................................................................... 23
2.1. Terms of Reference ............................................................................................. 23
2.2. Personal Inspection ............................................................................................. 23
2.3. Sources of Information ........................................................................................ 24
2.4. Independence ...................................................................................................... 24
2.5. Qualifications and Experience ............................................................................. 25
3. Reliance on Other Experts ................................................................................ 27
4. Property Description and Location .................................................................. 29
4.1. Property Description and Property Location ........................................................ 29
4.2. Legal Tenure for the TSF .................................................................................... 29
4.3. Royalties .............................................................................................................. 33
4.4. Environmental Liabilities, Legislative and Permitting Requirements .................... 33
4.5. Other Significant Factors and Risks .................................................................... 33
4.6. Material Agreements ........................................................................................... 33
5. Accessibility, Climate, Local Resources, Infrastructure and Physiology .... 34
5.1. Accessibility ......................................................................................................... 34
5.2. Climate ................................................................................................................ 34
5.3. Physiology ........................................................................................................... 34
5.4. Local Resources and Infrastructure ..................................................................... 35
6. History ................................................................................................................ 36
6.1. Historical Exploration Work ................................................................................. 38
6.2. Historical Mineral Resource Estimates ................................................................ 38
6.3. Historical Operations ........................................................................................... 38
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7. Geological Setting and Mineralisation ............................................................. 40
7.1. Regional Geology ................................................................................................ 40
7.2. Local Geology ..................................................................................................... 42
7.3. Mineralisation ...................................................................................................... 43
7.4. Structure .............................................................................................................. 45
8. Zandfontein UG2 TSF ........................................................................................ 47
9. Exploration ......................................................................................................... 49
9.1. Sound Mining Observations ................................................................................ 49
10. Drilling ................................................................................................................ 50
10.1. Auger Drilling Methodology ................................................................................. 50
10.2. TSF Auger Hole Sampling Results ...................................................................... 52
10.2.1. Sound Mining Observations ........................................................................................... 52
11. Sample Preparation, Analyses and Security ................................................... 53
11.1. Sampling Procedure ............................................................................................ 53
11.2. Laboratory ........................................................................................................... 53
11.2.1. Au, Pt, Pd Determination by Pd Collection ICP-OES ..................................................... 54
11.2.2. Determination of Major Elements by Fused Disc XRF ................................................... 54
11.2.3. Relative Density Measurements .................................................................................... 55
11.3. Dry Bulk Density Measurements ......................................................................... 55
11.4. Quality Assurance and Quality Control ................................................................ 57
11.4.1. Certified Reference Material .......................................................................................... 57
11.4.2. Blanks ........................................................................................................................... 59
11.4.3. Field Duplicates ............................................................................................................. 60
11.5. Sound Mining Observations ................................................................................ 60
12. Data Verification ................................................................................................ 61
12.1. Sound Mining Observations ................................................................................ 61
13. Mineral Processing and Metallurgical Testing ................................................ 62
13.1. Pilot Plant Flowsheet Description ........................................................................ 62
13.2. Sample Selection and Compositing ..................................................................... 64
13.3. Test Work Results ............................................................................................... 64
13.4. Sound Mining Observations ................................................................................ 66
14. Mineral Resource Estimates ............................................................................. 67
14.1. Resource Estimation Process ............................................................................. 67
14.1.1. Construction of Wireframe Models ................................................................................. 67 14.1.1.1. Tailings Volumes ............................................................................................................................68 14.1.1.2. Variography ....................................................................................................................................71
14.1.2. Sound Mining Observation ............................................................................................ 72
14.2. Mineral Resource Statement ............................................................................... 72
14.2.1. Sound Mining Comments .............................................................................................. 74
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15. Mineral Reserve Estimate ................................................................................. 80
15.1. Mineral Reserve Tabulation ................................................................................. 80
15.2. Sound Mining Observations ................................................................................ 83
16. Mining Method ................................................................................................... 84
16.1. Introduction .......................................................................................................... 84
16.2. Mining .................................................................................................................. 84
16.2.1. Overarching Depletion Strategy ..................................................................................... 84
16.2.2. Mining Methodology ...................................................................................................... 89 16.2.2.1. Mechanised Operations .................................................................................................................89 16.2.2.2. Hydraulic Operations ......................................................................................................................91 16.2.2.3. Sound Mining Observations ...........................................................................................................93 16.2.2.4. Mining Operations ..........................................................................................................................93 16.2.2.5. Grade Control .................................................................................................................................96 16.2.2.6. Planning Aspects............................................................................................................................96
16.3. Deposition ........................................................................................................... 99
16.3.1. Design Considerations .................................................................................................. 99
16.3.1.1. Quantity of Tailings.........................................................................................................................100 16.3.1.2. Capacity Analysis ...........................................................................................................................104 16.3.1.3. Stability Assessment ......................................................................................................................105
16.3.2. Operational Considerations ........................................................................................... 106
16.4. Sound Mining Observations ................................................................................ 107
17. Recovery Method............................................................................................... 108
17.1. Engineering Design Philosophy and Design Criteria ........................................... 108
17.2. Process Flowsheet .............................................................................................. 109
17.3. Chrome Plant Tailings Disposal .......................................................................... 112
17.4. Concentrate Stockpiling Facility .......................................................................... 112
17.5. Dispatch Facility .................................................................................................. 112
17.6. Water Requirements ............................................................................................ 113
17.7. Spillage handling ................................................................................................. 113
17.8. Control instrumentation ....................................................................................... 113
17.9. Sound Mining Observations ................................................................................ 113
18. Project Infrastructure ........................................................................................ 114
18.1. Mining and Deposition Infrastructure: .................................................................. 114
18.2. Electrical Infrastructure and Supply ..................................................................... 116
18.3. Water Reticulation ............................................................................................... 117
18.4. Maintenance Strategy .......................................................................................... 119
18.5. Sound Mining Observations ................................................................................ 119
19. Market Studies and Contracts .......................................................................... 120
19.1. Demand ............................................................................................................... 120
19.2. Supply ................................................................................................................. 121
19.3. Export Logistics and Procedures ......................................................................... 124
19.4. Sound Mining Observations ................................................................................ 124
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20. Environmental Studies, Permitting and Social or Community Impact ......... 126
20.1. Safety Health and Environmental Study .............................................................. 126
20.1.1. Storm water Management ............................................................................................. 126
20.1.2. Dam Wall Integrity ......................................................................................................... 127
20.1.3. Air Quality Monitoring and Dust Suppression................................................................. 128
20.1.4. Surface Water, Groundwater and Water Quality Monitoring .......................................... 129
20.2. Social and Community Impact ............................................................................. 130
20.2.1. Soils, Land Use and Land Capability ............................................................................. 130
20.2.2. Archaeology, Cultural and Historical Sites ..................................................................... 130
20.2.3. Vegetation, Flora and Fauna ......................................................................................... 130
20.2.4. Social Labour Plan (SLP) .............................................................................................. 131
20.3. Recruitment and Training .................................................................................... 131
20.4. Industrial Relations .............................................................................................. 132
20.5. Environmental Provisions .................................................................................... 133
20.6. Sound Mining Observations ................................................................................ 133
21. Capital and Operating Costs ............................................................................ 134
21.1. Operating Expenditure ......................................................................................... 134
21.1.1. Introduction ................................................................................................................... 134
21.1.2. Accuracy of Estimate ..................................................................................................... 134
21.1.3. Methodology / Basis of Estimate .................................................................................... 134
21.1.4. Owner Operating Costs ................................................................................................. 134
21.1.5. Contractor’s Operating Costs ........................................................................................ 135
21.1.6. Operating Cost Summary .............................................................................................. 135
21.1.7. Sound Mining Observations ........................................................................................... 136
21.2. Capital Expenditure ............................................................................................. 137
21.2.1. Introduction ................................................................................................................... 137
21.2.2. Accuracy of Estimate ..................................................................................................... 137
21.2.3. Methodology / Basis of Estimate .................................................................................... 137
21.2.4. Owner Capital Expenditure ............................................................................................ 137
21.2.5. Contractor Capital Expenditure ...................................................................................... 139
21.2.6. Capital Expenditure Summary ....................................................................................... 140
21.2.7. Sound Mining Observations ........................................................................................... 140
22. Economic Analysis ............................................................................................ 141
22.1. Introduction .......................................................................................................... 141
22.2. Revenue .............................................................................................................. 141
22.3. Discounted Cash Flow Analysis .......................................................................... 141
22.4. Sound Mining Observations ................................................................................ 143
23. Adjacent Properties ........................................................................................... 144
24. Other Relevant Data and Information .............................................................. 145
24.1. Legislative Framework ......................................................................................... 145
24.1.1. Mineral and Petroleum Resources Development Act (Act 28 of 2002) (MPRDA) ........... 146
24.1.2. Broad-Based Socio-Economic Charter (2004) ............................................................... 148
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24.1.3. Amendment of the Broad-Based Socio-Economic Empowerment Charter (2010) ......... 149
24.2. Risk Assessment ................................................................................................. 151
25. Interpretation Data and Information ................................................................. 152
26. Recommendation .............................................................................................. 153
27. References ......................................................................................................... 154
LIST OF FIGURES
Figure 1: Barplats Organisational Chart ........................................................................................ 17
Figure 2: Barplats Locality Plan and Mining Rights over the TSF .................................................. 30
Figure 3: Surface Rights Covering the TSF ................................................................................... 31
Figure 4: Ownership Structure ...................................................................................................... 37
Figure 5: Simplified Geological Map Indicating the Extent of the BIC ............................................ 41
Figure 6: A generalised Stratigraphic Column of the UG2 Chromitite Seam .................................. 43
Figure 7: A Generalised Cross Section of the UG2 intercepted at CRM ........................................ 44
Figure 8: Location of Barplats Mining Area Against Major Faults .................................................. 45
Figure 9: TSF Domain 101 and Domain 102 ................................................................................. 48
Figure 10: 2016 Exploration Drill Plan Showing the Auger Drillholes ............................................. 51
Figure 11: Pilot Plant Flowsheet .................................................................................................... 63
Figure 12: Sampling Point on TSF ................................................................................................ 64
Figure 13: TSF Mineralised Wireframe as Determined by SRK ..................................................... 69
Figure 14: TSF Mineralised Wireframe (Plan View) ....................................................................... 70
Figure 15: SRK Mineral Resource Classification for the TSF ........................................................ 73
Figure 16: 3E PGEs Grade Distribution of the TSF ...................................................................... 75
Figure 17: Au Grade Distribution of the TSF ................................................................................. 76
Figure 18: Cr2O3 Grade Distribution of the TSF ............................................................................. 77
Figure 19: 3E PGEs Grade Distribution (Cross Section) ............................................................... 78
Figure 20: Cr2O3 Grade Distribution (Cross Section) ..................................................................... 79
Figure 21 : Plan View of TSF showing Reserved Categories ........................................................ 82
Figure 22 : Proposed Mining Area for TSF .................................................................................... 85
Figure 23: Grade plot Cr2O3 .......................................................................................................... 86
Figure 24: Mining sequence .......................................................................................................... 87
Figure 25: contours of the coarseness (µm) .................................................................................. 88
Figure 26: Schematic Showing Mechanical Loader Settings ......................................................... 90
Figure 27: Jet Pump System ......................................................................................................... 91
Figure 28: Typical Cross Section from Main Catchment to Vibrating Screen ................................. 92
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Figure 29: Mining plan .................................................................................................................. 98
Figure 30: Design for the Re-deposition of tailings on the TSF.................................................... 100
Figure 31: Process Flowsheet ..................................................................................................... 110
Figure 32: Proposed Single Line Electrical Reticulation .............................................................. 116
Figure 33: Water Balance Diagram ............................................................................................. 118
Figure 34: China GDP Real Annual Growth ................................................................................ 120
Figure 35: Global Stainless Steel Output in 2010-2016 ............................................................... 120
Figure 36: 2017-2022 Chrome Ore Market Research Report ...................................................... 121
Figure 37: Global Chrome Ore Reserve Distribution ................................................................... 121
Figure 38: Global Chrome Ore Output Distributions .................................................................... 122
Figure 39: Global Chrome Ore Production and Growth Rate in 2011-2016 ................................. 122
Figure 40: Chrome Ore Stocks in 2013-2017 .............................................................................. 123
Figure 41: South African Chrome Ore 42% Conc. From 2012 to 2017 ........................................ 123
Figure 42: Zone of Influence of failure of the TSF ....................................................................... 128
Figure 43: Sensitivity of Cash Flow to Revenue, Capex, Opex .................................................... 142
LIST OF TABLES
Table 1: Reliance on Other Experts .............................................................................................. 27
Table 2: Legal Tenure Details ....................................................................................................... 32
Table 3: SRK fixed Volume Dry Bulk Density Measurements for Domain 101 and 102 ................. 56
Table 4: AMIS 0321 Certification ................................................................................................... 57
Table 5: Summary Statistics of independent field duplicates ......................................................... 60
Table 6: Pilot Plant Test Work Results .......................................................................................... 65
Table 7: PGEs, Au and Cr2O3 Grade Frequency Distribution for Domain 101 ............................... 68
Table 8: PGEs, Au and Cr2O3 Grade Frequency Distribution of Domain 102 ................................ 68
Table 9: Modelled Semi-Variogram Parameters for the Tailing in Domain 101 .............................. 71
Table 10: Modelled Semi-Variogram Parameters for the Tailing in Domain 102 ............................ 72
Table 11: SRK Mineral Resource Statement for the TSF as at 1st August 2017 ............................ 72
Table 12: Mineral Reserve Estimation as at 1 September 2017 .................................................... 81
Table 13: Depletion Summary ....................................................................................................... 88
Table 14: Mechanical Loader Cutting Depth Settings .................................................................... 90
Table 15: Design criteria ............................................................................................................... 97
Table 16: Production Schedule ................................................................................................... 101
Table 17: Generalised Stratigraphic Column ............................................................................... 105
Table 18: Material Strength Properties ....................................................................................... 106
Table 19: Process Design Criteria (PDC) ................................................................................... 108
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Table 20: Chrome Quality ........................................................................................................... 124
Table 21: Labour Complement .................................................................................................... 132
Table 22: Summary of Contractor Operating Costs ..................................................................... 135
Table 23: Operating Cost Summary ............................................................................................ 136
Table 24 Summary of Owner’s Capex (excluding contingency) ................................................... 138
Table 25: Summary of Contractor Capex (excl contingency) ....................................................... 139
Table 26: Capital Expenditure Summary ..................................................................................... 140
Table 27: Types of Rights Applicable in South Africa .................................................................. 146
LIST OF GRAPHS
Graph 1: Monthly CRP Throughput ............................................................................................... 38
Graph 2: Overall CRP Recovery efficiency.................................................................................... 39
Graph 3: Chrome Recovery from Hydraulic Mining of the TSF ...................................................... 39
Graph 4: AMIS 0321 Certified Reference Material Results - Cr2O3................................................ 57
Graph 5: AMIS 0321 Certified Reference Material Results - Pt ..................................................... 58
Graph 6: AMIS 0321 Certified Reference Material Results - Pd .................................................... 58
Graph 7: AMIS 0321 Certified Reference Material Results - Au .................................................... 59
Graph 8: AMIS 0321 Certified Reference Material Results - Rh .................................................... 59
Graph 9: Calculation Production Yield- Regression Curve (Yield vs Feed Grade) ......................... 66
Graph 10: Comparison between FS and Revised Mining Schedule ............................................ 102
Graph 11: Combined Production Quantity ................................................................................... 102
Graph 12: Average Cr2O3 Grade ................................................................................................. 103
Graph 13: Progressive Average Cr2O3 Grade ............................................................................. 103
Graph 14: Stage curve - Height vs Rate of Rise .......................................................................... 104
Graph 15: Stage curve - Height vs Volume ................................................................................. 104
Graph 16: Stage curve - Height vs Area ...................................................................................... 105
Graph 17: Monthly and Cumulative Real Cash Flow ................................................................... 142
LIST OF APPENDICES
Appendix 1: Consent of Qualified Person .................................................................................... 155
Appendix 2: Risk Assessment ..................................................................................................... 157
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Confidentiality
Information contained within this document is wholly owned by Sound Mining Solution (Pty) Ltd (Sound
Mining). Distribution of information is the explicit right of Sound Mining. Information contained herein is the
best available at date of issue and is subject to change as deemed by the author/s. Please note that if this
document is of draft status it is not for distribution.
Limited Purpose and Context of Information
The opinions expressed in this document are addressed only to Barplats Mines Limited for (Barplats) its
benefit with respect to this project. Sound Mining accepts no liability whatsoever for any loss or damage
(including consequential or economic loss or damage) arising as a result of reliance on the information
presented herein for any party other than Barplats.
Validity of Current Information
This document has been prepared as at the date stated on the cover page. Given the nature of this
document and the opinions expressed within, developments after the date of this document are likely. This
document takes no account of such potential future developments, therefore Sound Mining recommends that
Barplats seeks advice from Sound Mining in the future to ascertain whether any such events have occurred
or updated information has become available and should be considered.
Responsibility
Sound Mining has exercised reasonable care in accordance with standards normally exercised within our
profession in the completion of this document. Sound Mining has also relied on some information provided
by Barplats. Although Sound Mining has exercised reasonable care in reviewing this supplied data, Sound
Mining makes no representation or warranty with respect to the accuracy or veracity of the data that it has
relied upon.
Neither Sound Mining nor the authors of this report are qualified to provide extensive comment on the legal
aspects associated with ownership and other rights pertaining to Barplats. Sound Mining did not apply any
legal due diligence to confirm such title. Similarly, neither Sound Mining nor the authors of this report are
qualified to provide extensive comment on the environmental issues associated with the Project, as
discussed in Section 4.
Reliance on Information Received
Sound Mining compiled this report based on a review of reports and information supplied by Barplats.
Neither Sound Mining nor its employees have any financial interest in the Zandfontein Tailings Retreatment
Project other than the provision of technical consulting services to Barplats. Sound Mining has assumed that
all of the information and technical documents received and reviewed in this report are accurate and
complete in all material aspects. While Sound Mining carefully reviewed this information, Sound Mining has
not conducted an extensive independent investigation to verify its accuracy and completeness. The
information and conclusions contained herein are based on the information available to Sound Mining at the
time of preparation of this report.
Barplats agrees that neither it nor its associates will make any claim against Sound Mining to recover any
loss or damage suffered as a result of Sound Mining’s reliance on the information provided by Barplats for
use in the preparation of this report. Furthermore, Barplats has also indemnified Sound Mining against any
claim arising out of the assignment to prepare this report, except where the claim arises as a result of any
proven willful misconduct or negligence on the part of Sound Mining. This indemnity is also applied to any
consequential extension of work through queries, questions, public hearings or additional work required
arising from Sound Mining’s performance of the engagement. Sound Mining reserves the right to, but will not
be obligated to, revise this report and conclusions thereto if additional information becomes known to Sound
Mining subsequent to the date of this report.
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GLOSSARY OF TERMS, ABBREVIATIONS, UNITS
Units Description
% percent
m micrometre
° degree
°C centigrade degree
cm centimetre
cm2 square centimetre
g gram
g/t gram per tonne
ha hectare
hr hour
kg/ℓ kilogram per litre
km kilometres
kN/m3 kilonewton per cubic metre
kPa kilopascal
ktpd kilo tonnes per day
ktpm kilo tonnes per month
kV kilovolt
kW kilowatt
m metre
M million
m/s metre per second
m3 cubic metre
mamsl metre above mean sea level
mins minutes
Mℓ/day million litres per day
mm millimetres
Mt million tonnes
MVA mega volt ampere
oz ounce
t/m3 tonnes per cubic metre
tph tonnes per hour
tpm tonnes per month
USD United States Dollar
ZAR South African Rand
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Abbreviation Description
(Fe,Cu)S2 Chalcopyrite
(Ni,Fe)S2 Pentlandite
(Pt,Pd)S Cooperite
(Pt,Pd,Ni)S Braggite
95TH Perc 95th Percentile
Ag Silver
AMCU Association of Mineworkers and Construction Union
AMIS African Mineral Standards
Au Gold
Barplats Barplats Mines Limited
BEE Black Economic Empowerment
BIC Bushveld Igneous Complex
BIL Barplats Investments Limited
BRC Bottom Reef Contact
Capex Capital Expenditure
CIF Cost, Insurance and Freight
CIM Canadian Institute of Mining, Metallurgy and Petroleum
Co Cobalt
COG Cut-off Grade
CoV Coefficient of Variation
Cr Chrome
Cr2O3 Chromium Oxide
CRM Crocodile River Mine
CRP Chrome Recovery Plant
Cu Copper
CZ Critical Zone
DMR Department of Mineral Resources
DWAF Department of Water Affairs
Eastplats Eastern Platinum Limited
EBIT Earnings Before Interest and Tax
EIA Environmental Impact Assessment
EMP Environmental Management Plan
EMPr Environmental Management Program
ENVASS ENVASS Environmental Assurance Pty Ltd
Eskom South African National Power Utility
Fe Iron
Fe2S2 Pyrrhotite
FEL Front End Loader
FeO Iron Oxide
FeS2 Pyrite
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Abbreviation Description
FoM Free on Mine
FoS Factor of Safety
Fraser Alexander Fraser Alexander (Pty) Ltd
FS Feasibility Study
GNR Government Notice Regulation
GPS Global Positioning System
HDSAs Historically Disadvantaged South Africans
ICP OES Inductively Coupled Plasma – Optical Emission Spectrometry
Implats Impala Platinum Holdings Limited
IRR Internal Rate of Return
ITR Independent Technical Report
JSE Johannesburg Stock Exchange
LCZ Lower Critical Zone
LG Lower Group Chromitite Layers
LGS Lebowa Granite Suite
LIMS Laboratory Information Management System
LoM Life of Mine
LZ Lower Zone
MetQuip MetQuip (Pty) Ltd
MG Middle Group Chromitite Layers
MHSA Mine Health and Safety Act No 29 of 1996
MPRDA Mineral and Petroleum Resources Development Act
MPRDA Mineral and Petroleum Resources Royalty Act
MR Merensky Reef
MWP Mining Work Programme
MZ Main Zone
NEMA National Environmental Management Act
Ni Nickel
NPV Net Present Value
NUM National Union of Mineworkers
OK Ordinary Kriging
Opex Operating Expenditure
Pb Lead
Pd Palladium
PDC Process Design Criteria
PFP Pegmatoidal Feldspathic Pyroxenite
PGEs Platinum Group Elements
PGMs Platinum Group Metals
PLC Programmable Logic Controller
Pt Platinum
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Abbreviation Description
QAQC Quality Assurance and Quality Control
QP Qualified Person
Rand Mines Rand Mines Limited
RD Relative Density
RGS Rashoop Granophyre Suite
Rh Rhodium
RLS Rustenburg Layered Suite
ROM Run of Mine
Ru(Os,Ir)S2 Laurite
SAMREC Mineral Resource Statement in compliance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves
SANS South African National Accreditation System
SCADA Supervisory Control and Data Acquisition
SG Specific Gravity
SLP Social and Labour Plan
Sound Mining Sound Mining Solution (Pty) Ltd
SRK SRK Consulting (SA) Pty Ltd
Std Dev Standard Deviation
the Plant Processing Facility
the Project Zandfontein UG2 Tailings Storage Facility
TRC Top Reef Contact
TSF Tailing Storage Facility
TSX Toronto Stock Exchange
UASA United Association of South Africa
UCZ Upper Critical Zone
UG Upper Group Chromitite Layers
UG2 UG2 Chromitite Layer
USCS United Soil Classification System
UZ Upper Zone
V Vanadium
WSP Work Skills Plan
XRF X Ray Fluorescence
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1. SUMMARY
1.1. Introduction and Terms of Reference
Barplats Mines Limited (Barplats) engaged Sound Mining Solution Pty Ltd (Sound
Mining) to prepare an Independent Technical Report (ITR) on its plans to re-mine
and retreat the Zandfontein Tailings Storage Facility (TSF) to recover chrome (the
Project), which resulted from mining of the UG2 at the Crocodile River Mine
(CRM). It is understood by Sound Mining that the ITR will be used by the parent
company, Eastern Platinum Limited (Eastplats) and its wholly owned subsidiary
Barplats, to meet the reporting requirements of the Canadian Securities
Exchange.
This ITR complies with Canadian National Instrument NI 43-101 (the Standards
of Disclosure for Mineral Projects, NI 43-101F1 as well as the Mineral Resource
and Mineral Reserve classifications adopted by the Canadian Institute for Mining
(CIM).
Site visits were undertaken to CRM by the Qualified Person (QP) and the
technical specialists that assisted with the technical reviews during August 2017
and detailed discussions were held with CRM technical and management
personnel on site. Sound Mining has based its reviews on information largely
provided by Barplats. This information included a Mineral Resource Estimate for
the TSF that was completed by SRK Consulting (SA) Pty Ltd (SRK).
Neither Sound Mining, nor the authors of this ITR, have or have had previously,
any material interest in Eastplats or the mineral properties in which Eastplats has
an interest. Sound Mining’s relationship with Eastplats is solely one of
professional association between client and independent consultant. This ITR is
prepared in return for professional fees based upon agreed commercial rates and
the payment of these fees is not contingent on the results of this ITR.
1.2. Property Description, Title Status and Land Tenure
CRM is located on the western limb of the Bushveld Igneous Complex (BIC),
some 7 km south of Brits in the North West Province in South Africa. The terrain
is generally flat with an elevation of some 1,151 mamsl. The servitudes on site
include road and Eskom power lines.
Barplats has a Mining Right, an approved Environmental Management Plan
(EMP) and the necessary Water Use License. Re-mining of the TSF in terms of
the National Environmental Waste Management Act, 2008 (Act No. 59 of 2008)
[as amended], is authorized in the EMP as issued in 2001.
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1.3. Encumbrances, Environmental Liabilities and Permits
Barplats is not materially obligated financially or otherwise through contracts or
agreements at this stage. CRM does however, use the services of several
contracting companies to perform various functions including transportation,
housing services and security.
An Environmental Impact Assessment (EIA), EMP and Environmental
Management Program (EMPr) was approved on 30 January 2001. Barplats used
external specialists ENVASS Environmental Assurance Pty Ltd (ENVASS) to
audit and monitor compliance with the EMPr. This included an evaluation of the
environmental liability of Zandfontein, Maroelabult and Crocette. The latest
evaluation report indicates that the CRM should have a R75 million provision for
its environmental rehabilitation. CRM have arranged with Lombard Insurance to
issue financial guarantees to the Department of Mineral Resources (DMR) for this
amount. The guarantees are partially secured by cash and partially by mine
houses belonging to CRM.
1.4. History
The CRM operation was originally listed on the Johannesburg Stock Exchange
(JSE), in 1987. Barplats took control of CRM in 1991 and is in turn, currently
controlled as shown in Figure 1.
Figure 1: Barplats Organisational Chart
Mining operations on the UG2 of CRM started in the 1980s and although
interrupted periodically, continued until 2013. The material contained in the TSF
was derived from processing of UG2 for Platinum Group Metals (PGMs).
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A tailings retreatment plant was commissioned in 2007, and construction of the
existing Chrome Recovery Plant (CRP) was completed in 2008. Previous
production history indicates that the planned processing recovery and yields can
be realistically achieved.
1.5. Geology
The mining operations is situated adjacent to the Brits Graben structure located in
the western limb of the BIC. The BIC contains the world’s largest mineral
resources of Platinum Group Elements (PGEs), Chromium Oxide (Cr2O3) and
Vanadium (V) being exploited at numerous operations. Barplats mines the UG2,
which typically consists of a single chromitite layer.
Although currently on care and maintenance, CRM has exploited the UG2
Chromitite Layer (UG2) and it is the tailings from this material that comprise the
mineral resource on the TSF for the Project. A geological model of the TSF at
Barplats was developed in 2017 and has been used for mine planning.
1.6. Exploration, Drilling and Data Integrity
In October 2016 an exploration programme was conducted by Barplats to
quantify the three PGEs (3E PGEs), Gold (Au) and Cr2O3 resources in the TSF. A
total of 44 auger drillholes were drilled in the TSF with a total of 246 primary
samples being taken and submitted to the ISO 17025 accredited Set Point
Laboratories (Set Point) for chemical analyses.
During 2016, a total of 358.5 m was drilled from 44 auger drillholes in order to
evaluate the 3E PGEs, Au and Cr2O3 mineralisation. All the auger drillholes were
vertically inclined and collared with an azimuth of 0°. The holes were drilled
through the TSF and stopped once soil or clay was intercepted. This marked the
base of the TSF. The drillhole spacing applied a 200 m by 200 m grid to ensure
that the TSF was sufficiently covered and samples were taken at 1.5 m intervals.
Sound Mining received and reviewed the 44 Auger drillholes full dataset and
corresponding tailing assays (246). The data was imported using Micromine©
2016.1 software and validated to ensure that there were no errors identified within
the dataset.
The Quality Assurance and Quality Control (QAQC) methods and procedures
used with respect to data collection were acceptable and conducted in
accordance with best practice requirements. The distribution of the drillholes and
the result received demonstrate low variability in the grades within Domain 101
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(Old compartment) and Domain 102 (New compartment). A high degree of
precision and accuracy has been demonstrated by the independent exercise.
The TSF contains both Measured and Indicated Mineral Resources and a
Feasibility Study (FS) has been completed for the Project. It is noted that only a
portion of the TSF’s Mineral Resource is to be exploited by the Project.
1.7. Mineral Processing and Metallurgical Testing
A chromite recovery spiral plant was refurbished and re-commissioned in 2006. It
produced a 42% to 44% chemical and metallurgical chrome product from the
primary rougher tailings prior to secondary milling.
A report on internal spiral test work conducted indicated that this configuration
would optimise revenue over three other process flow streams tested. The
budgeted mass recovery to the spiral products is based on the test work
performed. The test work exceeded the required chromite product grade
specifications and support the efficiencies of the CRP as designed in the FS.
1.8. Mineral Resources and Mineral Reserves
The ITR has been prepared on information available up to and including
23 August 2017. The Mineral Resources and Mineral Reserves reflected in this
report are based on the Mineral Resource Report prepared by SRK and dated
1 August 2017 and on the FS completed by Barplats.
The Project’s Mineral Resources as at 31 July 2017 amount to 13.68 Mt at
20.72% Cr2O3. 12.48 Mt are in the measured Mineral Resource Category at
20.85% Cr2O3 and 1.19 Mt are in the Indicated Mineral Resource Category at
19.31% Cr2O3.
The Mineral Resource estimate is considered robust, and no critical flaws were
identified. In addition, Sound Mining supports the presented classifications.
Sound Mining has independently reviewed and restated the Mineral Reserves for
CRM utilising a modelled mining plan and a schedule together with appropriate
modifying factors. Sound Mining generated a discounted cash flow model to
justify the mineral reserves as estimated herein. The Proven and Probable
Mineral Reserves on the TSF at CRM as at September 2017 total some 6.42 Mt
at 22.36% Cr2O3. 6.25 Mt are in the Proved Mineral Reserve Category at 22.42%
Cr2O3 and 0.18 Mt are in the Probable Mineral Reserve category at 20.28%
Cr2O3.
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1.9. Mining and Recovery Methods and Project Infrastructure
The TSF is calculated to comprise a physical volume of just over 8,365,000 m3 of
tailings material or about 13.68 Mt (dry). A total of 6.42 Mt is planned to be moved
both mechanically and hydraulically to feed 240 ktpm to a modified and upgraded
CRP. A yield of around 15% is anticipated, which translates to a re-deposition
rate of about 208 ktpm. These tailings will be replaced into new paddocks on the
same footprint of the TSF to be mined.
A TSF operator will be contracted to do the mining while CRM personnel will
operate the CRP. A mechanical cutting machine will be used for the harder,
coarser material near the edges of the TSF while track mounted high pressure
monitor guns operating at a 40 bar water pressure will be utilised to mobilise a
slurry to a collection sump via a system of drains or launders for onward pumping
to the CRP.
The feed preparation and water reticulation infrastructure will be located at the
TSF with the redesigned gravity separation chrome recovery circuit retained
within CRM’s existing concentrator complex. Screens located at the TSF will
separate a +3 mm oversize fraction for re-crushing, re-milling or discarding as
necessary. Quality control processes are included in the FS because both grade
and particle size will need to be controlled for an economically efficient feed to the
CRP.
1.10. Marketing, Costs and Economic Analysis
Barplats does not have an off-take agreement for chromite, but the prevailing
market conditions support the sale of chromite profitability for the immediate
future. Sound Mining is of the opinion that Barplats will be able to get the chrome
cost efficiently into the Chinese market, where demand is the highest. Chrome
prices were adjusted as the metals are sold as a 40% concentrate, and therefore
only attract a percentage of the metal value.
Minimal capital is required for the mining operation because the appointed mining
contractor will supply all the mining equipment. The bulk of the capital is required
for the CRP and TSF construction. The mining cost was based on the anticipated
or forecast contract rates of the likely mining contractor and the processing and
overhead costs were determined using quotations and a bill of quantities
available at CRM. The cost estimates for the project included a contingency
based on the degree of uncertainty of the estimate.
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The capital and operating budget in the FS for the Project were used together
with the anticipated revenue forecast in a discounted cash flow model which
allowed the declaration of a mineral reserve.
Average total cost of production after capital, operating cost and royalties,
excluding further exploration drilling, corporate overheads and financing costs is
estimated to be ZAR 110.03/(RoM) t processed. Total capital expenditure for the
Project has been estimated at ZAR 219 M.
The Net Present Value (NPV) of the project, discounted at 13% per annum, is
estimated to be ZAR 42.2 M with an annualised internal rate of return (IRR) of
24% over a 33 month period.The project is forecast to generate a positive cash
flow in month 10 and reach break-even in month 25. Positive cash flows
averaging ZAR 12.9 M/month after payment of royalty are forecast over the
remaining LoM. At a FoM price of ZAR 870.79/t for 40% chrome concentrate
the project would be likely to achieve a cash margin of 10% and an operating
margin of 14%.
1.11. Adjacent Properties
There are numerous mines on the BIC with CRM being the most easterly on the
western limb. Nearby properties include Elandsfontein mine and Lonmin’s
operating Marikana mine, which is approximately 15 km apart. Samancor
operates chrome mines in close vicinity to CRM.
1.12. Interpretations and Conclusions
A technical review of the data used in the Mineral Resource estimation has
shown the quality of the data to be adequate for the intended purpose. The
historical drill results have limited QAQC monitoring as does the database in
which the data is stored.
Sound Mining found no fatal flaws in the modifying factors applied in the FS, and
accordingly this ITR presents a Mineral Reserve of 6.42 Mt at 22.36% Cr2O3
which is based on robust modifying factors. However the three material risks in
the opinion of Sound Mining are:
Chrome price fluctuation;
Politically motivated unrest, illegal squatting; and
Failure of TSF wall.
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1.13. Recommendations
As currently envisaged, the retreatment project has been required to use 20.5%,
which is a high cut-off grade (COG), to compensate for the significant drop-off in
yield anticipated at grades below about 19%. The LoM based on the current COG
is thus limited to some 33 months at a production rate of 240 ktpm, while cash
flow modelling suggests break-even may only occur in month 25.
The recovery of PGMs from the TSF should therefore be evaluated with a view to
lowering the COG and thus allowing a greater part of the available resource to be
treated over a longer LoM.
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2. INTRODUCTION
This ITR covering the FS work completed to date on recovering chrome from the
TSF, is prepared on behalf of Barplats for Eastplats, a Canadian registered
company which is listed both on the Toronto Stock Exchange (TSX) and on the
JSE. Barplats is incorporated in South Africa and is the owner and operator of
CRM and a wholly owned subsidiary of Eastplats. Eastplats’s website can be
accessed on www.eastplats.com.
2.1. Terms of Reference
This ITR has been prepared to comply with disclosure and reporting requirements
set forth in the TSX Corporate Finance Manual, Canadian National Instrument
43-101, Companion Policy 43-101CP, Form 43-101F1, the Standards of
Disclosure for Mineral Projects‟ of June 2011 (the Instrument) and the Mineral
Resource and Reserve classifications adopted by the Council of the Canadian
Institute of Mining (CIM).
The main activities undertaken for the ITR on the Project include the following:
A review of existing data and information.
Site visits and technical discussions.
A review of Mineral Resource estimation.
Estimation and classification of Mineral Reserve, including data validation.
A review of the Economic Model.
Compilation of a NI 43-101 and NI 43-101F1 compliant ITR.
All monetary figures expressed in this report are in South African Rands (ZAR)
unless otherwise stated. All technical measurements are reported in metric units,
unless otherwise stated.
2.2. Personal Inspection
A site visit was made during the period 15 to 23 August 2017 to CRM by Mr
Vaughn Duke Pr.Eng., PMP, MBA, BSc. Mining Engineering (Hons), as a
Qualified Person (QP) as that term is defined in NI 43-101.
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2.3. Sources of Information
Sound Mining has based its review of the property on information provided by
Barplats, along with technical reports by specialist consultants, and other relevant
published and unpublished data. These data and information are summarised as
follows:
Applications for prospecting and mining rights.
Information regarding drilling and assaying methods.
Mineral Resource estimation parameters.
Competent Persons Report.
Mine planning layouts and designs.
Ground stability reports.
Production schedules.
Metal accounting data and methods.
Process throughputs and recoveries.
Environmental reports, rehabilitation data and costs.
Financial model.
Relevant contracts.
Sound Mining’s specialists have endeavoured, by making all reasonable
enquiries, to confirm the authenticity and completeness of the technical data upon
which the ITR is based. A final draft of the ITR was also provided to Barplats for
the purpose of identifying any material errors or omissions prior to lodgement.
2.4. Independence
This ITR has been prepared by Sound Mining, which is an independent mining
consultancy. Its consultants have extensive experience in preparing Competent
Persons, Technical Reports and Valuation Reports for mining and exploration
companies. Sound Mining’s specialists writing this report have, collectively, more
than 50 years of experience in the assessment and evaluation of chrome mining
and exploration projects worldwide and are members in good standing of
appropriate professional institutions.
Neither Sound Mining nor its staff or subcontractors have, or have had, any
interest in these projects capable of affecting their ability to give an unbiased
opinion and, have not received, and will not receive, any pecuniary or other
benefits in connection with this assignment, other than normal consulting fees.
Neither Sound Mining nor any of its personnel involved in the preparation of this
ITR have any material interest in either Barplats or in any of the properties
described herein.
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Sound Mining was remunerated a fixed fee amount for the preparation of this
report, with no part of the fee contingent on the conclusions reached or the
content of this report. Except for these fees, Sound Mining has not received and
will not receive any pecuniary or other benefit whether direct or indirect for or in
connection with the preparation of this report.
The Mineral Resources for the Project were independently estimated, classified
and signed off by Mr A. S. Page of SRK (Pr.Sci Nat, MGSSA). The remainder of
the ITR is signed off by Mr. V Duke of Sound Mining.
Sound Mining reserves the right to, but will not be obliged to, revise this report or
sections therein, and conclusions thereto, if additional information becomes
known to Sound Mining subsequent to the date of this report.
2.5. Qualifications and Experience
Sound Mining has independently compiled this ITR as an independent review and
sign off. Mr. V Duke has the relevant and appropriate experience and
independence to appraise the assets. Mr V Duke is considered a QP, having
more than five years’ relevant experience in the assessment and evaluation of
the types of exploration and mining properties discussed in this report. Mr. V
Duke, was assisted by Kayleigh Cooper, John Ruddy and Richard Phillips, but
remains responsible for the overall report.
Vaughn Glenn Duke is a Senior Mining Engineer with over thirty years’
experience in the mining industry. His experience includes Executive
Management, Mining Engineering, Technical Evaluation, Financial Evaluation,
Due Diligence and Project Management. He has worked in various commodities
including precious metals, uranium, manganese, coal and base metals. He has
experience within South Africa, Ghana, Mozambique, Portugal, Namibia, Canada,
Zimbabwe, Sierra Leone, Mali, Sudan, UK, USA, Liberia, DRC, Botswana, China
and Zambia.
Kayleigh Cooper is a Geologist with nine years’ experience in the mining industry.
Her experience includes 3D Geological Modelling and Database Management,
Mineral Resource Estimation and Geostatistical Analysis, Mineral Exploration and
field mapping, Prospecting and Mining Work programme applications, Geological,
Environmental and Quality Assurance Reviews and operational experience.
Kayleigh has worked in various commodities including platinum, iron, manganese
gold, coal, fluorspar, rare earth elements, copper, nickel, uranium and bauxite.
She has extensive experience within South Africa, Zambia and Mozambique.
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John Ruddy is a mining engineer with 44 years’ experience in the mining industry.
His experience includes financial modelling, financial evaluation, mining
engineering and due diligence reviews. John has worked in various commodities
including coal diamonds, precious and base metals and industrial minerals. He
has covered Southern Africa, West Africa and East Africa.
Richard Phillips is a metallurgist with over 40 years’ experience in production and
project management. He held senior positions at Anglo American Platinum
Corporation and is a specialist in South African Chrome and Platinum Group
Metals. Richard has a NHD (Extraction Metallurgy) and a Bachelor of Arts
(Economics; Geography). He is a Fellow of the SAIMM.
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3. RELIANCE ON OTHER EXPERTS
Sound Mining has assumed that all of the information and technical documents
reviewed and listed in the “References” section of this report are accurate and
complete in all material aspects. While Sound Mining carefully reviewed all of this
information, Sound Mining has not concluded any extensive independent
investigation to verify their accuracy and completeness. The information and
conclusions contained herein are based on information available to Sound Mining
at the time of preparation of this report. Some of this information was based on
work done by employees and South African Companies that worked under the
direction of Barplats (Table 1).
Table 1: Reliance on Other Experts
Specialists Section
Mr. A Page Mineral Resource Estimate (Section 7 to 12, 14)
Dr B Shi Mineral Reserve Estimate (Section 15)
Mr A Lubbe, Marketing (Section 19)
Mr J Coetzee Metallurgy (Section 13)
Mr J Kapp Infrastructure (Section 18)
Mrs H Hanson Survey and Data (Section 23 and 24)
Mr M Hlapolosa Social and Community (Section 20)
Mr D Barnard Permitting (Section 20)
Mr M Gandela Environmental (Section 20)
Fraser Alexander (Pty) Ltd Mining Costs (Section 21 and 22)
Sound Mining has relied upon Mr. A. S. Page (Pr. Sci. Nat South Africa Reg. No
400022/07), BSc (Hons). Mr A Page has independently estimated the Mineral
Resources for the Project. Mr A Page is considered a QP, having more than five
years’ relevant experience in the assessment and evaluation of the types of
exploration and mining properties discussed in this report. Qualified Persons’
Certificates are presented in Appendix 1.
Sound Mining has viewed details regarding the mining rights that collectively
comprise the CRM. Sound Mining has not independently verified, nor is it
qualified to verify, the legal status of these concessions. The present status of
tenements listed in this report is based on information and copies of documents
provided by Barplats. Similarly, neither Sound Mining nor the authors of this
report are qualified to provide comment on environmental issues associated with
the Project.
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Barplats has reviewed draft copies of this report for factual errors. Any changes
made as a result of these reviews did not involve any alteration to the conclusions
made. Hence the statements and opinions expressed in this document are given
in good faith and in the belief that such statements and opinions are not false and
misleading at the date of this report.
Sound Mining reserves the right to, but will not be obligated to, revise this report
and conclusions thereto if additional information becomes known to Sound Mining
subsequent to the date of this report.
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4. PROPERTY DESCRIPTION AND LOCATION
4.1. Property Description and Property Location
The Project is located at CRM on the Western Limb of the BIC, a large layered
igneous province, world renowned for its platinum group elements and chrome
content. CRM covers an area of 2,777.65 ha, which comprises Krokodildrift in the
west, Zandfontein in the centre, and Maroelabult in the east. Krokodildrift and
Maroelabult are on opposite sides of the Crocodile River, while Zandfontein is
intersected by the river which meanders in a northerly direction. It is located 7 km
south of the town of Brits and approximately 70 km north-northwest of
Johannesburg or some 65 km to the east of Rustenburg, in the North West
Province of South Africa (Figure 2).
4.2. Legal Tenure for the TSF
Barplats operates under the legislative framework provided by the Mineral and
Petroleum Resources Development Act, No 28 of 2002 (MPRDA).
On 22 June 2013 Barplats issued a notice in terms of Section 52 of the
MPRDA to the DMR of the decision to cease operation due to the prevailing
economic conditions. If a decision is taken to proceed with the re-mining of
the TSF, a formal notification needs to be sent to the DMR informing them of
CRM’s intention to commence with operations. A revised Mining Work
Programme (MWP) and Social and Labour Plan (SLP) would need to be
lodged. The MWP and SLP are discussed later in this document.
The TSF and area is situated on Portions 98, 99 and 206 of the farm Zandfontein
447 JQ (Figure 3). These properties are owned by Barplats and held by Title
deeds no: T61839/1987, T63566/1987 and T18043/2015 respectively. The
combined extent of Portions 98, 99 and 206 is 135.8741 ha.
A list of the mining rights owned by Barplats are shown in Figure 2.
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Figure 2: Barplats Locality Plan and Mining Rights over the TSF
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Figure 3: Surface Rights Covering the TSF
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Table 2: Legal Tenure Details
Farm Parent Farm and Farm Portions DMR Ref Area (ha)
Status Expiry Date
Zandfontein 447 JQ (Zand)
Portion 8, 9,11,13, 21, RE 22, 23,24,60 (portions of portion 6), RE 36 (a portion of portion 1), portions 56 and 57 (portions of portion 17), RE 97, portion 98, RE 99 and 206 (portions of portion 5), RE 113 (a portion of portion 36), portions 120, 143, 151, 153, 154, 157, 158, 159, 160, 161, 162, 178, 195 (portions of portion 2), RE 133, portion 134 (a portion of portion 133), portion 166, portion 207 (a portion of portion 113)
NW 30/5/1/2/2/151 MR and
NW 30/5/1/2/2/151 MR Ext 2418.7547 Valid 19/06/2038
De Kroon 444 JQ (Maroela)
Remainders of portions 48 and 50, portions 49, 51, 52, 119, 121, 122 and 123, portions 165, 166, 167, 168 (portions of portion 47) and portion 199 (a portion of portion 48), remainders of portions 40, 128,278, 344.Portions 157,159, 161, 3, RE10, RE 12, RE 13, RE 14, RE 15, 16, RE 18, 19, 20, 23, RE 24, 25, 26, 27, 28, RE 29, RE 31, 33, RE 34, 35, 36 , 37, 38, 39, RE 40, 41, 44, 45, RE 55, 57, 58, 62, 63, 64, 65, 66, 67, 68, 69, 70, RE 71, 72, 72, 75, 77, 80, 81, 82, 83, 84, RE 86, RE 87, 88, 95, RE 96, 97, RE 98, 107, 108, RE 109, 110, 111, 112, RE 113, 116, 1171, 124, RE 125, 126, RE 127, 128, 130, RE 133, 134, 137, 139, 145, 149, RE 151, RE 152, 153, 156, 158, RE 172, RE 173, 185, 189, 190, 192, 194, 202, RE 203, RE 204, 206, 208, 213, RE 218, 219, RE 220, 221, 222, 223, 224, 225, 226, 227, 228, 231, 234, 235, 237, 240, 241, 242, 243, 244, 245, 246, 247, 248,249,250, 251, 252, 253, 254, 255, RE 256, 259, 260, 261, 262, 263, 265, 266, 287, 288, 307, 314, 314, RE 316, 317, 327, 329, 330, 337, 338, 344, RE, RE 1, 2, 5, 6
Hartebeesfontein 447 JQ Portion 247
Krokodildrift 446 JQ RE 8, RE 13, RE 17, RE 123, RE 124, 125, RE 137, 138, RE 140, RE 141, RE 142, 145, RE 146, RE 147, 200, 236, 240, 243, RE 265, 267, 268, RE 311, RE 312, 315, RE 352, 353, 452, 456, 457, 458, 459, 463, 464, 465, 466, 472, 535, 536, 537, 545, 546, 547, 549, 551, RE 559, 576, 577
Elandsfontein 44 JQ Portion of RE 6, portion of RE 10, portion of RE 22, portion of RE 64
De Kroon 444 JQ (Maroela)
Portion 157, 159 and 161
NW 30/5/1/2/2/78 MR 65.1209
Renewal Application Submitted - Licence
NW 30/5/1/2/2/78 MR on 30 August 2016
13/12/2016 Zandfontein 447 JQ (Zand)
Portion 19
Krokodildrift 446 JQ (Crocette)
Portion 126, 127, 128, 129, 130, 131, 132, 133, 134, 139, 329 and 417 NW 30/5/1/2/2/307 MR 155.67225 Valid 30/03/2018
Zandfontein 447 JQ (Zand Ext)
The remaining extent of portion 18, portions 16, 20, 55, 58, 59, 61, 135, 144, 145 , 155 and 156 NW 30/5/1/2/2/332 MR 110.8741 Valid 14/08/2018
De Kroon 444 JQ (Maroela Ext)
Portions 115 and 160 NW 30/5/1/2/2/363 MR 27.23 Valid 28/01/2019
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4.3. Royalties
The MPRDA covers royalties on revenues derived from mineral production in
South Africa. It distinguishes between refined minerals that have been refined
beyond a condition specified by the Act, and unrefined minerals which have
undergone limited beneficiation as specified by the Act. The royalty is determined
by multiplying the gross sales value of the extractor, in respect of that mineral
resource, in a specified year, by the percentage determined by the royalty
formula. Both direct operating expenditure and capital expenditure incurred is
deductible for the determination of Earnings Before Interest and Tax (EBIT). The
quantum of the revenue royalty on all minerals is dependent on the profitability of
the company based on the following formula. For unrefined mineral resources the
formula is:
Royalty Rate (%) = 0.5 + [EBIT / (Gross Sales (unrefined) × 9)] × 100
Chrome Product is deemed unrefined mineral resource and the minimum royalty
is 0.5%. The maximum rate of royalty for unrefined minerals is 7%.
4.4. Environmental Liabilities, Legislative and Permitting Requirements
The TSF is covered in the Zandfontein EMP. Although in care and maintenance,
CRM is still required to comply with its EMPs, and therefore employs ENVASS to
conduct annual evaluations of its rehabilitation closure costs. CRM would then
increase its guarantees to the DMR as required. The ENVASS evaluation usually
includes Zandfontein, Maroelabult, Crocette. The latest evaluation report
indicates that the mine should have R75 million provision for its environmental
rehabilitation. The mine did not deposit this money in a trust fund, instead it has
arranged with Lombard Insurance to issue financial guarantees to DMR for this
amount. The guarantees are partially secured by cash and partially by mine
houses belonging to CRM. A number of government approvals have already
been granted including a mining licence (i.e. NW 30/5/1/2/2/151 MR) granted on
June 2008, which will effectively cover the project to June 2038.
4.5. Other Significant Factors and Risks
There are no other significant factors or risks to the Project.
4.6. Material Agreements
Barplats are currently not party to any agreements that are likely to place a
material obligation on the company. There are however numerous smaller
contracts that relate to the ongoing care and maintenance activities at CRM.
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5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,
INFRASTRUCTURE AND PHYSIOLOGY
5.1. Accessibility
CRM is easily accessible by a number of tar roads, including the N4 National
Road that traverses the area from east to west. The R511 major road runs north
to south and is located immediately east of the Project.
5.2. Climate
The climate in the vicinity of CRM is typically warm to hot in summer, with dry,
mild, generally frost-free winters. The local area can be described as sub-humid
with a mean annual rainfall of 540 mm per annum as measured at the Brits
weather station. Rainfall is almost exclusively restricted to the summer months
between October and March. These rains occur mainly in the form of
thunderstorms. Winds are generally mild and blow predominantly from the north-
west. Winter is cool and dry. The climate is favourable to year-round mine
operations. The average daily temperature in June is 19 °C, and in January
29 °C. There are occasional short excursions to -2 °C and occasional maximum
temperatures of 44.5 °C are experienced. The climate is suited to year-round
mining operations.
5.3. Physiology
The local landforms formed in response to rocks of the BIC that have been
eroded to form a relatively flat surface that is covered with turf and grasslands
with acacia trees.
The average land elevation in the Project area is 1,151 mamsl. Land rises
gradually to the south of the mine, and then rises steeply to the Magaliesberg
Mountain range with an elevation of some 1,829 mamsl. The elevations of the
TSF range from 1,159 to 1,190 mamsl.
The dominant soils in the broader CRM area are black clayey vertisol soils, which
are generally known as “black turf”. The soils have a high clay content, which
means that the soils do not drain easily. Cracking during the drying process
causes surface soil material to fall down the cracks, causing subsoil and topsoil to
mix. Accordingly, there is usually no distinction between topsoil and subsoil in the
Arcadia profiles.
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5.4. Local Resources and Infrastructure
The town of Brits, to which the mine is adjacent, is well developed with many
businesses offering mine support services. Local infrastructure in terms of
airports, road, rail, power and water is excellent, with a knowledgeable, skilled
local labour force. Highway N4 which traverses the northern part of South Africa
from Mozambique to Botswana via Nelspruit, Pretoria and Rustenburg crosses
the southern portion of the property.
Mining services and human resources are available in Brits, Rustenburg and the
surrounding areas, which all occur within a well-established mining area. Drilling
contractors, services and consultants are also available from Johannesburg and
the greater Gauteng area. The region has good infrastructure, with major roads,
rail, water and power. Chromite mining, heavy agriculture and light industry all
occur around the town of Brits. A ferrochrome mine and smelter operate nearby,
and several platinum mines are in operation. There is intensive agriculture around
CRM, which includes crops such as tomatoes, potatoes, and cabbages as well as
commercial flower growers to the east, west and south.
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6. HISTORY
The CRM operation was originally listed on the JSE, in 1987. In November 1988,
Rand Mines Limited (Rand Mines) acquired a controlling interest in Lefkochrysos
through its subsidiary Barplats. Impala Platinum Holdings Limited (Implats)
acquired 38% of Barplats in 1991, but a sharp drop in metal prices resulted in the
mine closing later in the same year. Implats increased its stake in Barplats to
83% in 1998. CRM was re-opened in 2000 following further exploration and study
work. A consortium of investors acquired a majority shareholding in 2004 and the
concentrator in 2005 (Photograph 1).
Photograph 1: Photo of Barplats Metallurgical Complex
Eastplats then acquired a 69% stake in Barplats Investments Limited (BIL) in
2006 and later increased its interest by a further 5% to 74% to share ownership
with a black economic empowerment partner, the Gubevu Consortium (26%).
Tailings derived from mining and processing for PGMs at CRM were re-treated
for the first time during this period and a CRP was commissioned a little later in
2008. The TSF was originally designed and constructed in 1988 by
Fraser Alexander (Pty) Ltd (Fraser Alexander). It was decommissioned in 1991,
re-commissioned in 2000 and again decommissioned in 2003, before being
utilised between 2005 and 2013 when CRM went into Care and Maintenance.
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The current ownership structure is presented as Figure 4.
Figure 4: Ownership Structure
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6.1. Historical Exploration Work
Previous exploration was used to inform a 2015 unpublished mineral resource
estimate by SRK but recent exploration work has been completed on the TSF for
new data for the 2017 mineral resource estimate covered by this ITR.
6.2. Historical Mineral Resource Estimates
The recent Mineral Resource Statement (August 2017) of the mineral resource
estimate for the TSF is the first to be presented in a NI 43-101 compliant report.
6.3. Historical Operations
The average quantity treated from 2009 to 2013 (133,206 ktpm), following
commissioning of the CRP in 2008 is shown in Graph 1. The throughput, which
include run of mine and sludge from underground operations together with feed
from re-mining of the TSF, reduced over the period. This was reportedly due to
poor plant availabilities and low mining rates as finer material was sourced from
the TSF.
Graph 1: Monthly CRP Throughput
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Graph 2 and Graph 3 present the chrome recovery over the same period to 2013.
Graph 2: Overall CRP Recovery efficiency
Efficiencies also dropped over the period due to low plant availabilities and
difficult mining conditions (vegetation and hard material).
Graph 3: Chrome Recovery from Hydraulic Mining of the TSF
Better recoveries were recorded with the coarser higher grade TSF material.
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7. GEOLOGICAL SETTING AND MINERALISATION
7.1. Regional Geology
The mining operations at Barplats are situated on the western limb of the BIC.
The BIC is a 2.05 billion year old layered igneous intrusion underlying an area of
approximately 65,000 km2. Figure 5 shows the lateral extent of the BIC where the
area of coverage extends from Zeerust in the west to Burgersfort to the east,
covering the northern part of South Africa
The mafic rocks of the BIC display a maximum vertical thickness of approximately
8 km with some individual layers being traced for over 150 km along strike. The
BIC constitutes the most voluminous preserved mafic intrusion with the world’s
largest ore reserves of PGEs, Cr2O3 and V being exploited at numerous
operations.
The BIC (as well as the suite of rocks encompassed by the Bushveld event) can
be categorised into three subdivisions, namely, into the mafic rocks of the
Rustenburg Layered Suite (RLS), the Lebowa Granite Suite (LGS) and the
Rashoop Granophyre Suite (RGS) (Figure 5).
The units contained within the RLS comprise of dunite and pyroxenite through
norite, gabbro, anorthosite to magnetite and apatite rich diorites. A subdivision
has been proposed by using traditional zonal stratigraphy which comprises of a
noritic Marginal Zone, and ultramafic Lower Zone (LZ), and ultramafic to mafic
Critical Zone (CZ), a gabbronoritic Main Zone (MZ) and a ferrogabbroic Upper
Zone (UZ).
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Figure 5: Simplified Geological Map Indicating the Extent of the BIC
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7.2. Local Geology
Barplats is underlain by the CZ stratigraphy. The CZ is noted for carrying massive
deposits of chromite within the Lower (LG), Middle (MG) and Upper (UG) Group
chromitite layers and the worlds largest platinum bearing ore bodies the
Merensky Reef (MR) and UG2.
The Lower Critical Zone (LCZ) is an 800 m thick pyroxenitic cumulate with up to
seven chromitite layers (LG1-LG7). Nearly all of the LG layers contain minor
disseminated chromite.
The Upper Critical Zone (UCZ) of the RLS strikes east-west and contains both
the MR and UG2 which outcrop on the area. The MR intercepted in this part of
the western limb comprises a thick feldspathic pyroxenite unit of up to 14 m thick
and is considered to be relatively uneconomic. The UG2, which typically consists
of a single chromitite layer, has an average vertical thickness of 1.4 m. It is
composed of two sub-units called the C1 and C2 units, which are separated by a
1 cm to 8 cm wide pyroxenite parting. The higher grade mineralisation occurs at
the base of the C1 and the C2 units, however over the bulk of the lease area at
Barplats only the C1 unit is present.
Barplats mines the UG2 as it outcrops at surface, continuing down to depths in
excess of 2,000 m with an average dip of 17°. The host rocks that bound the UG2
are the overlying feldspathic pyroxenite and the underlying pegmatoidal
feldspathic pyroxenite with the norite below it. In Barplats’ Maroelabult section the
UG2 varies in thickness from 1.4 m to 1.5 m, whereas in the Zandfontein section,
it is thinner and varies from 1.3 m to 1.4 m thick. A generalised stratigraphic
column for the UG2 intercepted at Barplats is shown below in Figure 6.
The Project area is covered by black clay soil (turf), which varies in depth from
3.5 m to 30 m.
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Figure 6: A generalised Stratigraphic Column of the UG2 Chromitite Seam
7.3. Mineralisation
Common features of the UG2 are the undulating nature of the Bottom Reef
Contact (BRC), the presence of mafic/ultramafic pegmatites and potholes. The
chromatitic leader hangingwall layers are generally absent or have coalesced
with the main band to form a virtually homogenous chromitite. A very thin
chromitite stringer (approximately 1 mm thick) is seen to occur at varying heights
above the top of the chromitite in the immediate hanging wall.
The footwall is typically a Pegmatoidal Feldspathic Pyroxenite (PFP) but where
the BRC transgresses through the PFP the footwall is a norite. The Top Reef
Contact (TRC) is generally sharp and stable. The UG2 is predominantly impure
chromitite with interstitial silicate, comprising of pyroxene (bronzite) and feldspar
(anorthosite).
The UG2 is bottom and middle loaded with PGMs and the associated
disseminated sulphides are concentrated in the lower part of the reef (Figure 7).
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Figure 7: A Generalised Cross Section of the UG2 intercepted at CRM
The 3E PGEs and Au concentration of the UG2 at Barplats varies from 2.5 g/t to
6.6 g/t. The major PGMs are Laurite (Ru(Os,Ir)S2) and Platinum (Pt), Palladium
(Pd) Sulphide (Cooperite (Pt,Pd)S and Braggite (Pt,Pd,Ni)S). At Barplats, Pt
makes up 62.6% of the 3E PGEs and Pd 26.2%, Rhodium (Rh) 10.4% and Au
0.8%. The Pt to Pd ratio of the UG2 at Barplats is 2.38.
The UG2 is Pd and Rh enriched relative to the Merensky Reef. 9% of the PGMs
are associated with Chromite; 46% of the PGMs are associated with the silicates
and 45% of the PGMs are associated with the base metal sulphides. The base
metal sulphides that occur in the UG2 are the following, listed in decreasing order
of abundance Pyrrhotite (Fe2S2), Pentlandite (Ni,Fe)S2, Chalcopyrite (Fe,Cu)S2
and Pyrite (FeS2). The Cu content averages about 0.05% and Ni averages about
0.1%. The relative density of the UG2 in the western BIC ranges between
3.50 t/m3 and 3.90 t/m3; the average relative density is 3.85 t/m3. Potholes
commonly occur in the UG2 (pothole losses commonly vary from 10-20%) and
mafic and ultramafic pegmatites are also present.
At Barplats the 3E PGEs and Au content averages 4.29 g/t, at an average
thickness of 140 cm; this gives an average of 600 cmg/t.
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7.4. Structure
The UG2 is disrupted by major faulting forming a graben structure known as the
Brits Graben. The Brits Graben, is a prominent geological structure striking in a
south-east to north-west direction across the western limb of the BIC. The graben
and associated major faults result in Barplats mining area being split into three
sections, namely the Crocette section in the west, the Zandfontein and
Kareespruit section in the centre and the Maroelabult section in the east (Figure
8). The Zandfontein section has significant faulting with some of the faults having
differential throws caused by a scissors effect. The major graben-bounding faults
trend roughly NNW and dip steeply inward in the southern portion, but appear to
shallow and have smaller displacements in the northern portion. The UG2 reef
strikes roughly east-west and dips at approximately 15° to the north, outside of
the graben but strikes roughly SW-NE within the graben and the dips are steeper,
increasing to approximately 18° towards the north.
Figure 8: Location of Barplats Mining Area Against Major Faults
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In the Barplats lease area, the Brits Graben appears to have acted as a keystone
block during uplift of the Johannesburg Dome. The displacements on these faults
step up westwards, from the Kommandonek fault to the Bokfontein fault and
create the Krokodildrift and Zandfontein sections of the lease area. The eastern
boundary of the graben is less distinct and consists of a series of subparallel,
north-northwest striking, widely spaced, and steeply westward dipping faults (e.g.
Hartebeespoort fault, Zilkaatsnek fault and possibly others such as the De Kroon
fault and faults further to the east).
The graben is further complicated by a few NE-SW trending faults that appear to
cut older dykes and faults in places. The trend of Kareespruit fault is distinctly
different to most of the other graben bounding faults and does not appear to be
related to them, so it is unlikely to have evolved contemporaneously with the
graben. Strata within the graben are further cut by subsidiary, northwest striking
normal faults which generally have throws of less than 0.5 m. The larger
subsidiary faults divide the graben into compartments which form boundaries
between the blocks of UG2 ore. There are also subsidiary faults which were
subdivided into secondary faults (2 m to 50 m displacement) and tertiary faults
(5 cm to 2 m displacement).
Numerous dykes of mainly Pilanesberg age cut across the graben and some
Karoo age dykes also occur in the area. In places the dykes follow the major and
subsidiary fault planes, and in other places they appear to cut the graben without
following any pre-established structures. Large Pilanesburg dykes occur in the
Maroelabult sections. The other structures, such as the Kareespruit fault, are
oblique to most of the major structures and appear to cut the Pilanesberg dyke
set, suggesting that they are of a younger age.
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8. ZANDFONTEIN UG2 TSF
The tailings have been deposited in the TSF from 1980 until 2013, when the mine
went on Care and Maintenance. The material in the TSF was primarily derived
from the processing of UG2 Chromitite ore. The tailings deposited in the TSF,
originated as fines after milling and extracting the PGEs concentrates. Therefore
the Cr2O3, PGEs and Au mineralisation that is now being targeted in the tailings,
originates from within the UG2 chromitite seam itself. Some of the tailings were
later reprocessed at Barplats to extract a limited amount of the Cr2O3 (an
estimated at 1%-2% was processed) and PGEs (estimated at a grade of 0.2 g/t)
and then re-deposited in the new front compartment of the tailings dam
(Figure 9). The tailings also contain silicate material and minor amounts of base
sulphide minerals or their oxidized products.
The average Cr2O3 and FeO contents (derived from 246 tailings samples) for the
the Project are; 20.72% and 15.65% respectively. The average of Cr to Fe ratio
on the TSF in Domain 101 is 1.35 and in Domain 102 1.28. The chromium oxide
present in the tailings is in the form of chromite grains that have been liberated
during the crushing and milling of the chromitite ore. The Au is expected to be
present as very fine grained particles that were released after the oxidation of the
primary sulphide minerals. It is assumed that the major silicate minerals present
are pyroxene (enstatite/bronzite composition) and plagioclase feldspar
(anorthite); these occur with chromite, the second major constituent. The PGEs
are pre-dominantly associated with the silicate fraction and are expected to
consist of Fe-Pt alloys, and the PGMs that are associated with Pt-Pd sulphides
(cooperite and braggite) and Ru,Os,Ir sulphide (laurite) that were originally
interstitial to the chromite grains and also a very minor portion of small platinum
group minerals or alloys that are contained within the chromitite grains.
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Figure 9: TSF Domain 101 and Domain 102
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9. EXPLORATION
SRK was contracted by Barplats in early 2017 to do a Mineral Resource Estimate
based on a sampling campaign conducted by Barplats and the most recent
survey results, and to issue a Mineral Resource Statement in compliance with the
South African Code for the Reporting of Exploration Results, Mineral Resources
and Mineral Reserves 2007 Edition, as amended July 2009 (the SAMREC Code),
as well as Canadian listing compliant funder the National Instrument 43-101 for
the Project.
In October 2016 an exploration programme commenced to quantify the 3E PGEs,
Au and Cr2O3 resources in the TSF at the Barplats, this was completed in
December 2016. The drilling was done by contractors and supervised by
Barplats. A total of 44 holes were drilled in the TSF with a total of 246 primary
samples being taken and submitted to the ISO 17025 accredited Set Point
Laboratories for chemical analyses.
The detailed description regarding the drilling methodology, sample preparation,
sample analysis and data verification is contained in the “Mineral Resource
Estimate for the Barplats Zandfontein UG2 Tailings Storage Facility” Report
prepared by SRK.
9.1. Sound Mining Observations
Sound Mining received and reviewed the full dataset of 44 Auger drillholes and
corresponding tailing assays (246). The dataset was checked for incorrect collars,
overlapping samples and data gaps. No errors were found.
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10. DRILLING
A drilling programme for evaluation sampling comprising 44 auger drillholes,
(a total of 358.5 m) was undertaken in order to evaluate the 3E PGEs, Au and
Cr2O3 mineralisation for resource estimation purposes. All the auger drillholes
drilled were vertically inclined and collared with an azimuth of 0°. The holes were
drilled through the TSF and stopped in the soil or clay that occurs at the base of
the TSF.
However, there were a number of holes that intersected a hard impervious layer
that could not be drilled through and therefore were stopped short of the TSF
base.
10.1. Auger Drilling Methodology
The drilling was continually monitored by Barplats. The material in the TSF was
wet at the base, with the moisture content increasing with depth. The tailings
recovery was deemed to be more than acceptable (above 98%) with most holes
having achieving a 100% recovery.
The tailings material recovered from the auger drilling was homogenous and the
depths, type of material, grain size and colour were recorded for each sample
length of 1.5 m.
The holes were planned as close to a 200 m by 200 m grid as practical, to ensure
that the drilling plan sufficiently covered the TSF (Figure 10). The collars of the
auger holes were staked out before drilling commenced and then the positions
were resurveyed on completion of the drilling. The upper surface of the TSF was
surveyed using a local GPS base station for use in volume calculations. In
addition to these measurements, a more recent Lidar survey was completed by
Lombard Du Preez land surveyors and town planners.
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Figure 10: 2016 Exploration Drill Plan Showing the Auger Drillholes
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10.2. TSF Auger Hole Sampling Results
The holes in the TSF ranged in depth from 1.5 m to 15 m with an average length
of 8.15 m; a total of 358.5 m was drilled during the 2016 drilling programme. The
average grade of the length composited drillhole values for all of the TSF holes in
Domain 101, are the following; 3E PGEs 1.213 g/t, Au 0.008 g/t, Cr2O3 21.27%,
FeO 15.97% and Cr:Fe 1.35 and for Domain 102 they are the following; 3E PGEs
1.127 g/t, Au 0.006 g/t, Cr2O3 19.6%, FeO 15.19% and Cr:Fe 1.28. The results of
this drilling programme are incorporated in this Mineral Resource estimate.
10.2.1. Sound Mining Observations
The drilling density of 200 m by 200 m was sufficient to cover the full extent of the
TSF for the purposes of a Mineral Resource Estimation. Sound Mining believes
that the data collection methods used during the 2016 Exploration Auger Drilling
Programme are acceptable and conducted in accordance with best practice
requirements and the sampled data is considered to be representative for the use
in Mineral Resource estimation. Sound Mining agrees that the distribution of the
drillholes and the result received were able to demonstrate the low variability in
the grades in both Domain 101 and 102.
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11. SAMPLE PREPARATION, ANALYSES AND SECURITY
11.1. Sampling Procedure
The samples were removed by hand from in-between the auger spirals and the
spiral cleaned thoroughly in water and thereafter wiped down with a wet cloth
prior to each sample being collected. The tailings sample is collected from the
spiral into a rectangular stainless steel container, which is placed under the end
of the core barrel where the spiral is removed. A sample bag is placed on the bit
end of the rod to collect the sample when the inner spiral is removed, and when
the spiral is replaced this sample is added to the rest of the sample collected from
the spiral in the container. Both these containers are also wiped clean with a wet
cloth, before each sample is collected. Each one and a half meter of the hole was
sampled separately.
Barplats were responsible for the sampling and insertion of CRMs and duplicate
samples and preparing the samples for dispatch to the laboratory. There were
246 primary tailings samples taken at 1.5 m intervals and split into two fractions
using cone and quartering. The first sample was used by the laboratory for the
analysis and the second sample was retained for reference purposes. The auger
samples were bagged and sent in to Set Point in Isando, Johannesburg for
sample preparation and analysis.
Barplats supervised the transport of all the samples to their secure sample
storage facility at the old training centre to store the control samples. The
samples were then transported by Barplats to Set Point. Electronic assay request
lists in Excel format were sent by Barplats to Set Point. On delivery all the
samples are checked manually by Set Point against a printed copy of assay
request list. The Barplats sample ticket numbers are entered digitally into the Set
Point Laboratory Information Management System (LIMS) system.
Barplats implemented the necessary control throughout the sampling, chain of
custody, sample preparation and assay procedure and SRK and Sound Mining
are satisfied that it complies with internationally accepted practise.
11.2. Laboratory
Set Point is ISO 17025 accredited for Au, Pt, Pd and Rh analyses by Pb
collection fire assay pre-concentration followed by Inductively Coupled Plasma –
Optical Emission Spectrometry (ICP OES) finish, base metals by X Ray
Fluorescence (XRF) on pressed pellets, and gas pycnometer density
determination. Set Point is also accredited for XRF on fused discs to determine
the Cr2O3, FeO% in the samples.
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The analytical procedures followed entail:
11.2.1. Au, Pt, Pd Determination by Pd Collection ICP-OES
Au, Pt, Pd are collected by Lead (Pb) collection fire assay using Silver (Ag) as a
co-collector to facilitate easier handling of prills, as well as to minimise losses
during the cupellation process. Twenty five grams of sample are mixed with
200 g of fire assay flux and a measured amount of silver nitrate solution. The
mixture is loaded into a furnace and left for at least 55 minutes. The resulting melt
is poured into moulds and left to solidify. During cooling of the melt, a lead button
settles to the bottom of the mould and is separated from the slag. This button is
then cupelled for 60 minutes to remove the lead and a prill, containing the silver
added as a carrier, Au and the PGEs of interest, is left. This prill is digested using
Hydrochloric and Nitric acid and made up to a 5 ml volume. The resulting
solutions are analysed for Au, Pt, and Pd by ICP-OES.
Rh is collected by lead fire assay using Pd as a co-collector to facilitate easier
handling of the prills, as well as to minimise losses during the cupellation process.
Palladium solution is added to each crucible mixture. After cooling, the lead
button is removed, cleaned of adhering slag. The lead buttons are placed into
pre-heated cupels. The resulting oxidised lead is absorbed into the cupel and the
carrier Pd and Rh remains behind on the surface of the cupel in the form of a prill.
This prill is digested using Hydrochloric and Nitric acid made up to a 5 ml volume.
The resulting solutions are analysed for Rh, by ICP-OES.
11.2.2. Determination of Major Elements by Fused Disc XRF
All the samples from the holes drilled in the TSF were assayed by Set Point, by
XRF for the percentage Cr2O3 and FeO. XRF analysis was done on the primary
samples taken from the 44 drillholes. Set Point did XRF analysis to determine the
percentage of Cr2O3, and FeO. The XRF analysis is done on a fused disc. An
ignited sample mass of 1.1 g is fused with 9.9 g flux (lithium-tetra-borate) and
fused in a clean platinum dish. The fusion melt is poured into a clean platinum
mould and allowed to solidify. The solidified disc is analysed by calibrated XRF
spectrometer using the program provided for Cr2O3 and FeO by the manufacturer
of the equipment.
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11.2.3. Relative Density Measurements
Helium Gas pycnometry is the analytical technique used at Set Point to measure
RD on soils or pulp (already milled) material. The sample is introduced into an
automated pre-calibrated helium pycnometer in a built-for-purpose sample cup.
The analysis is started and using pre-set analysis conditions, the density/relative
density results are automatically calculated. 10 cm3 cups are used for the
pycnometer, so the mass taken is generally around 7g to 10 g.
11.3. Dry Bulk Density Measurements
Samples for bulk density measurements were taken by SRK by collecting fixed
volumes of tailings and submitting the samples to Set Point for mass
measurements and the calculation of the moisture content contained in the
dumps. SRK determined the dry bulk density of special samples taken from the
tailings in the TSF in order to calculate the tonnage of the resource. The
measurements were taken at 21 different localities spread evenly across the
upper surface of both compartments of the TSF and next to auger exploration
holes that were drilled during the current programme. SRK managed to determine
the dry bulk density at depths from 0m to 1.5 m.
The average moisture content determined for the entire TSF was 12.4%, which
corresponds with a weighted average bulk dry density for both Domain 101 and
Domain 102 of approximately 1.659.
This corresponds well with the actual RD values of 1.705 obtained for the bulk dry
density of sample ZK3 that had a 12.3% moisture content and 1.541 for sample
ZK32 that had an 11.8% moisture content (Table 3).
Domain 101 of the TSF, has an average moisture content of 11.36% and Domain
102, 13.72%. If one considers a fixed volume of tailings; the moisture content has
to be accounted for and removed by drying, before the dry mass can be
determined. SRK determined the two formulas for Domain 101 and Domain 102
for the linear regression lines which correlate the moisture content with dry bulk
density, using the 21 measurements taken by SRK on the TSF, in Domain 101
and Domain 102).
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Table 3: SRK fixed Volume Dry Bulk Density Measurements for Domain 101 and
102
Sample No. Moisture
% Wet Bulk Density
(t/m3)
Dry Bulk Density (t/m
3)
Domain 101 (Old)
ZK10 11.30 1.910 1.694
ZK12 6.10 2.063 1.937
ZK16 8.30 2.211 2.027
ZK18 4.10 2.372 2.274
ZK20 9.00 2.285 2.079
ZK24 10.70 1.723 1.540
ZK28 22.70 1.641 1.269
ZK29 9.10 2.046 1.860
ZK32 11.80 1.746 1.541
ZK34 15.20 1.926 1.633
ZK27 8.40 2.145 1.966
Average 13.35 2.372 1.709
Domain 102 (New)
ZK1 11.70 2.086 1.842
ZK2 8.50 1.907 1.745
ZK3 12.31 1.945 1.705
ZK5 23.17 1.951 1.499
ZK7 16.06 1.920 1.612
ZK9 11.25 1.846 1.638
ZK19 11.01 1.896 1.687
ZK37 16.20 1.918 1.608
ZK40 23.80 1.906 1.453
ZK43 29.70 1.817 1.278
Average 16.36 1.919 1.607
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11.4. Quality Assurance and Quality Control
11.4.1. Certified Reference Material
Barplats inserted aliquots of a selected independent Certified Reference Material,
(AMIS 0321) which was repeatedly analysed and the results of their analysis are
presented in Table 4 below.
Table 4: AMIS 0321 Certification
Element
Certified Value Measured Value No of
Samples
Within 1 SD Outside 2 SD
Mean Std Dev Mean Std Dev No of
Samples %
No of Samples
%
Pt 0.27 0.015 0.268 0.015 37 31 84 0 0
Pd 0.48 0.03 0.469 0.018 37 31 84 0 0
Au 0.054 0.007 0.059 0.011 37 24 64 10 27
FeO 18.17 0.105 18.001 0.066 5 14 6 17 35
Cr2O3 17.31 0.14 17.354 0.11 37 35 89 1 3
Graphs produced by Sound Mining of AMIS 0321 are presented in Graph 4 to
Graph 8. The reported values received back from the laboratory are similar to the
certified values for AMIS 0321; indicating that there is no under or over reporting
of values for Pt, Pd and Cr2O3. Poorer results were obtained for Au where the
measured mean is slightly higher than the certified mean.
Graph 4: AMIS 0321 Certified Reference Material Results - Cr2O3
17
17.1
17.2
17.3
17.4
17.5
17.6
17.7
17.8
1 6 11 16 21 26 31 36
Gra
de (
%)
Analysis Sequence
Cr-2sd Cr-1sd Cr+1sd Cr+2sd CV Cr2O3
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Graph 5: AMIS 0321 Certified Reference Material Results - Pt
Graph 6: AMIS 0321 Certified Reference Material Results - Pd
0.22
0.23
0.24
0.25
0.26
0.27
0.28
0.29
0.3
0.31
1 6 11 16 21 26 31 36
Gra
de (
g/t
)
Analysis Sequence
Pt-2sd Pt-1sd Pt+1sd Pt+2sd CV Pt
`
0.4
0.42
0.44
0.46
0.48
0.5
0.52
0.54
0.56
1 6 11 16 21 26 31 36
Gra
de (
g/t
)
Analysis Sequence
Pd-2sd Pd-1sd Pd+1sd Pd+2sd CV Pd
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Graph 7: AMIS 0321 Certified Reference Material Results - Au
Graph 8: AMIS 0321 Certified Reference Material Results - Rh
11.4.2. Blanks
A commercially available blank material (AMIS 0025) was submitted to the
laboratory as an independent blank. The material is coarse pyroxenite and was
subjected to the same milling as the rest of the tailing samples. This blank
material is certified only for Pt, Pd, and Au, and may therefore not be regarded as
a blank for Cr2O3 and FeO. No significant Pt, Pd, or Au contamination was
detected in the 39 aliquots analysed.
0.03
0.04
0.05
0.06
0.07
0.08
0.09
0.1
1 6 11 16 21 26 31 36
Gra
de (
g/t
)
Analysis Sequence
Au-2sd Au-1sd Au+1sd Au+2sd CV Au
0.04
0.05
0.06
0.07
0.08
0.09
0.1
0.11
1 6 11 16 21 26 31 36
Gra
de (
g/t
)
Analysis Sequence
Rh-2sd Rh+2sd CV Rh
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11.4.3. Field Duplicates
Duplicates were derived from the cone and quartered the tailings samples and
were inserted back as independent field duplicates at the end of each hole. The
similarity in the assay results obtained for the original samples, and the duplicate
samples split off from them, indicate that the tailings composition is very
homogenous. The results of Cr2O3, Pt, Pd, Rh, and FeO, show a high degree of
correlation (correlation coefficient >0.9 and slope of regression line close to 1).
The results obtained for Au indicate an abundance close to or less than the
analytical detection limit and as result, the duplicate analyses cannot be regarded
as meaningful. This is summarised in Table 5.
Table 5: Summary Statistics of independent field duplicates
Element No of
Samples Correlation Coefficient
Slope RMSE
(%) T-test Results
Pt 13 0.994 1.007 3.12 P > , no bias
Pd 13 0.991 1.053 4.16 P > , no bias
Rh 13 0.962 1.034 6.65 P > , no bias
Cr2O3 13 0.993 0.993 3.25 P > , no bias
FeO 12 0.979 0.997 5.03 P > , no bias
11.5. Sound Mining Observations
Sound Mining has verified the results of the independent QAQC programme
implemented by SRK. The following observations were made:
No significant evidence of PGEs contamination was detected during
analysis and during crushing and milling, this was evident from the results
obtained for the blanks inserted;
Set Point Laboratory achieves consistent reporting of the independent
CRMs, and the in-house analyses of different CRMs, these analyses also
indicate a satisfactory level of accuracy.
Samples analysed for Cr2O3 reflect a high degree of accuracy and
precision;
A satisfactory degree of precision has been demonstrated by the
independent QAQC programme.
The results could therefore be used with confidence in Mineral Resource
estimation for Cr2O3, Pt and Pd.
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12. DATA VERIFICATION
Sound Mining used the following methodology to review and verify the work
conducted by SRK:
The auger drillhole collar positions for the tailings were plotted and
checked against SRKs study.
Sound Mining reviewed the drilling and sampling procedures as discussed
by SRK.
Data validation was done using drillhole database checks were done to
identify errors in missing sample and overlapping intervals.
The drillhole database was recreated and visual inspections of the block
model were done on cross section at regular intervals to spot check the
corresponding grades of the drillhole database against the block model.
The QAQC results of the independent programme were verified against
SRKs analysis.
12.1. Sound Mining Observations
Sound Mining received and reviewed the full dataset of 44 Auger drillholes and
corresponding tailing assays (246). The data was imported using Micromine©
2016.1 software and validated using an in-built validation function. No errors were
identified in the dataset. The dataset was used to recreate a 3D drillhole
database and was found to be highly comparable to SRK.
The drilling density of 200 m by 200 m was sufficient to cover the full extent of the
TSF. Sound Mining confirms that the data collection methods used during the
2016 Exploration Programme are acceptable and conducted in accordance with
best practice requirements. The distribution of the drillholes and the result
received were able to demonstrate the low variability in the grades in both
Domain 101 and 102.
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13. MINERAL PROCESSING AND METALLURGICAL TESTING
Chrome recovery from the TSF using spirals will be a function of particle size and
density. Coarse heavier silica particles will report to the concentrate while fine
liberated chrome particles will be washed in the spiral concentrator as fines and
report to the tailings stream returning to the TSF. Different yields and recoveries
of chrome and metallurgical grade chrome product will be achieved depending on
the Cr2O3 grade and particle size distribution of the solids settled on the TSF.
Various technical studies and test work were therefore undertaken to determine
the most suitable process route for the Project in terms of:
A variation in feed grade;
The likely yield;
The overall recovery;
The grade of the final product; and,
Changes to the spiral configuration.
PC Metallurgical Equipment cc, trading as MetQuip (pty) Ltd (MetQuip) in South
Africa, have extensive experience in the processing of chrome and were
accordingly commissioned to assist CRM personnel with test work using a pilot
plant installed at the CRM concentrator adjacent to the existing CRP. The spiral
plant was operated by CRM staff under the supervision of MetQuip.
Amongst other existing installations, MetQuip has recently completed the design
and construction of a similar CRP elsewhere in the Limpopo Province for a
slightly lower throughput. It is performing to design specifications.
13.1. Pilot Plant Flowsheet Description
TSF material was pumped via a drive pump to a de-sliming cluster of cyclones.
The flow rate to the cluster was controlled to give a fixed inlet pressure, and the
discharge density was maintained at 1.3 kg/ℓ by introducing water. If the density
fell to below 1.3 kg/ℓ material was added to the sump. A close circuit was
maintained and sampling of the feed, tails and product occurred at the same time.
All samples were assayed for Cr2O3 and SiO2 by MetChem Laboratory, a SANS
accredited laboratory.
The selected pilot plant flowsheet is presented in Figure 11.
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Figure 11: Pilot Plant Flowsheet
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13.2. Sample Selection and Compositing
A representative bulk sample was composited from Domain 101 and 102 on the
TSF.
A total of six sample areas were prepared for the test work. These were selected
from coarse (ODC) and fine (ODF) material on the ‘Old Dam’ and coarse (NDC)
and fine (NDF) material from the ‘New Dam’ of the TSF (Figure 12).
Figure 12: Sampling Point on TSF
13.3. Test Work Results
A metallurgical grade chrome in excess of 40% Cr2O3 was produced. The chrome
recovery exceeded 30% and a yield of more than 14% was achieved.
Table 6 presents the results from the test work.
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Table 6: Pilot Plant Test Work Results
Type Spirals Feed
Grade (%)
Product Grade
(%)
Tail Grade
(%)
Chrome Recovery
(%)
Product Yield (%)
Pilot All New 17.14 40.10 13.47 32.24 13.78
Pilot All New 18.96 39.90 12.98 46.75 22.21
Pilot All New 17.92 39.80 13.44 37.75 17.00
Pilot All New 15.49 39.40 13.78 16.98 6.67
Pilot Old Cleaners 17.10 39.00 14.30 25.85 11.34
Pilot Old Cleaners 18.90 38.50 15.60 29.35 14.41
Pilot Old Cleaners 18.10 39.00 16.90 11.70 5.43
Pilot Old Cleaners 16.00 38.40 15.10 9.27 3.86
Laboratory MetQuip 28.20 40.14 16.50 70.45 49.49
Laboratory MetQuip 19.59 40.99 15.92 30.63 14.64
Laboratory MetQuip 23.58 42.42 14.86 56.92 31.64
Laboratory MetQuip 18.64 30.87 15.87 30.58 18.47
Pilot All New 19.23 39.59 16.29 25.98 12.62
Pilot All New 18.77 36.76 16.23 24.23 12.37
Pilot All New 20.25 39.14 15.52 38.71 20.03
Pilot All New 19.84 39.06 15.41 36.88 18.73
Pilot All New 26.37 41.97 16.05 63.37 39.81
Pilot All New 26.37 40.00 16.05 65.36 43.09
Pilot Xtra Roughers 42.80 17.17 62.92 40.50 46.21
Pilot Xtra Roughers 27.55 40.00 17.17 66.01 45.47
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The results from the test work were plotted and found to correlate as shown in
Graph 9 .
Graph 9: Calculation Production Yield- Regression Curve (Yield vs Feed Grade)
There appears to be a good correlation between feed grade and yield. The
correlation improves with higher grade coarser material correlation. Relatively
lower yields were recorded for fine material from New Dam. MetQuip proposed a
seven stage process after having completed the test work.
13.4. Sound Mining Observations
A large mass of tailings material was tested in the pilot plant. These results when
considered together with the information from the previous CRP operations,
which produced metallurgical grade chrome from the TSF, provide comfort in that
the predicted yield is likely to be achieved at the head grade associated with a
Cut-off of 20.5% Cr2O3.
It is Sound Mining’s experience from exposure to other similar chrome
retreatment operations that typical yields of between 12% and15% metallurgical
grade chrome is being achieved from a head grade of approximately 20% Cr2O3.
While Graph 9 illustrates a correlation between head grade and yield,
Sound Mining’s experience from similar operations reveal that this relationship is
generally not linear and that the yield usually reduces dramatically as the feed
grades drop below about 20%.
y = 3.3176x - 0.4685 R² = 0.9404
0%
10%
20%
30%
40%
50%
60%
0% 5% 10% 15% 20% 25% 30%
Yie
ld
Feed Grade
Calc Prod Yield
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14. MINERAL RESOURCE ESTIMATES
14.1. Resource Estimation Process
The mineral resource estimation work was completed by Mr A. S. Page, Principal
Geologist Pr. Sci. Nat South Africa Reg. No 400022/07, who qualifies as a
“Competent Person” in terms of the NI 43-101. The effective date of the Mineral
Resource Statement is the 1st of August 2017.
The database used to estimate the TSF’s PGEs, Au and Cr2O3 Mineral
Resources was compiled by Barplats and validated by SRK and reviewed by
Sound Mining.
The procedures and methodology used by SRK to generate the Mineral
Resource Estimation were verified as follows:
SRK constructed wireframes for the boundaries of the PGEs, Au and Cr2O3
mineralisation.
Definition of the tailings volumes were confirmed by Sound Mining.
Data conditioning was applied to the relevant dataset (compositing and
capping analysis) for geostatistical analysis and variography, this analysis was
reviewed by Sound Mining.
The resultant block model and grade interpolation was reviewed by Sound
Mining.
The Mineral Resource Estimate classification and validation was confirmed by
Sound mining.
SRK assessed the “reasonable prospects for economic extraction” and these
assumptions were reviewed by Sound Mining.
In addition to the drilling database, the contracted survey company, Neutrico
supplied SRK with contours determined from the surveying of the upper surface
of the TSF. Barplats has supplied this wireframe surface to Sound Mining.
14.1.1. Construction of Wireframe Models
The area in which the PGEs and Cr2O3 tailings occur were differentiated and the
solid wireframe defined, using ore body volume modelling from the actual survey
information supplied by Neutrico. The volume between the upper surface as
accurately measured by SRM incorporating the collars of all the auger holes, and
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the base of the TSF as modelled by SRK from the actual end depths of all 44 of
the exploration auger holes drilled; was determined by SRK.
14.1.1.1. Tailings Volumes
Domain 101 and Domain 102 of the TSF were modelled independently and
therefore geostatistical analysis was undertaken independently for the two
Domains. The statistical analysis showed that both Domains of the TSF
demonstrate normal distributions for 3E PGEs, Au and Cr2O3. The 3E PGEs, Au
and Cr2O3 grade distributions of Domain 101 and Domain 102 of the TSF are
shown in Table 7 and Table 8.
Table 7: PGEs, Au and Cr2O3 Grade Frequency Distribution for Domain 101
Domain 101
No. Samples
Mean Grade
Min Grade
Max Grade
Variance Std Dev CoV 95
th
Percentile
3E PGEs 129 1.263 0.520 2.030 0.075 0.273 0.216 1.740
Pt 129 0.776 0.270 1.240 0.030 0.173 0.223 1.070
Pd 129 0.318 0.130 0.540 0.005 0.071 0.224 0.460
Rh 129 0.168 0.070 0.300 0.002 0.044 0.260 0.260
Au 129 0.008 0.000 0.070 0.000062 0.008 0.950 0.020
Cr2O3 129 21.69 6.380 30.60 21.089 4.592 0.212 28.300
FeO 129 16.20 5.800 21.30 8.101 2.846 0.176 20.000 The PGE, Au and Cr2O3 grade value are weighted by sample length
The FeO value are only indicative
CoV: Coefficient of Variation
Table 8: PGEs, Au and Cr2O3 Grade Frequency Distribution of Domain 102
Domain 102
No. Samples
Mean Grade
Min Grade
Max Grade
Variance Std Dev CoV 95
th
Percentile
3E PGEs 143 1.167 0.390 2.050 0.046 0.213 0.183 1.470
Pt 143 0.705 0.240 1.210 0.017 0.131 0.186 0.890
Pd 143 0.293 0.090 0.520 0.003 0.052 0.179 0.370
Rh 143 0.169 0.060 0.340 0.001 0.036 0.215 0.230
Au 143 0.006 0.005 0.020 0.000007 0.003 0.425 0.010
Cr2O3 143 19.71 6.67 28.00 10.754 3.279 0.193 24.80
FeO 143 15.23 7.50 19.7 3.217 1.794 0.118 18.30 The PGEs, Au and Cr2O3 grade value are weighted by sample length
The FeO value are only indicative
CoV: Coefficient of Variation
The primary mineralised wireframe as determined by SRK together with the
exploration auger drillholes for the TSF is shown in Figure 13 and Figure 14. The
volume between the upper surface and base of the TSF (Derived from the end of
depth of the auger drillholes) were reviewed by Sound Mining and found to be an
accurate representation of the data.
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Figure 13: TSF Mineralised Wireframe as Determined by SRK
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Figure 14: TSF Mineralised Wireframe (Plan View)
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14.1.1.2. Variography
The experimental semi-variograms and the final semi-variogram models for both
Domains 101 and 102 were calculated, examined and modelled in CAE Studio.
For all the semi-variograms a lag angle tolerance of 90°. Directional semi-
variograms and down-hole variograms were examined and modelled. The semi-
variograms for Domains 101 and 102 on the 1.5 m sample length data showed
fairly good structure in all cases. The experimental semi-variograms were
oriented such that the X and Y axes approximated the long and short axis of the
tailings deposit in both Domain 101 and Domain 102.
The volumes in Domain 101 show low nuggets and give ranges of approximately
6 m for structures in the Z (down-hole) direction while the volumes in Domain 102
show low nuggets and give ranges of approximately 8 m for structures in the Z
(down-hole) direction. However, the layered method was used and the vertical
spacing of both Domains was set at 1.5 m. The semi-variograms stabilise at the
population variance at ranges of greater than 300 m on strike and 200 m on dip in
the TSF. The directional variograms for Domain 101 and Domain 102 (Table 9
and Table 10) show the two major directions of continuity of the mineralisation.
The 146.5° east of north direction is along the strike direction (longer range) of
the TSF compartments and the 56.5° direction is in the dip direction (shorter
range).
Table 9: Modelled Semi-Variogram Parameters for the Tailing in Domain 101
Domain 101
Element
Rotation (CAE Studio)
Structure1
Nugget C(0)
Range (m)
Sill (C1) Total Sill Z Y X Strike Dip
Down Hole
3E PGEs 56.5 0 0 0.034 502 269 2.25 0.049 0.083
Pt 56.5 0 0 0.014 460 240 2.25 0.22 0.036
Pd 56.5 0 0 0.00197 591 280 2.25 0.00370 0.00567
Rh 34 0 0 0.00094 508 205 2.25 0.00111 0.00205
Au 34 0 0 0.0000680 531 177 2.25 0.00019 0.0009
Cr2O3 56.5 0 0 5.659 524 257 2.25 13.669 19.328
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Table 10: Modelled Semi-Variogram Parameters for the Tailing in Domain 102
Domain 102
Element
Rotation (CAE Studio)
Structure1
Nugget C(0)
Range (m)
Sill (C1) Total Sill Z Y X Strike Dip
Down Hole
3E PGEs 56.5 0 0 0.041 298 350 2.25 0.013 0.054
Pt 56.5 0 0 0.015 309 199 2.25 0.006 0.021
Pd 56.5 0 0 0.00260 207 310 2.25 0.00053 0.00313
Rh 79 0 0 0.00106 204 161 2.25 0.00048 0.00154
Au 79 0 0 0.0000036 630 144 2.25 0.0000026 0.0000062
Cr2O3 34 0 0 6.525 243 200 2.25 6.516 13.041
14.1.2. Sound Mining Observation
The block model constructed by SRK was reviewed by Sound Mining and
confirmed to be acceptable for the purpose of a Mineral Resource Estimation.
The block model definition and extents were analyses and no errors were
identified.
There were sufficient samples to be able to characterise the grade population of
Domain 101 and sufficient samples (129) for Domain 102 to adequately by
creating semi-variograms.
14.2. Mineral Resource Statement
Ordinary Kriging (OK) was used as the primary estimation method for grade
interpolation into the block model. The OK estimate was constrained to the
outline of the original compartments of Domains 101 and 102 of the TSF as
defined by the individual wireframe solids.
The Mineral Resource classification for the TSF is stated in Table 11 below.
Figure 15 shows the Mineral Resource Classification for the TSF
Table 11: SRK Mineral Resource Statement for the TSF as at 1st August 2017
Classification Tonnage
(Mt)
3E PGEs (g/t)
Pt (g/t)
Pd (g/t)
Rh (g/t)
Au (g/t)
Cr2O3 (%)
3E PGEs (kOz)
Au (kOz)
Cr2O3 (Mt)
Measured 12.49 1.22 0.75 0.31 0.17 0.01 20.85 492.00 3.18 2.60
Indicated 1.19 1.14 0.69 0.29 0.17 0.01 19.31 430.52 0.22 0.20
Total 13.68 1.22 0.74 0.31 0.17 0.01 20.72 535.52 3.40 2.84
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Figure 15: SRK Mineral Resource Classification for the TSF
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The total Resource for the TSF is 13.68 Mt containing 535,520 oz of 3E PGEs at
an average grade of 1.218 g/t and 3 404 oz of Au at an average grade of
0.008 g/t and 2.834 Mt of Cr2O3 at an average grade of 20.72%.
The Resource Estimate for the TSF has a high level of confidence, with 91.29%
of the estimate falling into the Measured classification category and 8.71% falling
into the Indicated classification category.
The 3E PGEs, Au and Cr2O3 grade distributions estimated into the block model is
shown for the TSF in Figure 16 to Figure 18. Sound Mining conducted visual
inspections by superimposing the drillhole grades on the grade model and it was
found that it was highly comparable with the block model values (Figure 19 and
Figure 20).
The “reasonable prospects for economic extraction” of the TSF provided by SRK
were reviewed and deemed acceptable by Sound Mining.
14.2.1. Sound Mining Comments
Sound Mining agrees with SRK that the current drilling information is sufficiently
reliable to interpret with confidence the boundaries of the tailings of Domain 101
and Domain 102 (this includes the limits of the contained PGEs, Au and Cr2O3
resource) and that the assay data is sufficiently reliable to support Mineral
Resource Estimate dated 1st August 2017.
SRK followed the drilling and sampling procedures in accordance with best
practices and which was verified by an independent QAQC programme.
Sound Mining was able to recreate and validated the drillhole database used by
SRK in support of the Mineral Resource Estimate. The Mineral Resource
Statement prepared and presented in this Technical Report, is in compliance with
the National Instrument 43-101 Standards of Disclosure for Mineral Projects.
Sound Mining considers the overall estimates are consistent with the source data
and sufficiently represent the grade distribution seen with in the TSF. The
geostatistical analysis returned sufficiently robust results in the tailings volumes in
the TSF to allow for a kriged estimation to be undertaken for Domain 101 and
Domain 102 of the TSF.
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Figure 16: 3E PGEs Grade Distribution of the TSF
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Figure 17: Au Grade Distribution of the TSF
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Figure 18: Cr2O3 Grade Distribution of the TSF
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Figure 19: 3E PGEs Grade Distribution (Cross Section)
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Figure 20: Cr2O3 Grade Distribution (Cross Section)
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15. MINERAL RESERVE ESTIMATE
The Mineral Reserves have been prepared in accordance with the classification
criteria of the Canadian Securities Administrators' National Instrument 43-101 –
Standards of Disclosure for Mineral Projects (NI 43-101). The Mineral Reserve
calculation was completed under the supervision of Vaughn Duke, Pr. Eng of
Sound Mining, who is a Qualified Person as defined under NI 43-101.
In order to declare a mineral reserve it is necessary to develop a plan with
revenue and cost forecasts to confirm that the operation will be viable. Suitable
software was used in conjunction with the latest geological block model of the
TSF to generate a mining plan with operational sequencing and a production
schedule (i.e. a revenue forecast). All of the various assumptions and estimates
that were applied as part of the process are presented in Table 15, with the more
important being highlighted below:
A cut-off grade of 20.5%, based on test work and economic modelling, was
applied.
A mining recovery of 95% was applied (i.e. 3% planned losses and 2%
unplanned losses). These were determined from previous performance
observations and measurements.
A processing recovery and yield based on the results of pilot test work was
applied (Graph 9).
A processing capacity of 240 ktpm based on the designed CRP capacity
was targeted.
A product price, based on benchmarked metrics (Section 19), was used.
The mine design and processing capacity informed the capital forecast and
operating cost estimates, which were derived as part of the FS performed by
Barplats.
15.1. Mineral Reserve Tabulation
Discounted financial modelling of the forecast cash flows, which have taken into
account all of the modifying factors, demonstrates that a 40% chrome
concentrate can be economically produced over a mine life of approximately 33
months and accordingly a Mineral Reserve Estimate for the TSF at CRM is
presented in Table 12 and illustrated in Figure 21.
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Table 12: Mineral Reserve Estimation as at 1 September 2017
Category Quantity
(Mt) Grade
(%) Cr2O3 Content
(Mt) Cr2O3
Proved Mineral Reserve 6.25 22.42 1.40
Probable Mineral Reserve 0.18 20.28 0.04
Total Mineral Reserve 6.42 22.36 1.44
Notes to Table 12
The cut-off grade of 20.5% results in a Mineral reserve of 6.42 Mt from the total Mineral
resource of 13.68 Mt;
The Mineral Reserves constitute the feed to the CRP over 33 months and are stated as
at 1 September, 2017;
The Mineral Reserves are stated at a price of ZAR 870.79/t for 40% chrome concentrate
FOM;
Although stated separately, the mineral resources are inclusive of mineral reserves;
There are no inferred mineral resources included in the mineral resource statement, nor
do they play a part in the mineral reserve determination;
The PGEs are excluded in the mineral reserve estimate as they are not being recovered
as part of the Project;
Grade measurements reported as a percent (%) rounded to two decimal places, and
quantity measurements reported in metric units (Mt) rounded to two decimal place;
The FS is to the prescribed level of accuracy. The capital and operating costs are
supported by quotations and zero based costing techniques; and
The Mineral Reserve estimates contained herein may be subject to legal, political,
environmental or other risks that could materially affect the potential development of such
Mineral Reserves.
Mineral resources that are not included within the Mineral Reserves do not have
demonstrated economic viability.
The Mineral Reserve estimates are for Barplats's entire interest.
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Figure 21 : Plan View of TSF showing Reserved Categories
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15.2. Sound Mining Observations
The overall operation uses tried and tested technology that occurs elsewhere in
South Africa. As such, the levels of technical uncertainty are considered to be
low. However, a cut-off grade of 20.5% has been used to ensure an acceptable
yield. This in turn, has had the effect of the Project only planning to feed 6.42 Mt
of the overall mineral resource of 13.68Mt to the CRP. The forecast production
lasts for 33 months but payback is only achieved in month 25, places the Project
at risk to variations in the price (Figure 43).
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16. MINING METHOD
16.1. Introduction
This section of the ITR covers the mining and deposition components of the
production process. It also considers the environmental management implications
of mining the TSF.
16.2. Mining
Barplats employees worked with Fraser Alexander to:
confirm an overarching depletion strategy;
determine an appropriate mining methodology;
agree on the mining operations; and
complete the planning and cost estimates for the FS.
16.2.1. Overarching Depletion Strategy
Barplats’ preference is not to establish a new TSF and so the strategy is for the
tailings from the plant to be placed back onto the footprint of the existing TSF
while it is being exploited. The TSF has been divided into six areas (Figure 22) as
part of a strategy to exploit the total volume of tailings material.
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Figure 22 : Proposed Mining Area for TSF
The FS, however conservatively considers only half of this volume (i.e.6.42 Mt). A
cut-off grade of 20.5% was determined, rendering the areas marked in white in
Figure 23, as uneconomical.
Only mining areas 2, 3A, 3B and 3C will be targeted to excavate the 6.42 Mt and
achieve optimal yield of the Chrome from the TSF. Areas 1A and 1B contains
chrome with an average grade below the 20.5% cut-off.
The un-economical material in area A (Figure 23) will be mined from the south-
western corner and dumped onto the north-eastern uneconomical area (Area B in
Figure 23). The economical areas form Area 2 (Figure 22) will be deposited on
top of the economic area 1B in Figure 22 to create space for the re-deposition of
tailings from area 3A before the start of processing operations. Cognisance will
be taken of the size of the material for the purpose of re-mining. Area 2 will then
be prepared with the correct infrastructure for re-deposition. It will have enough
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space to accommodate the total volume of Area 3A and some of Area 3B, if
needed.
Hydraulic mining and Mechanical loading of material on the north-western section
(Area 3A and 3B) will start simultaneously and follow the sequence shown in
Figure 22. The associated tailings from the plant following processing will be
re-deposited using the cyclone method into the newly prepared Area 2
(Figure 23).
Figure 23: Grade plot Cr2O3
Work will start on preparing Area 3A and 3B to facilitate further re-deposition
capacity as soon as sufficient space becomes available. Tailings will continue to
be deposited in Area 2 (i.e. to starter wall level) until construction of the wall in
Area 3A and 3B is completed.
Area 3C and the high grade area in Area 1 will be targeted last with the tailings
from these areas deposited back into Area 3A and 3B.
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Figure 24 Shows mining sequence. All the area in dark blue is designated to be
mechanically mined at 120 ktpm (203 tph) and all the other areas are to be mined
hydraulically at 120 ktpm.
Mechanical loading is necessary in the coarse area of the TSF where material is
chemically bonded in layers, which is not able to be hydraulically broken down to
the minus 3mm fraction, which is the maximum plant feed size.
Figure 24: Mining sequence
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Figure 25 Presents contours of the coarseness of the material (i.e. >75µm)
Figure 25: contours of the coarseness (µm)
Table 13 presents the sequence of activities and quantities involved.
Table 13: Depletion Summary
Phase Activity Quantities / Infrastructure
1 Move Area 2 to Area 1A and 1B 1,783,909 m³
1 Pre-construction works Starter walls, penstock and drains
1 Time estimation 7 months
1 Pre-construction works in Area 3A Construct during Phase 1
2 Hydraulically mine and clean Area 3A 1,089,733 m³
2 Time estimation 7 months
2 Pre-construction works in Area 3B Construct during Phase 2
3 Hydraulically mine and clean Area 3B 902,710 m³
3 Time estimation 5 months
3 Pre-construction works in Area 3C and 1A Construct during Phase 3
4 Start hydraulic mining in Area 3C and 1A 1,578,534 m³
4 Time estimation 11 months
Total Volume In situ 4,474,438 m³
Total Volume Excavated (5% Loss) 4,250,716 m³
Total Quantity to Plant 6,435,348 t
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16.2.2. Mining Methodology
Modelling was used to determine the most suitable technique for mining the TSF.
The methodology involves continual and simultaneous cleaning, construction,
hydraulic mining and deposition activities.
Certain areas need to be excavated using mechanised equipment (i.e. coarser
harder material) while other sections of the TSF can be mined hydraulically (i.e.
finer softer material).
16.2.2.1. Mechanised Operations
Coarse material will be excavated, using a dry mechanised mining method. Four
tests where done on the coarse fraction area of the TSF to determine both the
mining rate as well as the size distribution of the material post mining using a
reclaiming unit (Photograph 2) with picks on a rotating drum.
Photograph 2: Mechanical Cutting Machine
It was found that on a closed setting, with two passes, a mining rate of 344 tph
can be maintained with a 50% passing the minus 3 mm fraction (Figure 26).
Tests were conducted using a 7 mm screen.
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Figure 26: Schematic Showing Mechanical Loader Settings
The settings used on the mechanical loader and number of passes done with
their respective results are shown in Table 14.
Table 14: Mechanical Loader Cutting Depth Settings
No. Configuration Pass Depth (mm)
Distance (m)
Time (mins)
Mining Rate (tph)
% + 28mm
% +7-28mm
% -7mm
5 Front End Loader
(FEL) 38 28 34
4 Open Setting 1 350 20 50 1905 4 36 59
3 Closed Setting 2 300 10 42 609 13 51 36
2 Closed Setting 1 250 20 90 756 1 34 64
1 Closed Setting 2 250 10 54 344 1 38 61
The mechanically mined material will be trucked to a scalping screen, which will
dry screen the vegetation from the material, after which it will pass through a
roller crusher that will ensure that all the material is screened to minus 28 mm
(Figure 27).
The material will be pulped and pumped with a jet pump at a planned rate of
203 tph, to the central pumping station with a 3mm wet screen where it will be
mixed with the hydraulically mined material.
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At the central pumping station, the oversize material (+3 mm), from the test work,
indicated to be approximately 50% of the mechanically mined material (100 tph),
will pass through a scrubber in closed circuit with the 3mm screen.
Figure 27: Jet Pump System
The grizzly feeder screen will be set at 40mm and a roller crusher set at 10 mm to
protect the booster pump which will transfer the slurry through HDPE pipes to the
main slurry pump station.
The engineering design is specified to ensure a constant throughput in the plant.
The trucks will be limited to a travelling distance of maximum 250 m to achieve
the design specifications of the plant. The jet pump unit will therefore be moved
closer to the advancing face during planned shutdown periods.
16.2.2.2. Hydraulic Operations
Hydraulic mining involves the material being hydraulically sluiced from the
planned sections or blocks of the TSF and transferred in a slurry form to a
collection sump via a system of drains or launders. A pump station is then used to
pump the slurry to the plant.
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The hydraulic sluicing is achieved by using track mounted high pressure water
monitor guns (one operating and one on standby) to generate a slurry from the
material, which has a specific gravity (SG) of 3.6 t/m3. The resulting slurry density
is expected to fluctuate from 1.35 t/m3 to 1.80 t/m3. Water is moved through a
series of pumps to increase the pressure of the water to approximately 275 kPa
before it is directed through a network of pipes to the high-pressure monitor units
on top of the TSF.
The slurry will flow through a launder system to a launder collection sump
(on-dam catchment area) and collection barge vertical spindle pump (Figure 28).
Figure 28: Typical Cross Section from Main Catchment to Vibrating Screen
A series of 110 kW satellite spindle pumps will be positioned to assist the flow.
Static screens (+50 mm) will be used at the satellite pumps to remove debris and
vegetation. The 12 m deep catchment area and launder will be created using an
excavator. A floating “tripod” barge will be installed in the catchment area to
include a vertical spindle pump for onward transfer of the slurry to the main slurry
pump station.
Following completion of an upper bench, a second catchment sump will need to
be established. Two vertical spindle pumps will be used on a barge system to
feed the main transfer slurry pump station. The final cut will follow the same
sequence of launder and mining the final footprint from the higher contour levels
towards the lower contour levels.
The two satellite pumps will be placed inside the final cut catchment area as a
sump and feed the main pump station with slurry. The collection sump, together
with the high wall will act to safe guard against flooding of the pump station by
collecting runoff water and barricading between the sump and pump station
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16.2.2.3. Sound Mining Observations
Fraser Alexander are experienced in re-mining operations on various TSF
operations. The selection of FA as a sub-contractor for re-mining is supported.
The plant and equipment specified for extraction at the TSF is simple and robust.
The screen at the TSF plant has apertures of 3 mm. The +3 mm material on the
TSF is in the form of a hard, composite chrome silicate. Metso, a local supplier of
attritioning equipment, together with BPL has planned a test work program with
Mintek to reduce the hard composite particle size to minus 3 mm. This work has
not yet commenced and if equipment is required, provision must be made for this
study work in the capital and operating cost budgets.
16.2.2.4. Mining Operations
The planning and design work considered a throughput target of 240 ktpm, which
equates to approximately 8 ktpd or 406 tph of dry material for a continuous
(i.e. 24/7) operation with an overall slurry production availability of 90% assumed.
Three teams (shifts) have been planned with a fourth team on an “off shift”
system:
Shift One: (06:00 – 14:00) – Morning shift
Shift Two: (14:00 - 22:00) – Afternoon shift
Shift Three: (22:00 – 06:00) – Night shift
Shift Four: Off
The off shift will rest for five days where-after, the teams will rotate. The off shift
will start on night shift, night shift will move to afternoon shift and afternoon shift
will move to the morning shift. The morning shift will then start on their five day off
shift.
The plan is for the mining operations (i.e. feed to the plant) to be managed as a
separate business unit. A suitably experienced contracting company will be
appointed to take responsibility for the supply, installation, operation and
maintenance of the following:
Site clearance;
Mining Infrastructure;
Fine material mining unit;
Coarse material mining unit; and
Storm Water Control.
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The contractor will be required to supply the stipulated tonnages and grading to
the process plant within the stipulated density range.
An upfront clear and grub operation will remove vegetation and any other
unwanted material to prevent blockages and to minimise delays in the slurry flow
system. While a significant amount of natural regrowth is observed, there is little
evidence of foreign waste, building rubble or organic waste on the TSF. The
vegetation will be removed in a structured and logical sequence as the operation
progresses. It will be either stockpiled or pushed over the edge of the crest of the
outer wall of the TSF. This will be governed by the 50 m FEL travel distance
constraint.
A 10 m high starter wall will be constructed for each area and an elevated blanket
filter drain system will be placed on the inside toe of this starter wall. A self-
decanting penstock system will be positioned in the centre of the area from where
an outlet pipe will decant into the surrounding drainage trench.
Operations will commence with the mechanical excavation of the launder
catchment pit and the installation of a barge pumping system to cater for the
natural ground slope. The decant barge system will be used till the level is high
enough for the water to decant freely. This will take place on the upper level
(bench). The necessary pipe work and a high-pressure manifold system will be
installed on the TSF while the barge system is being established. This will be
done in the section where mining is taking place and sequentially as the mining
plan dictate.
Further pipe work will then be connected downstream from the decant system to
feed into the vibrating screen. A permanent penstock decant tower will be
installed for the total foot print and life after this project. Monitor mining will start
as soon as the barge-launder system and connecting pipes have been
commissioned.
These units will be utilised to mobilise 120 ktpm (i.e. ~4.0 ktpd dry) from the finer
fraction of the dam, and a FEL will be used to typically excavate some 120 ktpm
of the coarser material from the outer area of the dam. The fine and coarse
material from both of these types of mining units will be delivered onto the main
transfer pump station’s vibrating screen and mixed before transfer into the
conditioning tank for diluting to a slurry density of 1.38 t/m3. The requirement is to
feed the slurry to the series of spirals in the plant at a consistent density and
volume. Area 3 will be mined by cutting the main launder and progressively
working to the southwest edge of Area 2.
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Fine material will be moved using monitors. This process will make use of two
monitor guns, one operational and one on stand-by. The general launder slope
will be maintained (1:80 to 1:120) and when the cut becomes too shallow (to
maintain gravity flow) a step ‘down’ will occur. Satellite pumps will be used at
these step-down intervals to transfer the slurry from the lower elevation to the
adjacent higher elevation and so facilitate continuation of the free draining
process.
The coarse material will be moved mechanically and loaded into a jet pump
system where it will be pumped, screened and blended with the finer material.
This coarse material is planned to be primarily sourced from the outer perimeter
of the TSF. A mobile re-claimer (mechanised cutter) will be used to excavate the
harder material.
Portable rechargeable lighting towers will be used for the night shift. Mining
operations will be stopped whenever lightning is detected closer than 30 km from
the mine. This may also occur during heavy downpours when working conditions
are likely to become unsafe.
The outer crest wall of the TSF will be maintained to accommodate a 1:50 year or
24-hour storm water holding capacity within the TSF. Storm water will however,
not be stored on top of the TSF but allowed to flow off in a controlled manner.
The surface topography is such that storm water not contained within the surface
paddocks will flow towards barge sump system. The holding capacity of the
catchment sump has been designed accordingly. The satellite pumps will move
storm water to the main slurry pump station from where it will be pumped back to
the plant. Excess water will be pumped to a return water dam for re-use. Rain
water can also bypass the plant via the solution trench to the return water dam
during heavy rain storms. Solids will remain in the catchment. A spillway in the
catchment will be used to discharge excessive storm water during the final cut.
The mining contractor will also be responsible for the mechanical and electrical
maintenance of all engineering equipment within the TSF fence line. This would
include the following infrastructure:
satellite vertical spindle pump stations;
water barge system;
booster pump station;
main slurry pump station with vibrating screen;
lighting and associated cabling; and
electrical distribution for the lighting and vertical spindle pumps.
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A suitably qualified engineer will be appointed to cover the legal responsibility
associated with the mining and plant operations. This person will oversee the
maintenance program, all artisans, the quality, standards and the scheduling of
all maintenance. Major overhauls of equipment are planned to be done off site.
Critical spares will be kept on site.
Planning provides for two barges to be operating with one standby or in the
process of being relocated. This is anticipated to increase the onsite availability to
98%.
16.2.2.5. Grade Control
The high-grade Chrome is located on the outer walls of the tailings facility and
therefore it is planned to concentrate mining on the higher grade (> 20.5%).
The block model will be used with the following additional trends as guidance
when selecting the material to be directed to CRP:
The moisture increases towards the centre of the dam.
The moisture content also increases towards the base of the dam.
The Cr2O3 grade increases towards the centre of the dam.
Coarser material is mainly situated on the edges of the TSF.
Ongoing feedback from sampling at the CRP will also assist in the overall grade
control effort.
The TSF feed stream will be sampled at the receiving tank by means of a linear
moving cutter sampler and this will be used as the CRP head grade sample.
Sampling in the CRP will by automatic samplers at feed belts or the pulp streams.
There is a comprehensive laboratory situated in the plant which is convenient for
sample preparation and assay. The TSF production will not be measured
separately; this will be back-calculated from the feed and concentrate streams. The
quantity of actual concentrate production will be determined by a monthly survey
of physical stock on the ground with dispatched chrome and the monthly opening
stock taken into account.
16.2.2.6. Planning Aspects
Table 15 presents the design criteria and assumptions used to inform the
planning process.
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Table 15: Design criteria
Design Criteria / Planning Assumption Value / Comment
Available information
Lidar DTM survey Given by client
DTM NGL survey Given by Client/SRK
Block model Given by Client/SRK
Tailings Storage Facility (TSF)
Tailings facility area 86 ha
Estimated total volume 8,377,803 m³
Dry in-situ bulk density of TSF 1.56 t/m³
Estimated quantity of dry tailings available for reclamation 1,368 kt
Portion reclaimed after losses (Planned and Unplanned) 95%
Dry mining rate 240 ktpm
Life of project 3 to 5 years
Yield/grade 22.5%
Mining Assumptions and General Slurry Characteristics
Method Mechanical and hydraulic mining
Excavation rate 257 ktpm
Mining rate (feed to plant) 240 ktpm
Overall project availability 84%
Contractor operational availability 98%
Dry mining rate (Incl. 84% availability (±10%)) 391 tph
Feed Solids SG 3.3 t/m3
Slurry density to supply to main slurry pump station. 1.35 t/m³ to 1.80 t/m³
Slurry flow rates based on SG of 3.3 at an RD of 1.5 647 m3/h
Minimum flow rate (Pipe Velocity) to prevent settling within pipe* 3.2 m/s
Deposition
Method Cyclone
Deposition rate 208 ktpm
Rate of rise 3.5 m/yr
Specific Gravity 3.6 t/m³
Underflow density 2.45 t/m³
Overflow density 1.35 t/m³
Feed density 1.45 t/m³
Pressure 1 to 1.5 kPa
Underflow split 25%
Overflow split 75%
Process Water Requirements (For HP Water Monitoring Supply)
HP Water requirements 577 m³/h
Designed HP Pump manifold 40 bar
Designed HP@ monitor guns 25 bar
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The design, sequencing and scheduling was accomplished by using data from
the geological block model and survey information with the design criteria to
determine a suitable exploitation strategy. A key design principle was to try and
keep the grade and size mix delivered to the plant as even as possible.
The designed layout and scheduling assumes a constant flow to the plant and
takes cognisance of a 20% variation in the pulp density which will fluctuate. The
need to use the existing footprint has limited flexibility in terms of selective mining
and as a consequence, complete blocks, or sections, of the TSF have been
committed to the mining plan at a time.
Figure 29 presents a general arrangement of the mining plan. Ongoing tactical
planning will be dynamic and may change as the operations progress.
Figure 29: Mining plan
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Figure 29 illustrates that the fine material is mainly deposited in the blocks
coloured in Green and will be mined hydraulically with monitors. The coarse
material is deposited in the blue coloured blocks and will be moved mechanically.
A provision of three months has been included in the FS to cater for operational
readiness prior to steady state production. Operators will be trained on-site to
gain exposure to the site specific conditions during the daylight hours only and on
completion of the operational readiness phase, mining will progress into a
continuous operation. The high-pressure pumps and slurry delivery process will
need to operate at full capacity for the operational readiness phase.
16.3. Deposition
Sound Mining also reviewed the study work completed in the FS for the re-
deposition, or placement, of tailings from the plant into the space created on the
TSF. The review considered both the design and operational issues related to
deposition.
16.3.1. Design Considerations
The “on-wall” cyclone deposition method is preferred and was selected for
inclusion in the deposition design because it can be operated at a much higher
rate of rise which reduces the need for additional space.
The South African standard, SANS 10286, “Code of practice for Mine Residue”
was used as a guideline to design the re-deposition of tailings onto the TSF. The
following aspects were considered together with the relevant design criteria in
Table 15 in determining the size and lay-out of the space requirement on the TSF
(Figure 30):
The quantity of tailings to be re-deposited to understand the space
required.
The deposition rate to fix the footprint required for an acceptable rate of
rise.
The geotechnical behaviour of the tailings material as determined by the
anticipated tailings material characteristics and deposition method to
ensure structural stability.
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Figure 30: Design for the Re-deposition of tailings on the TSF
16.3.1.1. Quantity of Tailings
The production schedule is presented in Table 15:
Area 2
Area 3B
Area 1A
Area 1B
Area 3A
Area 3C
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Table 16: Production Schedule
Month Description
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
Hydraulic Mining (kt) - - - - - - - 130.0 125.8 130.0 125.8 130.0 130.0 117.5 130.0 125.8 130.0
Planned Losses Ore* (kt) - - - - - - - 3.6 3.5 3.6 3.5 3.6 3.6 3.3 3.6 3.5 3.6
Unplanned Losses Ore** (kt) - - - - - - - 2.4 2.4 2.4 2.4 2.4 2.4 2.2 2.4 2.4 2.4
Feed to CRP (kt) - - - - - - - 124.0 120.0 124.0 120.0 124.0 124.0 112.0 124.0 120.0 124.0
Mechanical Loading (kt) - - - - - - - 130.0 125.8 130.0 125.8 130.0 130.0 117.5 130.0 125.8 130.0
Planned Losses Waste (kt) - - - - - - - 3.6 3.5 3.6 3.5 3.6 3.6 3.3 3.6 3.5 3.6
Unplanned Losses Waste (kt) - - - - - - - 2.4 2.4 2.4 2.4 2.4 2.4 2.2 2.4 2.4 2.4
Feed to CRP (kt) - - - - - - - 124.0 120.0 124.0 120.0 124.0 124.0 112.0 124.0 120.0 124.0
Re-Mining Quantity (kt) 240.0 240.0 300.0 300.0 300.0 300.0 300.0 240.0 240.0 190.0 - - - - - - -
Total Feed to CRP (kt) - - - - - - - 248.0 240.0 248.0 240.0 248.0 248.0 224.0 248.0 240.0 248.0
Total Content to CRP (kt) - - - - - - - 39.49 41.15 48.78 57.5 60.8 60.2 54.3 59.6 57.7 59.2
Average Grade of Content (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 15.9 17.1 19.7 24.0 24.5 24.3 24.2 24.0 24.0 23.9
Month Description
18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 Totals
Hydraulic Mining (kt) 125.8 130.0 130.0 125.8 130.0 125.8 130.0 130.0 121.7 140.4 188.8 145.3 125.8 130.0 130.0 125.8 3,410.97
Planned Losses Ore* (kt) 3.5 3.6 3.6 3.5 3.6 3.5 3.6 3.6 3.4 3.9 5.2 4.0 3.5 3.6 3.6 3.5 94.73
Unplanned Losses Ore** (kt) 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.3 2.6 3.5 2.7 2.4 2.4 2.4 2.4 63.77
Feed to CRP (kt) 120.0 124.0 124.0 120.0 124.0 120.0 124.0 124.0 116.0 133.9 180.0 138.6 120.0 124.0 124.0 120.0 3,252.47
Mechanical Loading (kt) 125.8 130.0 130.0 125.8 130.0 125.8 130.0 130.0 121.7 130.0 125.8 130.0 125.8 130.0 130.0 125.8 3,322.39
Planned Losses Waste (kt) 3.5 3.6 3.6 3.5 3.6 3.5 3.6 3.6 3.4 3.6 3.5 3.6 3.5 3.6 3.6 3.5 92.27
Unplanned Losses Waste (kt) 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.4 2.3 2.4 2.4 2.4 2.4 2.4 2.4 2.4 62.12
Feed to CRP (kt) 120.0 124.0 124.0 120.0 124.0 120.0 124.0 124.0 116.0 124.0 120.0 124.0 120.0 124.0 124.0 120.0 3,168.00
Re-Mining Quantity (kt) - - - - - - - - - - - - - - - - 2,649.97
Total Feed to CRP (kt) 240.0 248.0 248.0 240.0 248.0 240.0 248.0 248.0 232.0 257.9 300.0 262.6 240.0 248.0 248.0 240.0 6,420.47
Total Content to CRP (kt) 56.8 58.3 60.1 59.1 58.8 55.9 56.7 55.6 52.8 59.4 69.1 57.3 51.4 53.1 53.0 50.9 1,447.02
Average Grade of Content (%) 23.7 23.5 24.2 24.6 23.7 23.3 22.9 22.4 22.8 23.0 23.0 21.8 21.4 21.4 21.4 21.2
*Planned Losses: 3%
**Unplanned Losses: 2%
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A comparison between the original mining schedule completed by the mine and a
revised production schedule constructed by Sound Mining is shown in Graph 10.
The graph shows a close correlation between the original and revised mining
schedules although areas containing content below 20.5% was left out of the
Sound Mining schedule to extract 6.42 Mt.
Graph 10: Comparison between FS and Revised Mining Schedule
The quantity produced from the different mining methods is shown in Graph 11.
The initial seven months of production will be spent to remove the material
containing less than 20.5% Chromite in Area 2 and dumping it on top of Area 1A.
The hydraulic and mechanical mining will only start after the seventh month. The
project will maintain steady state production of approximately 240 ktpm from both
mining methods for another 28 months.
Graph 11: Combined Production Quantity
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Both mining methods will produce at rate of 120 ktpm during steady state.
The areas containing the highest Cr2O3 content was targeted first for extraction.
The spread in plant feed grade over the life of the project is shown in Graph 12.
The head grade starts at approximately 16% and increases to approximately 24%
until month 33.
Graph 12: Average Cr2O3 Grade
After Month 33 the progressive head grade drops below 23% and mining
activities will stop (Graph 13).
Graph 13: Progressive Average Cr2O3 Grade
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16.3.1.2. Capacity Analysis
An airspace model was developed using the contour mapping of July 2017. It was
built with an overall slope of 1:3 in benches of 9 m every 7 m vertical rise above
starter wall level. The modelling was completed using Model Maker (a DTM
software package). The resulting capacity, elevation and area relationships for
the modelled dam are indicated in a co-axial plot in Graph 14 to Graph 16 below.
Graph 14: Stage curve - Height vs Rate of Rise
Graph 15: Stage curve - Height vs Volume
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Graph 16: Stage curve - Height vs Area
16.3.1.3. Stability Assessment
Various geotechnical investigations were completed in the past by SRK and
Metago. The TSF is generally underlain by norites and pyroxenites belonging to
the RLS of the BIC. Sub-soils throughout the major part of the site comprise a
surficial horizon of hill wash in the form of pale grey or orange silty or clayey
sand. Underlying the hill wash is a layer of dense colluvial gravel that is
ferruginised to varying degrees. The norites and pyroxenites that occur below the
colluvium are in the form or residual clay-silts or clayey silts. The SRK report also
indicates underlain materials of calcrete and quartz silty clay. The material
classifies in terms of the United Soil Classification System (USCS) as a gravely
clay with sand (Table 17).
Table 17: Generalised Stratigraphic Column
Depth (m)
Description
0 – 0.5 Hill wash/clay
0.5 – 1.5 Clayey sand with calcrete
1.5 - 3 Quartz sandy clay
3 -15 Sandy silt and calcrete
15 - 30 Partially weathered pyroxenite and norites
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The soil strength parameters used in this analysis are tabulated in Table 18
below. They are based on anticipated tailings characteristics and test pit sampling
records:
Table 18: Material Strength Properties
Material Dry Density
(KN/m3)
Friction Angle (°)
Cohesion (kPa)
Tailings - Underflow 21 36 0
Tailings - Overflow 16.1 31 0
Starter Wall 20 25 0
Hill Wash/Clay 19 22 0
Foundation – Weathered Norite 19.97 25 0
The safety factor for a typical cross section when the facility reaches its final
height is 1.48
Computer modelling (i.e. the Bishop Simplified method) was used for the stability
analysis in the FS. The required overall slope angle of between 1:2.5 and 1:3 will
be achieved by using appropriate horizontal benches. Chrome tailings; naturally
stack at an angle of approximately 32°. These benches can be flattened if
required for rehabilitation and vegetation purposes. Ideally, a balanced geometric
shape having similar side lengths and a centrally located penstock is the
preferred; unfortunately, site characteristics mostly govern the shape of the dam.
16.3.2. Operational Considerations
The main operational task will be to ensure that the underflow is deposited in
sufficient quantity and within a prescribed profile. The overflow will be discharged
into the basin. Key performance criteria for the management of the deposition
operation are:
Minimal open-ending (emergency and contingency only)
Create sufficient underflow (target 25% by volume)
Keep the crest of the wall on each lift level
Ensure the outer slope conforms to the prescribed wall profile
Do not bury pipes, valves or cyclones
Avoid the overflow eroding the toe of the underflow slope
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Sufficient cyclones will be placed along the wall to ensure optimal efficiency.
Each cyclone will move back and forth to cover an allocated a 27 m section of the
wall. A distribution pipe will be placed along the line of the main filter drain with
the cyclones positioned directly above the filter drain. The cyclones at the starter
wall will be positioned over the upstream toe filter drain.
The initial tailings will be used to cover the blanket filter drain with underflow
before the overflow inundates the drain and cyclones. The advancing cyclone
method will be used for the wall development - first deposit a mound (+/-500 mm
high) in front of the cyclone. A plank can be placed across the front of the stand
to prevent burying the stand in underflow. When this mound has formed and dried
(while depositing through other cyclones), push the cyclone onto the mound so
that the underflow will now deposit just in front of the mound, and so advance the
mound to the same height or raising is another 500 mm to create a 1 m lift. The
advance procedure is then repeated, thus advancing the mound along the crest
of the wall, working to a string line to keep the crest level and straight.
16.4. Sound Mining Observations
Barplats have built in two main safety factors into their production plan to ensure
that the of volume (36 ktpm) and product specification in the market.
A cut-off grade of 20.5% vs a model prediction of 19%. This ensures that
even if the chrome price reduces by 10% to USD138/t, Barplats will still be
profitable and able to deliver product to its customers.
A 40% metallurgical product grade. During pilot test work, Barplats found
that it could consistently produce a product with a grade of +40%, and
hence it opted to use this grade for the purpose of the FS.
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17. RECOVERY METHOD
The CRP will remain within the existing processing complex. Its design is based
on tried and tested technology and comprises the use of spiral concentrators
(spirals), which are generally standard throughout the South African chrome
industry. Minor design improvements will be incorporated using lessons learned
from the test work. Wherever possible, existing equipment will be retained to
reduce capital expenditure. The old spirals will, however, all be replaced with
modern spirals to improve recovery and yield. The existing spiral structure will be
retained with a few structural modifications. Existing sumps, pumps and pipelines
will be upgraded and repositioned to cater for the increase in throughput to
240 ktpm. All steel modifications will be approved by a professional engineer.
Instrumentation will be minimal.
17.1. Engineering Design Philosophy and Design Criteria
CRM’s engineering design philosophy was to ensure a robust design with a
proactive maintenance strategy. The FS design reflects:
A robust process flowsheet, with surge capacity, a chrome recovery circuit
and residue pumping system;
Tried and tested operational ready equipment;
Ease of maintenance, given the abrasive nature of chrome ore;
A control philosophy that allows an efficient continuous operation with optimal
throughput;
The design accommodates a throughput of 240 ktpm or 407 tph as contemplated
in the FS, with a potential 20% variation. The volume pumped will remain
constant, but the pulp density will be allowed to fluctuate. Table 19 presents the
process design criteria.
Table 19: Process Design Criteria (PDC)
Design Criteria Value / Comment
Throughput 240 ktpm
Feed grade (Cr2O3) >20%
Product Grade (Cr2O3) >40% Cr2O3, < 3% SiO2
Yield 15%
Plant Availability 85%
Plant Utilization 95%
Feed rate 407 tph
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In addition to the above, the design takes cognisance of the following operating
requirements:
Metal accounting samplers will comply with international best practice;
All pump boxes, sampler boxes, pipelines, and similar will support a wet,
settled slurry density of 5.0 t/m3.
All process pump boxes will be installed above ground level.
All slurry sumps will be sized to have a residence time of 90 seconds and
minimum valley angles of 45° on the lateral and 60° on the rear.
There will be adequate, safe access to operating equipment, and spiral nests
will be provided for CRP personnel.
Ergonomically acceptable and corrosion resistant, galvanized walkways with
kick plates, hand railings and 2 m of head room will be provided.
Hard piped, high pressure flushing water facilities and drain points will be
provided on all slurry pipelines and pumps, and generally., for handling
spillage.
Standard pipelines will be sized to ensure adequate slurry velocities for the
full suspension of solids at all times. The minimum slurry velocities will be
maintained between 2.7 m/s and 2.9 m/s. The chrome concentrates will be
moved at a minimum velocity of 3.2 m/s.
The pump gland service water supply lines will be automated and fitted with
check valves, sight glasses and pressure relief valves.
The potential for blockages and spillage will be low to minimise maintenance
and to maximise overall plant availability.
The layout makes maximum use of gravity and will seek to ensure that
optimum even slurry splits on the distributors are achieved.
All flow and density measuring equipment installations will allow effective and
efficient calibration at regular intervals. Design and instrument layouts will be
approved by the relevant vendors.
17.2. Process Flowsheet
The availability of the CRP will be dependent of the operational availability of the
hydraulic mining equipment on the TSF and "visa versa", and therefore a facility
to bypass the recovery circuit is not in the design (Figure 31).
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Figure 31: Process Flowsheet
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Slurry from the TSF will report to a spiral feed tank (TK100), where process
water will be added through a density control circuit to reduce the pulp relative
density from an average of 1.35 kg/ℓ to 1.29 kg/ℓ as required for the cluster
cyclone feed.
This density may vary between 1.25 kg/ℓ and 1.45 kg/ℓ. The higher figure was
used for the dilution water requirement, and the lower figure was used for the
maximum pumped volume requirement in the design.
The CRP feed and tailings lines will be equipped with a densitometer and flow
meter for mass integration capability to control the feed.
The design of the cluster cyclones will result in a relatively fine underflow (i.e.
cutting at approximately 45 m). The underflow from the cluster cyclones will be
controlled to a density of 1.70 kg/ℓ gravitated directly to the rougher spiral feed
tank (TK300) ahead of the spiral banks. The overflow from the cluster cyclone
will gravitate into tank (TK200) and will be pumped to the tailings thickener.
The CRP will consist of twenty five banks of spirals. Spiral clusters will be
arranged in a pattern so as to ensure an optimum even feed distribution between
the spirals. The rougher and scavenger spirals will be vertically stacked above
one another, making use of gravity feed to each section below. All of the spirals
will have adjustable cutters that will allow for the production concentrate and a
tailings stream on all stages.
There will be an automatic isolation valve on each discharge of the eight-way
pressure distributor so that a single nest may be taken off-line at a time without
affecting the rest of the CRP. This will include the process water take-off of the
ring main manifold for each specific bank in order to facilitate maintenance, or if
the average volumetric flow rate is too low.
The rougher spirals comprise three banks of ten spirals with five turns each.
They will be fed at a pulp density of 1.7 kg/ℓ.
The scavenger and re-scavenger spirals will be similar to the rougher spirals. The
four banks of cleaner spirals with three turns will be fed at a pulp density of
1.6 kg/ℓ.
The re-cleaner and re-re-cleaner spirals will also be of the three turn, double start
type, and will consist of one and three quarter turns each. They will be fed at a
pulp density of 1.5 kg/ℓ. At each stage, the concentrate will be processed for
further cleaning, whilst the tailings will be split off into a central discard pipe
reporting to spiral tails sump (TK 400).
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Diluting water will be added to the feed of each spiral stage via a ring type
manifold and each spiral will have its own manual control valve. Concentrate
from the re-re- cleaner spiral bank will gravitate to the final cleaner feed sump
(TK 600) and report to the hydrosizer for final cleaning. The tailings stream will
gravitate to the cleaner feed tank (TK 500).
The oversize from the hydrosizer will be pumped to a spiral receiving tank. The
under flow will report to the distributor from where product will go to its own sump
with control water added prior to being pumped to the metallurgical concentrate
stockpile de-watering cyclone. Make-up water to the chrome product sumps will
be evenly split between manual water addition to the respective product
launders, and level control water added directly to the sumps.
17.3. Chrome Plant Tailings Disposal
The de-sliming cyclone overflow will gravitate, via a vacuum box, to the thickener
feed box where it will be combined with the various spiral tails. All spiral tails from
the plant will be pumped to the tailings thickener feed box.
Slurry will be pumped at a fixed volume to the thickener. The underflow will be
pumped directly to de-watering cyclone ahead of the residue transfer station. A
densitometer and flow meter will be installed on this line with mass integration
capabilities to allow for proper control of this stream. This stream can be
delivered back to the TSF at a density of between 1.35 kg/ℓ and 1.40 kg/ℓ.
17.4. Concentrate Stockpiling Facility
From the distributor, the concentrates will be pumped to one of two overhead
de-watering cyclones from where the underflow will drop directly onto a concrete
stockpile area. The overflow of the de-watering cyclone will be returned via
pumping to the sumps of origin or the process water tank.
Drainage from the metallurgical grade stockpiles will gravitate to the lowest
point, preferably central between the two stockpiles with a retaining wall to cater
for two days stockpile run off and will be pumped via a sump and spillage pump
arrangement to the spiral process water tank.
17.5. Dispatch Facility
Access for external road transportation to the area is through an existing security
check point and all vehicles entering the area will be weighed.
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17.6. Water Requirements
The CRP will require significant amounts of water and so a separate water circuit
with sufficient pumping capacity has been provided for. Potable water will be
used for gland service water and process water will be used for the spiral dilution
water.
Water will be supplied from a process water tank that will cater for one and half
times the volumetric water requirement. The bottom of the tank will be sloped to
allow for periodic cleaning. The water feed from the tank will have a self-
cleaning inline strainer upstream of the supply pumps to remove foreign
objects that could impact performance. Make-up water to the chrome product
sumps will be split 50/50 between the manual water addition to the respective
product launders and the automatic modulating water makeup directly into the
sumps.
17.7. Spillage handling
Spillage will be contained within a bunded concrete area that slopes to a sump
with a 6 mm slotted wedge-wire screen. Provision has been made for a standby
spillage sump. A vertical spindle spillage pump will be used to transfer spillage to
the chrome tails thickener feed sump.
17.8. Control instrumentation
Suitable monitoring instrumentation will be installed and integrated into a
dedicated control room with a stand-alone Programmable Logic Controller (PLC)
Supervisory Control and Data Acquisition (SCADA) system to manage
production.
17.9. Sound Mining Observations
The yield in the PDC at 20% is 25% higher than typically achieved; in this case it
would be a conservative number, allowing for some over-design in the proposed
CRP.
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18. PROJECT INFRASTRUCTURE
The buildings at CRM appear to be well constructed. The offices and change
houses are extensive and well equipped.
A large workshop is available to the Project and comprises twelve service bays,
six offices, toilets, a conference room with a steam wash bay for four vehicles and
two overhead cranes (15 t and 5 t capacities).
There is a store with a 20 t overhead crane and off-loading facilities. It also has a
well secured outside storage area.
The general surface area is fenced and security is outsourced with adequate
access controls in place. The roads are hard-capped and in good condition. A
computerised weighbridge is also operational. Drainage and storm water handling
is in good order.
18.1. Mining and Deposition Infrastructure:
A low pressure barge system, and make up water system is needed at the TSF’s
return water dam. A high pressure water suction pump will also be installed
upstream. Provision has been included for power at the TSF and for the following:
Starter Walls: Starter walls will be constructed for each of the phases to
accommodate the initial high rate of rise. They will be built to tie in with the
natural contours and the average height of these walls will be between 10 m and
12 m. Waste rock comprised of calcrete, quartz and norite from the underground
works and surrounding areas will be used as building material. The wall will be
5 m wide at the top with the side slopes constructed at a 1:2 slope.
Under Drainage: A 6 m wide filter drainage system will be established at the
perimeter of each starter wall section. It will be placed on an elevated platform on
the inside toe of the starter walls. This filter drain will be linked to outlet pipes
feeding a solution trench and return water dam. The under-drainage system will
facilitate the removal of inter particle water, increase the consolidation rate and
contribute to structural stability.
Solution Collection Trench: A concrete lined solution trench will be positioned
around the perimeter of the TSF to collect seepage and for discharging water into
the return water dam.
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Access Road: An access road will be provided to cater for light vehicle travel
and the delivery of equipment to operations on the TSF. It will be designed to
prevent water from ponding.
Penstock Decant System: Each deposition area will require a dedicated
penstock decanting system (penstock towers and a gravity outfall pipe). This
decanting system will consist of two single intake penstocks at different
elevations that will be used to decant water as the dam rises rapidly during
commissioning. These will have to be sealed once the dam has risen to the next
intake tower. The permanent penstock has two intakes and will be centrally
positioned in the dam. Water from the penstock outlet pipe will be discharge
directly towards the silt trap and return water dam via a solution trench. These
penstock towers will be sleeved as they rise.
Due to the natural ground slope, during the commissioning phase of Area 2, a
decant barge pumping system will be used until the water elevation is at a height
suitable for decanting from the penstocks
Catwalks and Access to Penstocks: Provision has been made for the
construction of a wooden walkway (catwalk) as access to each penstock intake
structure. These catwalks and penstock structures will be constructed during the
construction phase and may be shortened during the operation with the
introduction of pool wall constructed of tailings material.
Slurry Delivery: The infrastructure on the tailings dam, associated with the slurry
delivery and tailings placement is determined by the selected deposition method.
Two feed delivery lines will come from the main plant where it be divided into
different ring main systems on each of the areas of deposition. This will be
controlled by proper change over valve stations. The ring mains will have a
cyclone take-off point for deposition, roughly every 27 m. See drawings for layout
details.
Storm Water Cut-off Trench: The separation of dirty and clean water is a legal
requirement. The construction of a storm water cut-off trench, to meet with the
flow and separation requirements is included in the design. This trench needs to
be excavated upstream of the tailings dam footprint. The trench will catch the run-
off water from the east and south of the tailing facility and will be diverted and
channelled towards the west and north of the dam into the natural catchment
area away from the tailings dam.
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18.2. Electrical Infrastructure and Supply
The operation will be supplied from the national grid which is owned and operated
by the South African National Power Utility (Eskom). Stand-by power is available
from a 2.0 MVA 6.6kV diesel generator. There are various main sub-stations
strategically located on surface. All of the electrical equipment and machinery
appears to have been properly installed and well maintained.
23 MVA is available to CRM. The Project will require 3 MVA at the TSF and there
is more than enough capacity for the CRP. Capacity for 1 MVA is already
available at the TSF (Figure 32) and funding has been provided for the necessary
upgrade to 3 MVA.
Figure 32: Proposed Single Line Electrical Reticulation
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18.3. Water Reticulation
Water is supplied from the Crocodile River (1 Mℓ/day) and sourced from the
Zandfontein underground mining area (4 Mℓ/day). This is more than the Project’s
make-up water requirement of 4.3 Mℓ/day. CRM have also submitted an
application to the Department of Water Affairs (DWAF) in South Africa to increase
the supply from the river to 5 Mℓ/day. This will reduce the Project’s reliance on
water from underground only, and ensure a constant feed for the treatment of the
product. Water balances were performed for the rainy and dry seasons in order to
calculate the raw water and bleed stream requirements during these periods.
CRM has five fresh water dams on the property. Used water is pumped to settling
dams for solids settle. The cleaner water is then pumped through a water
treatment plant back to the fresh water dams. Any excess clean water is pumped
back to the Tailings Return Water Dam for re-use.
Water draining from the TSF will report to the Tailings Return Water Dam for use
in mining process (Figure 33). Excess water will be sent to the plant as process
water.
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Figure 33: Water Balance Diagram
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18.4. Maintenance Strategy
Maintenance strategy will conform to Preventative, Predictive and Breakdown
maintenance. The system utilises suitable software (i.e. Axapta).
Preventative maintenance also known as scheduled maintenance. This strategy
includes routine and scheduled maintenance. Detailed maintenance schedules
will be completed for all equipment and updated during the life of the plant.
Weekly and monthly maintenance shutdowns will be scheduled to coincide with
the tailings storage facility planned maintenance schedules.
Predictive maintenance also known as condition based maintenance. This
strategy includes the collection of measurements of a wide variety of different
machinery parameters over a period of time. From the data collected it will be
possible to identify trends, predict possible failures and plan repairs in advance.
18.5. Sound Mining Observations
The existing processing complex has adequate electrical capacity for the CRP.
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19. MARKET STUDIES AND CONTRACTS
19.1. Demand
Chrome ore demand is directly linked to stainless steel production worldwide, but
with the rest of the world growing at a rate of 1% to 3%, the significant growth is
associated with China (Figure 34).
Figure 34: China GDP Real Annual Growth
China had a very buoyant growth rate in the order of 8%, but it has reduced to a
more sustainable rate with 6% expected going forward. Linked to this growth rate,
is the annual growth of 3% in stainless steel production (Figure 35). China
consumes some 11 Mtpa of the total world production of approximately 31 Mtpa.
Figure 35: Global Stainless Steel Output in 2010-2016
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
2010 2011 2012 2013 2014 2015 2016
Quantity
(10 K
t)
Year
Others North America Europe Asia
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Figure 36 presents a 2% growth forecast in chrome sales over the period of the
project. It compares well with the 3% growth in stainless steel sales, which is
considered to be a conservative expectation going forward.
Figure 36: 2017-2022 Chrome Ore Market Research Report
19.2. Supply
South Africa’s BIC contains some 70% of world’s total chrome reserves
(Figure 37).
Figure 37: Global Chrome Ore Reserve Distribution
951.5
964.3
1020.6
1055.2
1070
1110.7
1146.8
1173
1204.9
1240.7
1245.3
1250.3
0
200
400
600
800
1000
1200
1400
2011
2012
2013
2014
2015
2016
2017E
2018E
2019E
2020E
2021E
2022E
Period
74%
8%
1% 12%
2% 3%
South Africa Kazakstan India Zimbabwe Turkey Others
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Figure 38 shows that South Africa currently produces only 56% of world supply.
Figure 38: Global Chrome Ore Output Distributions
From Figure 39 it is evident that, at some 31 Mtpa, global chrome ore production
grows at a similar rate as demand, of circa 2% annually.
Figure 39: Global Chrome Ore Production and Growth Rate in 2011-2016
56%
14%
12%
3%
6%
9%
S. Africa Kazakstan India Oman Turkey Others
2011 2012 2013 2014 2015 2016
Output(Unit:10KT) 2980.2 2950.4 3060.5 3000 3090 3141.9
Growth YOY+/-% 8.82% -1.00% 3.73% -1.98% 3.00% 1.70%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
2850
2900
2950
3000
3050
3100
3150
3200
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Recent world ore inventories at 2.5 Mt sit at approximately four weeks of supply,
and remain very tightly balanced (Figure 40).
Figure 40: Chrome Ore Stocks in 2013-2017
The imbalance in supply and demand at the end of 2016 resulted in the price
escalating to USD 400/metric tonne CIF China for 42% concentrate in December
2016 (Figure 41). This normalised quickly following an inventory build-up.
Figure 41: South African Chrome Ore 42% Conc. From 2012 to 2017
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Taking cognisance of the forecasted balanced supply and demand in the next
four years, Barplats is very confident of a price range of USD 150/metric tonne to
USD 170/metric tonne for 42% Concentrate CIF China for the project period and
Barplats used USD 153 in the real term discounted cash flow model.
19.3. Export Logistics and Procedures
The export logistical options for the chromite concentrate have been identified as
either bulk commodity or containerised shipping through the South African ports
of Richards Bay or Durban.
A recent survey undertaken as part of the ITR has indicated that very competitive
logistics costs can be derived through a containerised shipping option out of the
port of Durban. Logistical dispatch from the mine to Durban for containerised
shipping at the port warehouses can be achieved in approximately 30 days.
It is expected that the marketing of the chrome concentrates will be undertaken
through a trading contract with an established international commodities trading
company.
19.4. Sound Mining Observations
Sound Mining notes the envisaged term sheet in Table 20 from the results of the
chromite ore assaying.
Table 20: Chrome Quality
Element Typical Grade
Cr2O3 (min) 40.00%*
Cr:Fe (min) 1.27:1
SiO2 (max) 6%
MgO (max) 15%
Al2O3 (max) 17%
P (max) 0.015%
S (max) 0.015%
*42% applied as a basis in the financial model and concentrate below 39.5% would be rejected.
Metallurgical grade chrome as supplied to China is generally sold CIF 42%
Cr2O3; less than 3% SiO2. A target grade of 42% Cr2O3 should be the target and
if 40% is achieved on occasion, this can be blended to achieve a higher grade.
Lower grade Cr2O3 will cost more to transport per unit chrome and will attract
penalties.
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Accordingly, Barplats preference to use a price of USD 153/metric tonne, which is
at the lower end of the forecasted price range over the relatively short duration of
the project, is appropriately conservative.
Sound Mining believes that there could be upside potential in the Project. This
potential would need to be properly considered with further study work. This
would involve dropping the selected chrome cut-off grade and including the
recovery of PGMs.
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20. ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL
OR COMMUNITY IMPACT
The review work comprised of the following activities in the performance of this
ITR:
a discussion with Barplats regarding the current environmental and social
compliance status (including management practices) at CRM; and
a review of all relevant documentation, inclusive of licences, internal and
external audits, where available.
20.1. Safety Health and Environmental Study
The Mine Health and Safety Act No 29 of 1996 (MHSA) was developed under the
auspices of a tripartite relationship between State, Employer and Employee
organisations. The result is a large emphasis on employee participation regarding
Health and Safety matters. A full EIA, which was accepted by the DMR, also
exists at CRM. It inter alia covers the following safety, health, and environmental
issues.
20.1.1. Storm water Management
There is an existing storm water management plan for the mine. The guiding
principle of the storm water management plan is the separation of clean and dirty
storm water runoff. The existing storm water infrastructures are designed for
optimal reuse of dirty water. All access and haul roads will be constructed or
shaped so as to also act as diversion berms and canals. The runoff at all dirty
areas will be contained by dirty water berms and excess water will be drained by
canals to discharge dirty storm water into the planned dirty water ponds. Dirty
water collection berms will be constructed downslope of all “dirty areas” where
pollution of water resources is likely to occur. Clean water cut-off canals will also
be constructed upslope of dirty areas to convey unpolluted water to its nearest
outfall.
The FS includes adequate provision for the containment and reuse of
contaminated storm water from the mining area. Contaminated storm water
should be used as process water for the mine where possible.
Storm water infrastructure will be maintained on a regular basis to ensure
efficiency and persistency. Routine inspections will include dam wall
embankments and spillway inspections, dam seepage control inspections,
vegetation overgrowth, sediment settlement and regular water quality monitoring
programmes. With respect to Regulation 704 (Best Practice Guideline – G1:
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Storm Water Management – August 2006), storm water facilities and clean and
dirty diversion berms are required to prevent contamination of surface water and
the containment of contaminated water.
20.1.2. Dam Wall Integrity
The TSF was designed and constructed in 1988 by Fraser Alexander. In 1991 the
tailings dam was decommissioned and in 2000 the TSF was re-commissioned by
Barplats and was again decommissioned in 2003 where after it was re-
commissioned again by Barplats in 2005 until 2013 when the mine went into care
and maintenance.
It has proved resilient but when subject to re-mining, and as the outer slope is
developed, problems related to wind and water erosion may develop. These
problems are addressed by stabilizing the surface against wind and water erosion
by establishing vegetation on the wall benches as part of the operation.
Without the rehabilitation, the run-off from the benches will cause excessive
erosion of the uniformly non-cohesive underflow, despite the profile, leading to
siltation, a loss of retention capacity and concomitant overtopping. This
overtopping of a bench would have domino effect on lower benches which could
ultimately fail leading to potential spillage downstream of the TSF. Figure 42
illustrates the probable zone of influence if the TSF were to fail. The tailings
would essentially flow down gradient following the steepest path and would be
directed by obstructions and water courses.
Specialist consultants were appointed to perform a risk assessment and flow
slide analysis to better understand slope stability and the probability of failure at
the TSF. The probability of the failure was found to be 1: 85,614, which is
acceptable when compared to the industry’s recommended probability of failure
ranges between 1: 15,000 (unlikely) and 1: 150,000 (highly unlikely).
The FS has never-the-less, afforded the stability of the TSF the appropriate
attention in the design, construction and operational phases of the Project. The
planned concurrent rehabilitation will result in well-established stable slopes. An
operating manual for the mining operation will be drafted and used to explain the
mining plans, procedures, risk assessments and standards to all employees.
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Figure 42: Zone of Influence of failure of the TSF
20.1.3. Air Quality Monitoring and Dust Suppression
Section 28(1) of the National Environmental Management Act 107 of 1998
(NEMA) places a general duty of care on any person who causes pollution, to
take reasonable measures to prevent such pollution from occurring. Air quality
monitoring is considered to be a measure to exercise this duty of care, since it will
establish the type and volumes of emissions emanating from activities
undertaken on the site. Once this is known, measures can be taken to mitigate air
pollution. According to Government Notice 827 (NEMAQA, Act 39 of 2004), dust
monitoring is done in accordance with ASTM D1739-98(2010) Standard Test
Method for Collection and Measurement of Dust fall (Settle-able Particulate
Matter) and the South African National Standards 1929:2011 (Ambient Air Quality
– limits for common pollution).
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20.1.4. Surface Water, Groundwater and Water Quality Monitoring
The river catchment is characterised by a sprawling urban and industrial area
between Johannesburg and Pretoria, an extensive irrigation downstream of the
nearby Hartbeespoort Dam and large mining developments north of the
Magaliesberg (NWRS, 2012). The bulk of the urban water requirements for this
area are supplied by Rand Water, with the Vaal River System as its source.
Substantial volumes of return flows generated in the urban centres, enter the
Crocodile River, resulting in a surplus of water which offers a resource that can
be used to support development downstream of the catchment. Both the quantity
and quality of water in the river are a challenge to the requirements for the
ecological Reserve. Bio-monitoring assessments occur in summer (wet season)
and winter (dry season). There is currently no discharge into the river with little
difference between the up and downstream water quality and are in-line with
requirements.
Information from 335 boreholes and data from the National Groundwater Archive
was used together with a digital terrain model to establish the general flow of
local groundwater. The results indicate that the groundwater flows north-east and
north-west at Zandfontein on either side of the river. No significantly increased
concentrations can be observed north (i.e. downhill) of the TSF. The WULA
proposed that the impacts on the ground water are unlikely to be significant,
either in terms of quality or quantity. It listed potential sources of water
contamination, all of which can be managed in terms of generally accepted
practices. Make up water will be sourced from ground water and the river at
CRM. Current environmental planning assumes a zero-effluent discharge.
The South African National Standard (SANS) for domestic use (241:2011) is used
for the assessment of the water quality. This classification system is published by
the Water Research Commission and compiled in collaboration with DWAF and
the Department of Health. (SANS 1 & 2). There is an established surface water
quality monitoring programme in existence at CRM. It has been done in
accordance with the requirements of DWAF and an Exemption 218B that was
issued on 31 May 2001 to allow CRM to extract 140 m3 per day for make-up
water. The permit also allowed for a maximum discharge of 25 m3 per day of
purified effluent into the river. Barplats’ water uses are now authorized through a
Water Use License issued on 17 June 2017 in terms of the Chapter 4 of the National
Water Act, 1998 (Act no 36 of 1998).
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20.2. Social and Community Impact
CRM is located within the Local Municipality of Madibeng, which is one of five
local municipalities included in the Bojanala Platinum District Municipality (DC37).
The population of the Madibeng municipal area is about 33,800 (Census 2001). A
number of informal settlements have developed on private land in the vicinity of
CRM. There is a need for increased provision of basic housing and related
services. Brits serves as a base for providing a full range of urban amenities,
including world class medical, educational, financial, retail and commercial
services.
This section of the ITR covers the social impact of the Project on communities
within a certain reach of CRM (~25 km) or vice versa (Impact of communities on
the project). The following issues have been reviewed:
20.2.1. Soils, Land Use and Land Capability
The agricultural potential of the black turf soils is recognized as being high, and
most of the land in the area is arable. The soils can be used for both crop and
pasture production, and approximately 70% of the land in the area has been
cultivated at some stage to produce cotton, sunflowers, maize, citrus fruit and
various vegetables.
20.2.2. Archaeology, Cultural and Historical Sites
There are no historical sites, archaeological findings or graveyards within the vicinity
of the TSF.
20.2.3. Vegetation, Flora and Fauna
CRM falls within the savannah biome, and vegetation in the mine area is
classified as Norite Black Turfveld. The vegetation comprises a thornveld
component dominated by Acacia species and a grass component dominated by
Cymbopogon species. The lack of any unique habitat features (e.g. unusual soils
or rocky outcrops) makes it unlikely that any rare or endangered species occur on
the site. Furthermore, plant and animal habitats have been extensively
transformed by cultivation of land in the area. There are a number of plant
species that are protected under the National Forests Act but none occur on the
TSF. The TSF is not material in terms of conservation.
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20.2.4. Social Labour Plan (SLP)
CRM’s existing five-year SLP expires at the end of 2017 financial year. A new 5-
year SLP proposal will be submitted to the DMR for approval by the end of
November 2017. It will guide CRM policy with respect to “Local Economic
Development” where small, micro and medium enterprises receive access to do
business with CRM and “Preferential Procurement” where local broad-based
black economic empowerment companies are given preferential procurement
opportunities. CRM’s intentions regarding learnerships, adult basic education
training, portable skills training, and internships will also form part of the SLP.
Suitable projects will be agreed post a workshop with the following community
stakeholders:
Nearby Farmers;
Madibeng Municipality;
Khulusa School;
Brits – Elandsrand;
Oukasie;
Damonsville;
Lethlabile;
Mmakau;
Mothutlung; and
Bapong (including Majakaneng), Sonop, Bokfontein and Checkersville.
The new plan will be effective from 01 January 2018. Progress in terms of the
SLP will be monitored and managed through the Stakeholder Forum.
20.3. Recruitment and Training
The Project will need 92 additional staff on CRM’s payroll (Table 21) and
sufficient financial provision has been included in the FS.
Unemployment forums will be consulted by CRM when recruiting new staff. Local
residents and previously retrenched employees with relevant experience will be
given preference on about 63 low level vacancies that have been identified for the
purpose. Barplats will advertise normally for vacancies not filled. CRM have a
clear recruitment plan in place with suitable employment equity targets. The
recruitment process can take up to two months, which will include mandatory
training.
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Table 21: Labour Complement
Department Category No. of Employee Grade
Security
Supervisor 1 C5
Guards Weighbridge 6 A2
Guards Tailings Dam 9 A2
Plant 3 A2
Subtotal 19 -
Logistics
Supervisor 1 C5
Logistics Clerk 1 B4
Snr Attendant 4 B2
Samplers 12 B1
Subtotal 18 -
Quality Control
QC Leader 4 C3
QC Attendant 8 B1
Subtotal 12 -
Metallurgy
Plant Manager 1 D4
Plant Foreman 1 C5
Plant Metallurgist 1 C3
Shift Foreman 5 C3
Operators 5 B5
Metals Accountant 1 C2
Attendants 20 B1
Subtotal 34 -
Engineering
Engineering Supervisor 1 C5
Artisan 4 C2
Engineering Helper 3 A3
Subtotal 8 -
Total 92 -
In essence, a training needs analysis informs a Work Skills Plan (WSP) which is
a requirement of the Skills Development Act. Suitable classroom facilities
(Engagement Centre) are available and specialist service providers (i.e. external
trainers) will be engaged to present the courses onsite.
20.4. Industrial Relations
CRM are party to a collective agreement that covers the recognition of trade
unions (i.e. National Union of Mineworkers (NUM) and United Association of
South Africa (UASA)) and aspects related to such recognition. The appointed
mining contractor will convene and run their own labour consultation forum.
Disciplinary and grievance procedures will be revised for the Project. The
agreement also provides for negotiations around conditions of services and
regular meetings with labour.
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20.5. Environmental Provisions
Sections 41 to 47 of the MPRDA address current legislative closure
requirements. Section 41(1) requires that an applicant for a prospecting right,
mining right or mining permit must, before the Minister approves the EMP in
terms of Section 39(4), make the prescribed “financial provision” for the
rehabilitation or management of negative environmental impacts.
The TSF is covered in the existing EMP at CRM and accordingly the existing
liabilities stemming from the TSF are provided for in the closure plan. An annual
compliance audit of the TSF is undertaken by ENVASS, to update the estimate of
the mine closure liability. The latest evaluation report indicates that the CRM
should have a R75 million provision for its environmental rehabilitation. CRM
have arranged with Lombard Insurance to issue financial guarantees to the DMR
for this amount. The guarantees are partially secured by cash and partially by
mine houses belonging to CRM.
20.6. Sound Mining Observations
Standards, procedures, code of practices and legal documents are in place to
ensure the safe running of the TSF. CRM have a safety program, risk assessment
procedure and a medical surveillance program to minimize the risk of losses to its
employees, assets and environment. All people entering the mine are required to
undergo induction, occupation related training and assessments to ensure the
company work achieve zero harm.
Previous engagements with relevant stakeholders revealed a number of minor
concerns which range from the quality of water resources to security, noise and
air quality. While it is noted above that these issues are addressed using
recognized and accepted management practices, community liaison and effective
environmental management is essential for the smooth running of the operation.
CRM has a safety, health and environmental department that audit compliance
with company standards. Regular meetings are held where issues relating to
safety, health and environmental risks are reported and discussed.
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21. CAPITAL AND OPERATING COSTS
21.1. Operating Expenditure
21.1.1. Introduction
The financial evaluation based on production, revenue, costs and global
assumptions has established that the project presents a positive NPV measured
at the company’s required rate of return.
The following were considered when compiling the cash flow model:
Establish cash flows in real terms,
Project future cash flows,
Using a discount rate, discount future cash flows to the present valuation
date, and
Perform sensitivity analysis.
21.1.2. Accuracy of Estimate
The methodology used in preparing the plant and infrastructure base costs,
based on the scope, results in an estimate with an accuracy of 15% quoted as
(-5%, +10%)
21.1.3. Methodology / Basis of Estimate
Operating costs have been generated from a zero basis and have been
benchmarked where appropriate against operating costs previously achieved at
the mine. Mining and treatment costs relating to the project have been sourced
from supplier quotes, while current actual labour costs have been used to
establish labour costs for the project.
All operating costs are denominated in South African Rand (ZAR). The Base Date
applied to the operating cost estimate is 1st September 2017 and all values have
been expressed in Real August 2017 money terms. Any values shown in United
States Dollars (USD) have been converted at a rate of USD 1.00 = ZAR 12.75.
21.1.4. Owner Operating Costs
Total operating costs are shown in Table 22. Owner’s operating costs take into
account both current care and maintenance costs and costs specifically
associated with the project.
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The owner’s operating costs include the following:
Labour: A total labour complement of 175 employees was used in
calculating labour cost provided in the model. Labour costed in accordance
to current operational requirements and personnel required specifically for
the project. The current operations cost is carried under overheads.
Maintenance: Costs have been provided in the model for
scheduled/planned plant maintenance.
Utilities: A detail calculation indicating electricity required for the project
and current operations (care and maintenance) was made. Eskom tariffs
for both high and low seasons were applied in determining the electricity
costs. This cost relates to a variable portion of the utilities based on
consumption.
21.1.5. Contractor’s Operating Costs
The total contractor operating cost per month is estimated at ZAR 2.1 M or
ZAR 8.76/RoM t, excluding critical spares and electrical maintenance. The latter
will be charged at cost plus 10%. A summary of the forecast monthly cost is
presented in Table 22 below.
Table 22: Summary of Contractor Operating Costs
Description ZAR 000’s
/ month Comments
Salaries 279 Manager, superintendents
Wages 655 FEL operators 41 employees, shift allowances, overtime
Consumables 51 PDS system, gaskets, hoses
P & G / Admin 60 Office maintenance, training, surveyor
Plant 1,058 Trach guns, LDV, diesel
Total 2,103
21.1.6. Operating Cost Summary
The level of detail undertaken in estimating the operating costs is considered
appropriate to ensure a 90% probability that the estimated costs will not be
exceeded.
A total operating cost of ZAR 458 M is included in the cash flow model. The
operating cost profile, on a unit cost per ton is tabulated below:
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Table 23: Operating Cost Summary
Description RoM
(t) Sales
(t)
Forecast LoM Production 6,420,469 901,248
Description ZAR / RoM t
ZAR / Sales t
Amount ZAR 000’s
Mining – Production 8.76 62.43 56,269
Mining – Wst for Construction 8.76 25.77 23,224
Treatment 19.32 137.65 124,054
Deposition 3.47 24.70 22,257
Overhead 31.16 221.99 200,067
Reclaimer - Rental 1.42 10.10 9,100
Contingency 3.52 25.05 22,581
Total 71.26 503.23 457,553
21.1.7. Sound Mining Observations
Given that the greater part of the mining operating cost is incurred by the mining
contractor, and thus defined in some detail in the mining contract, it is considered
likely that this component of operating cost has been accurately reflected in the
estimate.
The mining contractor likely to be appointed has considerable recent experience
in similar chrome recovery operations, which provides reasonable assurance that
planned mining efficiencies can be achieved.
Metallurgical operating costs were calculated from first principles and represent
well established technology and processes. It is also noted that the overhead
component of operating cost makes provision for current actual costs for Care
and Maintenance which will be absorbed into the project.
Sound Mining therefore considers that the overall operating cost estimate to be
reasonable and likely to fall within the range of accuracy quoted.
It is noted that no allowance has been made for spare parts other than pump
accessories.
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21.2. Capital Expenditure
21.2.1. Introduction
Capital costs of ZAR 219 M including contingency have been allowed for the
project. The capital costs include both owner’s costs and contractor’s costs.
Contractor’s costs constitute the majority of the capital costs and will be incurred
within the first six months of the project, while owner’s costs will be incurred at the
pre-production phase of the project. Building starter walls and moving materials
account for the major part of the tailings dam capital expenditure (Phase I). A
contingency of 10% has been applied to the direct project capital cost.
Capital expenditure has been expressed in the cash flow model in real August
2017 money values, with no escalation applied.
21.2.2. Accuracy of Estimate
The capital expenditure estimate has been determined at a 90% confidence level.
The majority of the costs were sourced from supplier quotes.
21.2.3. Methodology / Basis of Estimate
The methodology followed to determine a capital cost estimate for the chrome
recovery project to an accuracy of 90%, was firstly to clearly define and scope the
hydraulic mining strategy, mechanical mining phase followed by gravity
separation equipment and mechanical equipment list. The capital cost estimates
are based on determining total equipment, labour and consumables required.
The Base Date applied to the capital estimate is 1st September 2017 and all
values are expressed in Real August 2017 money terms. The Base Currency is
the ZAR. Where values have been expressed in USD an exchange rate of USD
1.00 = ZAR 12.75 has been applied.
21.2.4. Owner Capital Expenditure
The capital estimate is almost entirely ZAR denominated and majority of the cost
estimates have been sourced from supplier quotations and were based on actual
cost where operations/activities are similar (Table 24).
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Table 24 Summary of Owner’s Capex (excluding contingency)
Item Total BP 2017
Concentrator ZAR 000's
Replace tailings feed line 4,289
Tie in slurry line to Chrome plant and Tank 574
Upgrade tailings pumps 5,284
Upgrade tailings sump and connection pipes 538
Replace civils at Tailings pumps 161
Upgrade SCADA software and license 1,544
Upgrade Tailings MCC and Variable speed drives 6,289
Associated steel work in Tailings section 299
Motor replacements 1,468
Pump accessories 193
Valves and hydraulic power packs 1,999
Chrome plant pumps and return water pumps 1,620
Power line at TSF and associated works 1,373
Roads 742
Sewerage works 12
Crawls re certification and repairs 123
Mobile vehicles 0
Eskom TSF supply and HT Reticulation 1,497
Transformer MCC repairs 100
Compressed air 0
Crane hiring 276
Surge tank 1,000
Plant - Engineering 30,809
Gravity separation Equipment 13,116
Installation and Steelwork 1,183
Piping 897
Pumps 458
Densitometers 338
Samplers 1,960
Cranage 350
Repair Bridge 470
Plant - Spirals 18,772
Oversized Handling System 1,000
Security Equipment 648
IT network 10
ISO Accreditation 90
Bulldozer (topsoil) 60
Robot system at Bridge 19
Computers for Plant & Weighbridge 70
IT Capex 897
Total Owner's Capex 51,478
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Owner’s costs include:
Plant spirals: New equipment will be installed to ensure optimal
performance. This includes spirals, distribution boxes and cyclones.
Densitometers for measurement will be installed.
Plant refurbishment by engineering team: The plant has been stopped due
to the company being under care and maintenance. The refurbishment of
pumps prior to starting the tailings dam project was necessitated. The
electrical system requires upgrading and the SCADA system needs to be
reallocated with densitometers and other equipment to be connected
21.2.5. Contractor Capital Expenditure
The final capital cost for mining and deposition was estimated at ZAR 147 M,
which accounts for some 74% of the total capital cost, excluding contingency, of
ZAR 199 M. Table 25 below gives a breakdown of Contractor Total Capital cost.
Table 25: Summary of Contractor Capex (excl contingency)
Description RoM
(t) Sales
(t)
Forecast LoM Production 6,420,469 901,248
Description ZAR / RoM t
ZAR / Sales t
Amount ZAR 000’s
Slurry System 2.76 19.68 17,736
Jet Pumps 0.29 2.09 1,886
HP System 0.39 2.80 2,524
LP System 0.07 0.52 472
Infrastructure 0.35 2.52 2,273
Mining (Hydro Mining Infrastructure) 3.88 27.62 24,891
Preliminary and General 4.41 31.69 28,288
General Earthworks Tailings Dam 9.05 64.49 58,119
Drains 1.46 10.40 9,377
Storm and Dirty Water Trenches 1.73 12.33 11,115
Fence - - -
Lights - - -
Penstocks and Inlets 0.74 5.28 4,757
Reticulation 1.67 11.89 10,715
Tailings Dam 19.06 135.78 122 371
Total 22.94 163.40 147,262
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21.2.6. Capital Expenditure Summary
The level of detail included in the capital cost estimate is considered to be
appropriate to ensure 80% probability that the estimated capital costs will not be
exceeded. Table 26 presents the summary of the forecast of total direct capital
expenditure for the project.
Table 26: Capital Expenditure Summary
21.2.7. Sound Mining Observations
Sound Mining notes that bulk of the major costs in the capital expenditure
estimate is based on recent enquiries and quotations rather than factored or
benchmarked values. Both metallurgical and engineering capital requirements
were determined from engineering drawings and Process Flow Diagrams.
Equipment lists were determined. Quotations were then sourced from vendors
and reviewed.
The equipment specified in the capital estimate is clearly defined and supports an
established rather than an innovative or experimental process. In addition, the
quantities set out in the tailings component of the estimate represent only limited
uncertainty in scope.
In view of this relatively limited risk in quantities, timing and rates for a significant
part of the budget, Sound Mining would consider the capital estimate to fall within
the range of accuracy stated.
A provision should be made for a scrubber or similar attritioning piece of
equipment at the Fraser Alexander pumping station, to deal with +3mm material.
Test work to determine the equipment and PFD is still underway.
Description RoM
(t) Sales
(t)
Forecast LoM Production 6,420,469 901,248
Description ZAR / RoM t
ZAR / Sales t
Amount ZAR 000’s
Mining (Hydro Mining Infrastructure) 3.88 27.62 24,891
Tailings Dam 19.06 135.78 122,371
Oversized handling System 0.16 1.11 1,000
Plant - Spirals 2.92 20.83 18,772
Plant - Engineering 4.80 34.19 30,809
IT Capex 0.14 1.00 897
Total (excl contingency) 30.95 220.52 198,740
Contingency 3.10 22.05 19,874
Total (incl contingency) 34.04 242.57 218,614
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22. ECONOMIC ANALYSIS
22.1. Introduction
A financial model has been developed to evaluate the overall economics of
the project using the discounted cash flow method of investment appraisal. All
inputs to the model are in real September 2017 money terms, with no
escalation applied to revenue, capital or operating costs.
The Base Currency used in the model is the ZAR. All USD denominated
inputs have been converted to ZAR at a rate of USD 1.00 = ZAR 12.75.
22.2. Revenue
Revenue is based on an assumed Free on Mine (FoM) price of ZAR 870.79/t
received for a 40% chrome concentrate.
This value has been determined from a Cost Insurance and Freight (CIF) China
price of USD 153/t for a 42% chrome concentrate.
The value for a 42% concentrate is first adjusted to USD 146/t for the 40%
concentrate which would be produced at Zandfontein. The adjusted CIF value is
then converted to an equivalent FoM price by deducting the various percentage
based commissions and fees followed by the USD based freight charges. The
result is then converted to ZAR, after which the various local ZAR based logistics
costs are deducted to arrive at a notional FoM value in ZAR. At an exchange rate
of ZAR 12.75 = USD 1.00, the notional FoM price for a 40% concentrate would
amount to ZAR 870.79/t.
22.3. Discounted Cash Flow Analysis
NPV of the project, discounted at 13% per annum, is estimated to be
ZAR 42.2 M with an annualised internal rate of return (IRR) of 24%.
The maximum monthly negative cash flow of ZAR (27.5) M occurs between
months 3 and 7, with the maximum indebtedness of some ZAR (212.2) M
arising in month 9 (Graph 17). The project is forecast to generate a positive
cash flow in month 10 and reach break-even in month 25. Positive cash flows
averaging ZAR 12.9 M/month after payment of royalty are forecast over the
remaining LoM.
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Graph 17: Monthly and Cumulative Real Cash Flow
At a FoM price of ZAR 870.79/t for 40% chrome concentrate the project would
be likely to achieve a cash margin of 10% and an operating margin of 14%.
Figure 43 shows that the project is significantly more sensitive to Revenue
than to Operating Cost or Capital Expenditure, with a breakeven Revenue
(i.e., NPV = 0) forecast at approximately ZAR 810/t.
Figure 43: Sensitivity of Cash Flow to Revenue, Capex, Opex
Driver
NPV of Project Cash Flow
Revenue 80% 90% 100% 110% 120%
(ZAR M) (81.9) (19.9) 42.2 104.2 166.2
Capex 80% 90% 100% 110% 120%
(ZAR M) 83.6 62.9 42.2 21.5 0.8
Opex 80% 90% 100% 110% 120%
(ZAR M) 116.4 79.3 42.2 5.1 (32.0)
(250)
(200)
(150)
(100)
(50)
0
50
100
Mth 1 Mth 4 Mth 7 Mth 10 Mth 13 Mth 16 Mth 19 Mth 22 Mth 25 Mth 28 Mth 31
Cash F
low
(R
eal) Z
AR
M
Monthly Cash Flow Cumulative Cash Flow
(100)
(50)
0
50
100
150
200
80% 90% 100% 110% 120%
NP
V @
13%
pa R
eal Z
AR
M
Change in Variable
Rev Capex Opex
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22.4. Sound Mining Observations
Sound Mining has reviewed the calculation used in the cash flow model and does
not believe the notional FoM price used to be unreasonable. Both the CIF price
(USD 153/t) and the Rate of Exchange applied may be considered somewhat
optimistic, but not unreasonably so, (current CIF China rates are in the region of
USD 210/t to USD 220/t) and the various charges applied in the calculation are in
line with current rates. Sound Mining however cautions that there may some risk
in relying on the conversion from CIF to FoM rates as local market conditions
may result in a disconnect between the notional FoM value and prices actually
paid by traders or smelters for local delivery.
The NPV and IRR arising from the cash flow model confirm the viability of the
project at the notional FoM price used. Sound Mining’s observations under
revenue, capital expenditure and operating cost suggest the key inputs to each of
these categories to be reasonable.
While the cash flow model suggests positive monthly cash flows of ZAR 12.9 M
per month may be anticipated at the forecast grades and recoveries used in the
model, it should be noted that breakeven is forecast in month 25 of a projected 33
month LoM.
Given the project’s sensitivity to revenue, consideration should be given to basing
the project’s forecast selling price on that reflected in current local mine sales
agreements, rather than a notional price calculated from the CIF China value.
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23. ADJACENT PROPERTIES
The property is bounded to the east by Xstrata’s Eland mine and to the west be
properties held by Impala Platinum, Anglo Platinum and Lonmin.
To the north west of CRM are the operating mines of Eastern Platinum Mine,
Western Platinum Mine, Tharisa Minerals, Karee Platinum Mine, Rustenburg
Platinum Mines and Impala Platinum Mine. To the east is the property of
Elandsfontein. Samancor operate several chrome mines in close vicinity to CRM.
Sylvania Platinum scavenge chrome and PGMs from the Samancor TSFs.
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24. OTHER RELEVANT DATA AND INFORMATION
24.1. Legislative Framework
The South African Government has an extensive legal framework within which
mining, environmental and social aspects are managed. Included within the
framework are international treaties and protocols, and national acts, regulations,
standards, and guidelines which address international, national, provincial and
local management areas. South African statutory legislation and requirements
relevant to the projects and considered as part of this assessment included:
Mineral and Petroleum Resources Development Act (Act 28 of 2002)
(MPRDA);
Mineral and Petroleum Resources Development Amendment Act 49 of
2008;
Mineral and Petroleum Resources Development Draft Amendment Bill
(2013);
Broad-Based Socio-Economic Charter (and associated amendments,
2010);
Promotion of Beneficiation Bill;
Mineral and Petroleum Resources Royalty Act (Act 28 of 2008) (MPRRA);
National Environmental Management Act (Act 107 of 1998) (NEMA);
National Environmental Management: Air Quality Act (Act 39 of 2004)
(NEM:AQA);
National Environmental Management: Waste Act (Act 59 of 2008)
(NEM:WA);
National Environmental Management: Protected Areas Act (Act 57 of 2003)
(NEM:PAA);
Environment Conservation Act (Act 73 of 1989) (ECA) (Section 25 – Noise
Regulations);
National Heritage Resources Act (Act 25 of 1999) (NHRA);
National Forests Act (Act 30 of 1998) (NFA);
National Water Act (Act 36 of 1998) (NWA);
Hazardous Substances Act (Act 15 of 1973) (HAS); and
Mine Health and Safety Act (Act 29 of 1996) and amendments (MHSA).
The most important of these are summarised in the subsections to follow.
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24.1.1. Mineral and Petroleum Resources Development Act (Act 28 of 2002)
(MPRDA)
Types of rights and permits applicable to the mining industry in South Africa, as
provided for in the MPRDA and amendments, are detailed in Table 27.
Table 27: Types of Rights Applicable in South Africa
Licence Type Purpose Duration Requirements Conditions
Reconnaissance Permission
Exploration at the reconnaissance
stage. 1 year
Financial ability; technical ability
and work programme.
Holder does not have the exclusive right to
apply for a New Order Prospecting
Right (NOPR).
New Order Prospecting
Right (NOPR)
Exploration at target definition
stage.
Up to 5 years initially
Financial ability; technical ability;
economic programme; work programme and environmental
plan.
Payment of Prospecting fees.
Holder has the exclusive right to apply for NOMR.
Retention Permit
Hold onto legal rights between
prospecting and mining stages.
3 years initially
Prospecting stage complete;
feasibility study complete and Environmental
Management Plan (EMP) complete.
Project not currently feasible.
May not result in exclusion of
competition, unfair competition or
hoarding of rights. May not be
transferred, ceded, leased, sold, mortgaged or
encumbered in any way.
New Order Mining Right
(NOMR)
Development and production stage.
30 years initially Renewable for
further periods of 30 years.
Effective for life of mine (LoM).
Financial ability; technical ability;
prospecting complete; economic
programme; work programme;
social plan; labour plan and
completed EMP.
Payment of royalties (from 2010).
Compliance with Mining Charter and
Codes of Good Practice on broad
based BEE.
Mining Permit Small-scale
mining.
2 years initially Renewable for 3 further periods of 1 year at a time.
Life of project must be <2 years;
areas must be <5ha and
completed EMP.
Payment of royalties (from 2010). May not
be leased or sold.
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The South African government enacted the MPRDA on the 1st May 2004. It
defines the State’s legislation on mineral rights and mineral transactions in South
Africa. The Act emphasises that the government did not accept the existence of
the historic dual State and private ownership of mineral rights in South Africa and,
as such, the Act legislated that ownership of all mineral and petroleum resources
in South Africa now vests in the State. Additional objectives of the Act include the
promotion of economic growth, the development of resources to expand
opportunities for the historically disadvantaged, and the socio-economic
development of the areas in which mining and prospecting companies are
operating. It also provides for security of tenure relating to prospecting,
exploration, mining and production.
A further objective of the Act was to advance Black Economic Empowerment
(BEE) within South Africa’s minerals industry, by encouraging mineral exploration
and mining companies to enter into equity partnerships with BEE companies. The
Act also makes provision for the implementation of social responsibility
procedures and programmes by coal resource companies.
The Act incorporated a "use-it or lose-it" principle, that has been applied to
companies or individuals who owned mineral rights or the rights to prospect and
mine prior to 2004 (Old Order Rights). These Old Order Rights were required to
be transferred within specified timeframes, under the provisions of the Act, into
New Order Rights to prospect and mine.
Once the State has granted the conversion of the Old Order Rights to New Order
Rights, or has granted a New Order Right for new applications submitted after the
implementation of the MPRDA, a Notarial Agreement between the State and the
holder of the New Order Right is entered into. This Agreement sets out all the
conditions associated with the New Order Right. New Order Rights can be
suspended or cancelled by the Minister if, upon notice of a breach from the
Minister of its obligations to comply with the MPRDA, or the conditions prescribed
as part of its New Order Right, a breaching entity fails to rectify such a breach.
In addition, in terms of the MPRDA, mining and exploration companies have to
comply with additional responsibilities relating to environmental management and
to environmental damage, degradation or pollution, resulting from their
prospecting or exploration activities.
Section 37 of the MPRDA establishes the framework for the inclusion of
environmental management principles, with Section 39 establishing
environmental management programme and EMP requirements. Requirements
for the contents of exploration, scoping, EIA, EMPs and EMP reports are
provided in Government Notice Regulations (GNRs) 49, 50, 51 and 52.
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Sections 41 to 47 of the MPRDA address legislative closure requirements. GNR
527 of the MPRDA addresses the financial provision for mine rehabilitation and
closure and requires that the quantum of financial provision, to be approved by
the Minister, must be based on the requirements of the approved EMP and
include a detailed itemisation of all actual costs required for:
premature closure regarding;
the rehabilitation of the surface of the area;
the prevention and management of pollution of the atmosphere;
the prevention and management of pollution of water and the soil; and
the prevention of leakage of water and minerals between subsurface
formations and the surface.
decommissioning and final closure of the operation; and
post closure management of residual and latent environmental impacts.
GNR527 establishes the requirements for the SLP.
Amongst other aims, the MPRDA strives to transform the mining and production
industries. The Act requires the submission of the SLP as a prerequisite for the
granting of mining or production rights. The SLP requires applicants for mining
and production rights to develop and implement comprehensive Human
Resources Development Programmes including Employment Equity Plans, Local
Economic Development Programmes and processes to protect jobs and manage
downscaling and/or closure (DMR).
Monitoring and performance assessments, and waste management principles
inclusive of pollution control and waste management, and the management of
mine residue stockpiles and deposits are also included within the scope of
GNR527.
Blasting permits are required for any blasting activities as defined within the
MPRDA.
24.1.2. Broad-Based Socio-Economic Charter (2004)
Promulgation of the Broad-based Socio-Economic Charter for the South African
Mining Industry (also known as the Mining Charter) marked the end of protracted
debates and varying interpretations of the legislation’s requirements, paving the
way for the full implementation of the MPRDA.
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All mining and prospecting companies are required to comply with the provisions
of the Mining Charter. The objectives of the Mining Charter are to:
promote equitable access to the State’s resources by all the people of
South Africa. It required that every mining company achieved a 15% level
of ownership of its mining assets by historically disadvantaged South
Africans (HDSAs) by the 1st May 2009, and a level of 26% ownership by
the 1st May 2014;
substantially and meaningfully expand opportunities for HDSAs, including
women, to enter the mining and minerals industry and to benefit from the
exploitation of the nation’s resources. In terms of this requirement, 40% of
management roles were to be held by HDSAs by 2010;
expand the skills base of HDSAs to serve the community;
promote employment and advance the social and economic welfare of
mining communities, and the major areas from which labour is drawn to
carry out exploration or mining; and
promote the beneficiation of South Africa’s mineral commodities, whereby
the companies which have facilitated downstream, value-adding activities
for products they mine, could achieve an “offset” against the HDSA equity
participation requirement.
Most mining companies are already implementing their own empowerment
strategies. These strategies demonstrate their best endeavours to consider the
issues and a willingness to accommodate the requirements when they are finally
defined. Compliance with the Mining Charter is measured using a designated
scorecard, which provides a practical framework against which the Minister can
assess whether a company actually measures up to what was intended in the
MPRDA and the Mining Charter.
24.1.3. Amendment of the Broad-Based Socio-Economic Empowerment Charter
(2010)
The Amendment of the Broad-based Socio-Economic Empowerment Charter for
the South African Mining and Minerals Industry (the Charter Amendment) was
released in September 2010. It was unsurprising that it retained the minimum
target of 26% HDSA ownership of mining assets by 2014. However, an offsetting
of HDSA ownership by as much as 11% is now possible depending on the extent
of a company’s beneficiation strategies.
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BEE procurement targets in the Amendment are as follows:
a minimum of 40% of capital goods will have to be sourced from BEE
entities by 2014; and
70% of services and 50% of consumer goods will have to be purchased
from BEE entities by 2014.
In addition, multinational suppliers of capital goods will have to contribute 0.5% a
year of their annual income from South African mining firms towards a socio-
economic development fund.
HDSA targets for employment equity are also further refined and a minimum of
40% HDSA demographic representation is stipulated for executive management,
senior management, core and critical skills, middle management and junior
management by 2014.
Specific annual targets are noted for human resources development, since a
percentage of the annual payroll (excluding the mandatory skills levy) will have to
be spent on skills development activities and be reflective of South Africa’s
demographics. Skills expenditure, as a percentage of payroll, increases by 0.5%
each year, with an initial target of 3% of payroll in 2010, rising to 5% by 2014.
The expenditure is intended to support South African-based research and
development initiatives focused on solutions in sectors such as exploration,
mining, processing, technology efficiency in the use of water and energy in
mining, beneficiation and environmental conservation and rehabilitation.
The Charter Amendment also supports SLPs by insisting on:
an ethnographic community consultative and collaborative process prior to
the start of a mining project; and
a community development needs analysis, together with mining
communities, of projects to be implemented in support of Integrated
Development Plans, the spend of which should be proportionate to the size
of the mining investment.
The Charter Amendment also calls for an upgrade of hostels to family units, a
one-person-per-room occupancy rate, and support for home ownership options –
all of which should be implemented by 2014.
Environmental management and an improvement in the industry’s health and
safety performance are also highlighted, and best-practices in these areas are
specifically mentioned.
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The Charter Amendment also calls for annual reporting by mining companies on
their levels of compliance with the Mining Charter, and notes that noncompliance
with the Charter and the MPRDA will result in mining companies being in breach
of the MPRDA.
24.2. Risk Assessment
Extracts of the risk assessment performed in the FS are available in Appendix 2.
Sound Mining wishes to highlight three significant risks or uncertainties that could
reasonably be expected to affect the reliability or confidence in the projected
economic outcomes.
As the cash flow analysis has indicated that the project is significantly
more sensitive to revenue than to either capital or operating cost, price
volatility is considered both a risk and uncertainty. As the forecast FoM
revenue is linked, even if not wholly dependent, on a USD denominated
market price, volatility may be expected to arise from both market
conditions, which could be considered to be dependent on fundamental
supply and demand relationships, and ZAR exchange rate related
volatility, which may often be driven by non-market related events or
sentiment.
The negotiation of long-term sales contracts with both smelters and traders
for a significant portion of forecast production is considered an effective
means of mitigating the impact of price volatility.
The Risk section of the ITR notes the potentially severe impact on not only
the viability of the retreatment project but also the risk to areas adjacent to
the project which may arise from issues relating to the structural integrity of
the TSF and potential environmental impacts. Although serious breaches
may be considered unlikely, the potential impact may be severe, and
warrant continuous management and operational monitoring and
evaluation, with appropriate remedial action where necessary.
Although on-going implementation of the Mine’s Social and Labour Plan
commitments is likely to support good community relations, non-mining
related issues linked to events at the nearby Marikana operation may
increase community-related uncertainty entirely beyond the control of the
Mine.
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25. INTERPRETATION DATA AND INFORMATION
A technical review of the data used in the Mineral Resource estimation has
shown the quality of the data to be adequate for the intended purpose. The
historical drill results have limited QAQC monitoring as does the database in
which the data is stored.
Sound Mining found no fatal flaws in the modifying factors applied in the FS, and
accordingly this ITR presents a Mineral Reserve of 6.42 Mt at 22.36% Cr2O3
which is based on robust modifying factors. However the three material risks in
the opinion of Sound Mining are:
Chrome price fluctuation;
Politically motivated unrest, illegal squatting; and
Failure of TSF wall.
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26. RECOMMENDATION
As currently envisaged, the retreatment project has been required to use a high
COG to compensate for the significant drop-off in yield experienced at grades
below about 19%. The LoM based on the current COG is thus limited to some 33
months at a production rate of 240 ktpm, while cash flow modelling suggests
break-even may only occur in month 25.
The recovery of PGMs from the TSF should therefore be evaluated with a view to
lowering the COG and thus allowing a greater part of the available resource to be
treated over a longer LoM.
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27. REFERENCES
1. Bankable Feasibility Study for Chrome Recovery Plant Treating Tailings
Material at Eastern Platinum Mine Facilities, Prepared by: JA Coetzee,
Reviewed by: H Hanson, July 2017 -(BFS Folder)
2. Mineral Resource Estimate for Barplats Zandfontein UG2 Tailings Storage
Facility, SRK Consulting, 1st August 2017 - (Mineral Resource Folder)
3. Tailing Storage Facility Project Ore Reserve, Dr Bielin Shi, August 2017-
(Mineral Reserve Folder)
4. Mining Rights – (Locality Plan Folder):
BML 78 MR.pdf
BML 151 MR.pdf
BML 307 MR.pdf
BML 332 MR.pdf
BML 363 MR.pdf
Map CRM Mineral Rights.pdf
CRM Farm & Portions Boundaries.pdf
5. SLA Folder: Corporate Organization Chart.doc and 2016 List of SLA.xlsx
6. Historical Chrome Production.xlsx
7. PGM and Chrome Model (019).xlxs
8. CRM’s EMP report (approved January 2001) (SRK, 2000) (Engineers, 2007).
9. TSF Risk Assessment, SRK Consulting (South Africa) (Pty) Ltd
10. Metago Report - Oct 2006
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Alan Page
SRK Consulting (South Africa) Pty Ltd 265 Oxford Rd,
Illovo 2196,
Johannesburg,
South Africa.
Consent of Qualified Person
RE: The Zandfontein UG2 Tailings Retreatment Project �WKH�³Project´�
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Yours truly,
____________________
Signature
Alan Page
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Appendix 2: Risk Assessment
In compliance with the Mine Health and Safety Act (Act No. 29 of 1996) and
relevant South African legislation, the mine has implemented a Risk Management
Policy and procedure. The Management team was tasked to assess the project
risk to ensure the integrity of the Barplats risk management and internal controls,
as well as maintaining and monitoring the organisations systems of internal
control.
The ultimate outputs of any business risk identification exercise are to:
Identify and prioritise business risks that have the highest potential to
impact (positively or negatively) on the achievement of the company’s
strategic objectives.
Provide a valuable tool and reference source for management,
assisting them with identifying and/or managing strategic risks including
financial, operational, compliance and reputational risks.
Provide an initial risk profile, which will usually form the basis for ongoing
review that will assist with:
The determination of the proposed focus of a detailed risk management
approach (i.e. risk management plan) for the organisation.
The development and rollout of controls and an action planning process to
address an appropriate risk response strategy for significant risks
The risk categories were aligned to the functional areas of Barplats. The
purpose of the risk categories is to identify those risks that directly affect and/or
impede business ability to achieve strategic and business objectives.
Risk Categorisation
During the risk assessment workshop, risks were categorised according to
pre-defined “Risk Focus Areas”. The focus areas for the workshop are the
following and was discussed at the workshop:
Strategic, Commercial and Reputational
Strategic and commercial risks pose threats to the commercial success of a
company. They usually arise from poor business decisions or their incorrect
execution, tend to be longer term in nature and affect business development
and growth.
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Reputational risk, on the other hand, is related to the trustworthiness of a
business and arises from events that undermine public trust in an
organisation’s brand, services and products as a result of internal or external
threats. The workshop focused on the following risk categories:
strategic and Governance;
growth and Diversification; and
business Development, Marketing and Sales.
Organisational and Operational Risk
These risks arise from inadequate or failed internal activities. They may
include poor customer service provided by outsourced providers, decreased
efficiency and quality in outsourced processes, and financial and reputational
loss. Or, they may arise from external events. They affect the efficiency and
effectiveness of day-to-day operations and may, if severe or ongoing, affect
one or more of the other risk categories. The workshop focused on the
following risk categories:
operations;
human resources; and
information technology.
Financial Risk
There are many kinds of risk associated with the effective financial operation
of a company including exposure to commodity prices, foreign currencies and
interest rates, the risk of bad debt, fraud and difficulty in raising finance. The
workshop focused on the following risk categories:
Finance Risk; and
Capital Requirements.
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Compliance and Regulatory Risk
These are risks that expose a company to compliance issues or external
litigation. They include legal risk and result from violations or non-conformance
with contracts, laws, rules, regulations, prescribed practices, internal policies
and procedures or ethical standards. The workshop focused on the following
risk categories:
Regulatory Compliance; and
Health, Safety and Environment.
Risk Assessment
In any risk assessment exercise, it is essential that risks are not only
identified, but also rated and ranked (prioritised). This is done by rating risks
based on the likelihood (probability) of occurrence and the impact, should that
risk materialise.
For the purpose of this exercise, the workshop considered inherent risks, i.e.
the risk to the organisation in the absence of any actions management might
have taken to alter either the specific risk’s likelihood or impact. The residual
risk was not assessed during this workshop and can only be determined once
risk responses have been developed and evaluated.
Likelihood and Severity Rating
When voting on the likelihood of a risk materialising, the workshop considered
the possibility that the given event or risk will occur, in the absence of any
actions management might have taken to mitigate the risk or reduce the
probability of the risk materialising.
The likelihood of occurrence will be assessed as follows:
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Table A2-1: Impact / Severity Rating Table
Impact Type Minor Moderate Substantial Major Catastrophic
11 12 13 14 15 16 17 18 19 20
Safety & Health
Event but no injuries (Near misses)
Injuries but no lost time
Lost time injuries without perm disability
Lost time injuries with perm disability
Fatalities
1 person exposed
More than 1 person
FAL MTI 1 person More than 1
person 1 person
More than 1 person
One or two person/s
More than 2 persons
Gross Loss Rands Less than R500,000
Less R1 mil
Less R1.5 mil
Less R2 mil
Less R3 mil
Less R4 mil
Less R10 mil
Less R20 mil
Less R30 mil
>R40 mil
Operation Interruptions
Several Hrs production interruption in some
working places
Several Hrs production interruption in most
working places
> One day production interruption
> 5 days production interruption
> 10 days production interruption
Reputation Local public awareness Local public concern Some adverse media
attention Significant adverse media
attention Serious public / Media
outcry
Environmental Low reversible impact on
local area Moderate reversible impact
on local area Moderate reversible impact
on region Serious but reversible
impact on region Serious reversible impact. national press coverage
Governmental & Legal
Some relationship concerns
Some relationship concerns.
Tolerable legal fines
Significant relationship concerns.
significant legal fines
Substantial breakdown in relations.
Severe legal fines
Severe breakdown in relations. Temporary loss
of permits / license
HR & IR Some unresolved
grievance Significant unresolved
grievances One-day work stoppage > 5-day work stoppage
Prolonged industrial action impacting more than half of
operation
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Table A2-2: Likelihood Rating Table
Almost Certain 4.75-5 Known to have occurred regularly within the organisation.
Likely 4.25-4.5 Likely to occur once or twice per year.
Possible 3.75-4 Likely to occur once or twice per 5 years.
Unlikely 3.25-3.5 Likely to occur once or twice per 10 years
Rare 2.75-3 Conceivable in extreme circumstances only. If it did occur it would be a once-in-a lifetime
Table 2A-3: Risk Rating
Minor Moderate Substantial Major Catastrophic
11.0 12.0 13.0 14.0 15.0 16.0 17.0 18.0 19.0 20.0 Risk Rating
5.0 55 60 65 70 75 80 85 90 95 100 Extreme
4.5 50 54 59 63 68 72 77 81 86 90 High
4.0 44 48 52 56 60 64 68 72 76 80 Moderate
3.5 39 42 46 49 53 56 60 63 67 70 Low
3.0 33 36 39 42 45 48 51 54 57 60
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Top Risks
The table below, records the detailed results for the top 10 inherent risks.
Table 2A-4: Top 10 Inherent Risks
Rating Risk Area Potential Hazard Likelihood Impact Risk Rating Sound Mining Comment
1 Strategic Chrome price fluctuation 4.8 18.0 86 Based on recent fluctuations in Chrome Prices. No off-take agreement
2 Compliance Politically motivated unrest, illegal squatting
4.5 18.0 81 Political unrest evident in the area
3 Operational Failure of TSF wall 3.8 19 72 Mitigating plans in place
4 Compliance Social and labour plans, mining charter non implementation
4.5 16.0 72 Uncertainty remains around Mining charter
5 Strategic High re-mining complexity 4.0 17.0 68
6 Financial Volatile currency environment 4.3 16.0 68
7 Strategic Community expectation too high 3.8 18.0 68
8 Strategic Not realising forecast production 3.8 17.0 65
9 Financial Operating cost – incorrect estimates 3.8 17.0 65
10 Financial Capital cost – incorrect estimates 3.8 17.0 65
Two extremely high risks remain and these need to be mitigated and managed so as to ensure they become tolerable.
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