Mineral Reserves and Resources

The mineral resources and reserves were classified according to the South African Mineral Resource Committee (SAMREC) Code. SAMREC defines a mineral resource as: ‘a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable and realistic prospects for eventual economic extraction’.

In terms of the Code, ‘the location, quantity, grade, continuity and other geological characteristics of a mineral resource are known, or estimated from specific geological evidence, sampling and knowledge interpreted from an appropriately constrained and portrayed geological model. Mineral resources are subdivided, and must be so reported, in order of increasing confidence in respect of geo-scientific evidence, into inferred, indicated or measured categories’.

To elaborate, a mineral reserve is the economically mineable material derived from either a measured or an indicated mineral source. It includes diluted and contaminated materials and allows for mining losses. At minimum, an appropriate assessment for a project should be a pre-feasibility study. Alternatively, a Life of Mine Plan – detailing considerations; modifications; realistically assumed mining; and all other modifying factors such as the metallurgical, economic, marketing, legal, environmental, social and governmental impacts – should be drawn up.

The cut-off feed grade to economically produce a saleable phosphate rock concentrate was calculated using methods originally made famous by leading mathematician and mining consultant Kenneth Lane. The cut-off grade currently used for the North and South mineral reserves is 5.5% P₂O₅, with material with a grade of between 4% and 5.5% P₂O₅ classified as marginal ore.

Proved mineral resources as at 31 March 2010

Proved and probable mineral reserves, as at 31 March 2010

North Pyroxenite deposit

Foskor commenced mining phosphate-bearing ore from the North Pyroxenite deposit, situated in the north-western part of the Palabora Igneous Complex, in 1966. From 1961 to 1977, almost 150 drill holes or 24,377 metres were drilled. Between 1980 and 1984, an additional 55 holes were drilled around the existing pit, adding a further 23,200 metres.

The lithological (rock classification) information from these holes was interpreted to build a resource mineralisation model. On this basis, the mineral resources were estimated and categorised as either measured, indicated or inferred. Optimisation of the pit was designed using the Whittle pit method (i.e. the global open pit mine planning system used to maximise net present values, and to balance schedules, blends and stockpiles). The North Pyroxenite mineral reserves were estimated with modifying factors at 432.7 million metric tons as at 31 March 2010.

South Pyroxenite deposit

Drilling in the South Pyroxenite area began in the late 1950s and continued into the 1960s. In the 1990s an infill drilling programme was terminated prematurely, due to financial considerations, but was completed during 2005/06. In total, 143 drill holes or 49,584 metres were drilled. Bulk and trench sampling was also done in the South Pyroxenite area.

The geological and resource models for the South Pyroxenite area were based on the exploration campaigns. The geological contacts were interpreted from the drilling data. Ordinary kriging was used to estimate the P₂O₅ block model values, which were finally validated through comparisons against the original drill hole data.

Mineral resources in the South Pyroxenite area were audited by Snowden Mining Industry Consulting in 2008. As at 31 March 2010, the reserves were estimated at 997 million metric tons.

Central area: PMC active tailings dam

Phosphate-rich tailings have been deposited in the PMC active tailings dam since the late 1970s. Foskor owns the rights to the apatite in the tailings even though the dam is located on PMC’s premises. A resource of approximately 297 million metric tons with an in situ (i.e. prior to processing) grade of 6.6% P₂O₅ was delineated through drilling and sampling during the 1990s.

The data collected during exploration was evaluated for geostatistical application. An oriented block model was then created and ordinary kriging was applied to estimate the grade distribution throughout the dam. The resources were categorized as either measured, indicated or inferred.

In 2003 a feasibility study (carried out with assistance from Snowden Mining Industry Consultants and Rio Tinto Technical Services) to reclaim the tailings revealed that the planned capital and operating costs would exceed actual benefits. The project was aborted and PMC’s use of the tailings dam continued.

Stockpiles

The carbonatite intrusion in the centre of the igneous complex is surrounded by apatite-bearing foskorite and pyroxene pegmatoid rock types. PMC used to mine and stockpile the foskorite and pyroxene pegmatoid rock as a by-product of mining the copper bearing carbonatite ore. PMC selectively mined and stockpiled ore according to the Extension 100F Agreement between Foskor and PMC. The agreement gave PMC the right to process ore with a less than an agreed P₂O₅ grade, and to retain every mineral except phosphate.

The rights to the ore mined by PMC were determined by conventional grade control practices by PMC and monitored by Foskor. PMC commenced mining in 1965, and in 2002 the opencast mine reached its maximum planned depth of 750 metres, after which PMC developed an underground mine in the same ore body below the opencast mine. The foskorite and apatite-rich pegmatoid mined by PMC containing more than 6% P₂O₅ was stockpiled as foskorite stockpiles for Foskor. The remainder of these stockpiles have been mined and processed during the year under review.

Palabora phosphate & vermiculite tailings

Currently, PMC operates an opencast mine in the South Pyroxenite area, which produces vermiculite concentrate from the plant. PMC transports the high P₂O₅ tailings from this plant to a stockpile close to Foskor’s East Crusher. Foskor has reclaimed high phosphate tailings from this stockpile since 2006.

Responsible persons

The estimated mineral resources and reserves reported here were reviewed and endorsed by the following competent persons:

• Mr H Coetzee, BSc (Geology), 23 years’ experience, Mine Geologist;
• Ms N Mzamo, BSc (Hons) (Geology), 10 years’ experience in mining geology, registered with SACNASP as professional natural scientist, Superintendent Mine Services;
• Mr C Terblanche, BSc (Mining), BCom, MBA, 12 years’ mining experience, Senior Mine Engineer; and
• Mr N Richardson, NHD (Mine Survey), Government Mine Surveyor Certificate of Competence, Chief Surveyor.
  

Snowden Consulting was appointed to act as competent person in the validation of the original report compiled in 2009.