The coal deposit at Matla forms part of the Highveld coalfield. The coal seams are found in the Vryheid formation of the Karoo Supergroup. The stratigraphy sequence in the Matla area includes five coal seams that can be easily correlated with seams found in the Witbank coalfield. Coal seams in the area are generally flat and continuous, with subsequent igneous activity resulting in displacements and devolatilisation of coal seams at places.

The principal economic seams currently exploited are S2 and S4, with mining of seam 5 (S5) terminated in 1998 due to high levels of contamination and subsequent increase in abrasive index. The Matla mining area is characterised by two distinct dolerite types, the B8 (porphyritic) and B4 (olive-rich) types which have varying effects on seam displacements and coal burning and devolatilisation. A dolerite sill with an average thickness of 10m is generally found above S5 in mine 2 and 3, however, the sill intersects the coal seams and underlies S2 in mine 1 and S4 on the south-western part of the Reserves. This sill has burned and devolatilised S2 on the southern part of the mining area in mine 1. Floor rolls have been encountered in S2 workings and created some challenges in some mining sections. The floor rolls strike NE-SW vary in width between 50m and 200m and have amplitudes up to 1.5m. The floor rolls are more prominent if the seam floor is close to the basement contact. Sandstone lenses encountered are generally less than 0.5m in width but can reach up to 1.5m in thickness.

S5 was historically mined for a limited period but is currently not extracted. The seam is most prominent in the mine 2 and mine 3 areas and, to a limited extent, in the Western Limb of the southern part of the mining rights area. The roof comprises ~0.5m of thick sandy micaceous shale at mine 2 that thickens up to ~1.6m in mine 3. Above this is a competent sandstone, usually saturated with water, resulting in a weathered parting between the two sequences. This presents challenges in supporting the shale during coal extraction and must, in most cases, be removed. The seam consists of mixed coal and torbanitic material with an average thickness of 1.5m.

S2 at Matla is well developed in the north-western part of the mining area, in the mines 2 and 3 Resource areas. It thins out to the south, where thickness averages at 1.2m to 2.5m. Coal qualities are also generally poor in this area, thus S2 is not generally mined in the southern portion of the mine area. S4 is generally well distributed throughout mine 1, 2 and, to a limited extent, mine 3. Seam thickness varies between 1.0m to 5.5m and consists of homogenous, dull lustrous coal interspersed with bright coal bands.

S4 splits in two thin and poor-quality horizons impacting the economic viability in mine 3. The best S4 qualities are on the southern part of the lease area (mine 1 area). However, S4 is heavily intruded by dykes in this area, creating significant challenges for coal extraction.

Matla comprises three underground production facilities: mine 1, mine 2 and mine 3. All three are long-life assets, each with a specific operating capacity comprising conventional coal circuits to produce bituminous coal. Work at mine 1 was stopped in 2015 due to pillar instability but an Eskom-approved project to relocate mine 1 access is currently in the implementation phase. Mine 2 and mine 3 use both bord-and pillar and shortwall methods to mine seam 2 (S2) and seam 4 (S4) coal seams. In 2019, Matla continued with pillar extraction (stooping) as a mining method to maximise Resource extraction. At mine 2, there are four continuous miner (CM) sections (two currently stooping) and a shortwall section mining S2. At mine 3, there are two CM sections (one currently stooping) and a shortwall section mining S4 and three CM sections mining S2.

Matla, an Eskom-tied underground operation, extracts coal through three underground mines. Matla extracts 2 seam select and the lower-quality but somewhat thicker 4 seam in a specific scheduled relationship to blend and honour the volume and quality requirements of the Eskom agreement. It is therefore of the utmost importance to have adequate access to quality Coal Reserves to ensure the correct volumes are scheduled for the short, medium and long-term strategies. Both coal seams’ mineable Reserves are rapidly diminishing within mines 2 and 3 and the unfortunate closure of Mine 1 due to pillar instability in 2015 placing a burden on the operation to comply with contractual expectations. However, Exxaro has, since closure of Mine 1, accelerated exploration and outlined 2 seam and 4 seam Coal Resources that will be accessed through either new or existing infrastructure.

During this time, annual mining targets were supplemented by the identification of additional potential mineable areas, prioritising exploration activities, and through innovative and adaptable mine planning extract the additional required Coal Reserves. Exploitation of the Mine 3 low coal seam is a clear example of this successful undertaking.

The outcome of the studies to secure long-term Coal Resources resulted in a number of expansion projects. The first was the completion of a relocation investigation that entails developing a new box-cut and tunnels to access the remaining Mine 1, 4 seam Coal Reserves. The study was approved and is currently under construction, expecting first coal in the fourth quarter of 2022. The 4 seam shows consistent continuity in thickness and quality although a number of geological challenges relating to faulting, associated dolerite intrusions and seam floor undulation were identified within the larger project area. The challenges were investigated and subsequently considered during mine planning. The geological challenges will be further investigated through vertical and incline drilling with supplementary surface geophysical surveys in 2020. An important activity to highlight is the continuous assessment of geotechnical accessibility to ensure that all Coal Resources can be accessed in future and successfully converted to Coal Reserves.

Two additional expansion projects, consisting of a decline and incline (respectively) below and above current workings at mines 2 and 3 were approved by Eskom, unlocking seams 2 and 4 Coal Reserves. The decline at Mine 3 with the associated vent shaft, is under construction and first coal is expected in the second quarter of 2020. Matla accesses Coal Reserves under challenging geological and mining conditions. Thinning coal seams, variability in coal quality and roof conditions due to the impact of intrusive dykes and sills, as well as geological faulting, present challenges for coal extraction in a number of mining sections. Focused exploration activities, including surface and downhole geophysical surveys and vertical and horizontal drilling, are employed to proactively outline the impacts on mine planning. Directional surface to seam drilling will be implemented for the first time to investigate a number of prominent geological faults in the Mine 2 Incline project area. The drill rig will be located on two positions where it will drill a number of trails to specifically derisk the planned main developments. The geological model was updated during the reporting year resulting in minor Coal Resource changes. These changes, mining depletion and the disposal of stooping areas to protect surface infrastructure were the primary contributors to Coal Reserve changes. A submission for the renewal of the Matla mining right was submitted on time during the reporting year and Exxaro has reasonable expectation that the approval will be granted.

Matla mine produces thermal coal exclusively to Eskom. Historically, Matla produced approximately 12.5Mt of coal per annum. Due to the closure of Mine 1, Matla currently produces about 6Mt of coal annually. None of the coal mined at Matla is beneficiated but is crushed and screened (sized) before being conveyed to the power station.