Arnot geology.
The Arnot operation lies close to the eastern edge of the Witbank coalfield, close to the margin of the Main Karoo Basin in which the stratigraphic column is reduced to 80m but still contains coal seams correlating to the five classical (#1-5) Witbank coalfield seams. The pre-Karoo basement topography consists of felsites and diabase intrusives associated with the Transvaal Supergroup and Bushveld Igneous Complex respectively. The Vryheid Formation is conformably deposited on top of the reworked glacio-fluvial tillite of the Dwyka Group.

Seam 1 (S1) and seam 2 (S2) are the only coal seams of economic interest in the Arnot mining right area, and these correlate with the typical Witbank coalfield seams. The S1 is well- developed across the entire underground and opencast Resource areas. It is intersected at an average depth of over 50m in the underground areas, and the depth and undulation render it unfeasible for exploitation. It does, however, occur at shallower depths of at least 23m in opencast areas and remains a good prospect in these areas.

The S2 is the main, well-developed coal seam of economic importance at Arnot. The depth to the top of S2 depends largely on local surface topography and reaches a maximum depth of 80m along the eastern boundary of the mine lease area, and pinches and thins out in the eastern parts of the mining section due to local, pre-Karoo basement palaeo highs. This seam is generally intersected at an average depth of 44m in underground Resource areas and at average depths of 20m in opencast Resource areas. It is continuous across the Arnot mine lease area and varies from <1m to 4.5m in thickness with an average of 3.1m. S2 is site-specifically subdivided into the seam 2 lower (S2L), seam 2 upper (S2U) and seam 2A (S2A) marked by two in-seam partings, namely P2 and P3 respectively. The S2L is the only coal seam being mined in the underground Resource areas and consists of dull to lustrous coal with several bright coal bands and occasional stone partings. It has an average of 23.28MJ/kg (adb) calorific value in the underground Resource area and a 24.22MJ/kg (adb) in the opencast area, and constitutes about two-thirds of the mineable in-situ Coal Resource in the Arnot mining area.

The seam 4 (S4) occurs erratically across the mining area with an average thickness of 0.5m. The seam is often split by internal clastic partings into S4L and S4U. The seam is overlain by interlaminated units of siltstone and shale with the seam 5 (S5) sporadically developed in small areas.

A number of faults trend roughly north-east south-west with displacement of 1m to 3m are present in the Arnot mining right. However, one large pertinent thrust fault (L9) separates the southern Coal Resource area from the main Resource. Accessibility through this fault is problematic and will require specialist mining intervention. A limited number of dolerite dykes are known to have intruded the Karoo sediments in the area. Dykes in general lack magnetic signature and are not responsive to geophysical method of detection. The presence of dolerite dykes and sills has a devolatising effect on the S2L coal seam. The intersected dykes are generally thin (0.3m to 1.5m), discontinuous and sub-parallel to a sill in an east-west direction. This sill is well- developed (about 5m to 40m thick) and overlies the S2L coal seam along the southeastern Resource boundary.

Arnot was contracted to supply coal to the nearby Eskom Arnot power station until 31 December 2015. This was achieved by extracting 2 seam lower (S2L) from two underground shafts, 8 and 10, using mechanised mining equipment (bord-and-pillar extraction) while Mooifontein opencast used conventional truck-and-shovel, roll- over mining method to extract S2L and 1 seam (S1). One beneficiation plant handles around 14% of the RoM and the mine is served by several good access roads, gravel and paved. The mining right area is 15 021.21 hectares and annual production in 2014 and 2015 was 1.44Mt and 1.40Mt respectively. Arnot has a mining right (MP325MR) that is executed and lapses December 2038.

Wescoal Processing is the primary coal processing facility. The plant was purchased from Muhanga in 2014 and is regularly upgraded to meet customers’ product quality and quantity requirements. The combined installed ROM treatment capacity is currently proven to be more than 200 000 tonnes a month.

The upgrades to the raw coal handling section enable more than 250 000 tonnes a month to be crushed. The complex consists of a crushing section and drum/cyclone and fines treatment plants that can produce a range of products to meet the demands of Eskom, other domestic consumers and the export market.

Wescoal’s strategy to diversify its income streams has placed the group in a better position to meet Eskom’s increased demand as well as to optimise supply into other domestic and export customers.