THUNGELA RESOURCES LTD

THUNGELA RESOURCES LTD Organogram

Thungela Resources Ltd is a large producer and exporter of thermal coal in South Africa, based on aggregate thermal coal reserves and marketable thermal coal production. As a group, Thungela exports thermal coal mainly to India, Asia, SEA, Middle East and North African markets.\r\n\r\nThungela owns interests in 7 mining operations in the Mpumalanga province of South Africa:\r\n• Goedehoop colliery - underground thermal coal mine, with Coal Resources Measured: 243.8Mt, Indicated: 5.8Mt, Coal Reserves Proved: 6.4Mt, Probable: 0.2Mt and LOM of 2 years\r\n• Greenside colliery - underground thermal coal mine, with Coal Resources Measured: 8.5Mt, Indicated: 4.0Mt, Coal Reserves, Proved: 15.0Mt, Probable: 2.1Mt, and LOM of 5 years\r\n• Isibonelo colliery - open cast thermal coal mine, with Coal Resources Measured: 16.4Mt, Coal Reserves Proved: 7.4Mt, and LOM of 2 years\r\n• Khwezela colliery - open cast thermal coal mine, with Coal Resources Measured: 39.5Mt, Indicated: 9.5Mt, Coal Reserves Proved: 26.4Mt, Probable: 2.1Mt, and LOM of 6 years\r\n• Mafube colliery - open cast thermal coal mine, with Coal Resources Measured: 26.6Mt, Indicated: 1.4Mt, Coal Reserves Proved: 82.6Mt, Probable: 32.1Mt, and LOM of 20 years\r\n• Rietvlei colliery - open cast thermal coal strip mine, with Coal Resources Measured: 5.0Mt, Indicated: 0.5Mt, Coal Reserves Proved: 20.9Mt, Probable: 2.5Mt, and LOM of 8 years\r\n• Zibulo colliery - underground and open cast mini-pit thermal coal mine, with Coal Resources Measured: 376.4Mt, Indicated: 55.5Mt, Coal Reserves Proved: 27.1Mt, Probable: 24.3Mt, and LOM of 8 years\r\n\r\nProjects\r\n\r\n• The Elders Project: The Elders production replacement project will establish an underground mine to maintain the production capability of the South African export coal business as other operations approach the end of their economic mine lives. The project is intended as the replacement for the Goedehoop Colliery volumes as that operation nears the end of its life. It is anticipated that the project should sustain regional jobs and existing community suppliers.\r\nThe on-site infrastructure has been planned to produce up to 4.2Mtpa of ROM, initially from the higher quality No 2 Seam, with further optionality to mine the No 4 Seam sequentially or simultaneously depending on offtake demands. The No 2 Seam is well suited to produce a washed 5,700kcal/kg export product and the No 4 Seam is better suited for domestic customers as raw sales or a lower grade 4,500kcal/kg domestic product.\r\nThe development capital is estimated in the order of approximately R2.0 billion and should be completed 24 months after final notice to proceed.\r\nThe project has commenced construction with the main boxcut and structural, mechanical, piping and platework contracts in progress. The capital spent in 2022 is R205 million, with 52% of the total capital already committed. First underground coal is expected in the first quarter of 2024, followed by a steady ramp-up.\r\n\r\nCapex cost R2.0 billion (between 2022 and 2025), LOM 12 years steady-state (No 2 Seam), Production profile 4.2Mtpa ROM (No 2 Seam), Potential quality 5,700kcal/kg export, 4,500kcal/kg domestic, Project stage is in the Execution phase.\r\n\r\n• The Zibulo North Shaft project \r\nThe Zibulo North Shaft project aims to establish a new decline shaft and associated infrastructure within the existing Zibulo mining right area. This will enable access to the Zondagsfontein West reserves thereby extending the LOM to beyond 2040, and ensure continued utilisation of the full allocated wash capacity of the Phola Coal Processing Plant. The new shaft will improve operational efficiency and optimise the cost structure through reduced travel distances to the coal face. This will further mitigate the loss of ROM production as the opencast operation winds down, and de-risk the Zibulo operation through access to additional panels. The new shaft is positioned approximately 8km northwest of the existing shaft on the edge of Zondagsfontein West Resource area, which was acquired and licensed at the same time as the Zondagsfontein East (current Zibulo) mining area.\r\nThe on-site infrastructure is aimed at sustaining ROM production of up to 8Mtpa after the initial underground development has been completed. The export product quality is expected to reduce from 6,000kcal/kg to 5,700 kcal/kg from 2030 based on current operational strategies, while production beyond 2035 will be targeted for domestic supply.\r\n\r\nCapex cost R2.4 billion (between 2023 and 2026), LOM extension 10 to 12 years, Production profile 7.8 to 8.4Mtpa, Potential quality 6,000kcal/kg export, 5,700kcal/kg export, Project stage is the Bankable feasibility complete.\r\n\r\n• The Lephalale coal bed methane (LCBM) project \r\nThe Lephalale coal bed methane (LCBM) project is located approximately 30km north-northeast of the town of Lephalale within the largely undeveloped Waterberg Coalfield of the Limpopo province of South Africa. Thungela holds an exploration right which covers a total area of approximately 132,000ha and owns approximately 12,500ha of surface rights within the exploration right footprint.\r\nThungela has been involved in the LCBMP since 1992, culminating in the establishment of a five-spot pre-feasibility test site in 2004, which ran for 10 years. The quality of the LCBMP has been confirmed by several studies supported by over 100 exploration holes.\r\n\r\nThe LCBMP is a significant methane gas resource and Thungela is currently evaluating its development options and potential phasing. The options being explored as a lower carbon energy source include: \r\n• Power generation\r\n• Diesel fuel substitution\r\n• Liquefied natural gas\r\nAn additional consideration is the associated water that is produced, which could become an important resource to the water-scarce Lephalale district. Our development options are supported by a resource model that was developed with Advanced Resources International Inc. that supports the 3.5 trillion cubic feet (Tcf) gas in place estimate, of which 1.5Tcf is extractable.A feasibility study has commenced and an associated production \r\nright application is planned for mid-2023