Muller Du Plessis-The Basics Still Works

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com
42 TOCPA International Conference

13-16 May 2019, Johannesburg, South Africa
The Basics still work

The five focussing steps in
underground mining
Muller du Plessis
Exxaro
South Africa
Muller du Plessis
Qualifications
B. Eng (Industrial) UP
B b&a (hons) (USB)
Experience
Industrial Engineer – Grootegeluk mine Photo
Manager, Business improvement – Grootegeluk mine
Principal, Project Assurance and Value Engineering - Exxaro
Improvement Projects
Optimise Grootegeluk 1 Plant
Optimise Grootegeluk 4/5 Plant
Apply TOC to Grootegeluk mine
muller.duplessis@exxaro.com
Process design GG6 Plant
Optimise Exxaro Opencast operations
Optimise Exxaro Coal Central operations
Optimise Project feasibility studies
www.tocpractice.com 42 TOCPA International Conference

Disclaimer
Opinions expressed herein are by nature subjective to known and unknown risks and
uncertainties. Changing information or circumstances may cause the actual results,
plans and objectives of Exxaro Resources Limited (the “Company”) to differ materially
from those expressed or implied in the forward looking statements. Financial forecasts
and data given herein are estimates based on the reports prepared by experts who in
turn relied on management estimates. Undue reliance should not be placed on such
opinions, forecasts or data. No representation is made as to the completeness or
correctness of the opinions, forecasts or data contained herein. Neither the Company,
nor any of its affiliates, advisors or representatives accepts any responsibility for any
loss arising from the use of any opinion expressed or forecast or data herein. Forward-
looking statements apply only as of the date on which they are made and the
Company does not undertake any obligation to publicly update or revise any of its
opinions or forward looking statements whether to reflect new data or future events
or circumstances.

Maximisation of Dorstfontein
West
Case Study of business Turnaround

Applying the five focussing steps
Strategic
Operational
Learnings

About Exxaro
Exxaro is a South African-based diversified
and coal mining company listed on the JSE
and included in the FTSE Russell SRI Index
and Responsible Mining Index. Exxaro’s
portfolio of coal operations includes mines
in Mpumalanga and Limpopo supplying to
Eskom, other domestic markets and the
export markets. Their investment portfolio
also includes a 20% interest in SIOC (an iron
ore mining company) and a 50% interest in
Cennergi Pty Ltd, a joint venture with Tata
Power, which has developed two wind farms
with a combined generation capacity of
229MW (10% of the currently installed
capacity of South Africa’s Renewable Energy
Independent Power Producer Procurement
Programme (REIPPPP).

The Transaction
Exxaro acquired Total Coal RB1 ($/t)

South Africa (TCSA) from Total 90
during 2014. 80
The legal processes to transfer 70
ownership took 11 months 60
The mines were operated 50
independently from both 40
companies during the period. 30
Exxaro assumed operational 20
control in August 2015. 10
During this time the Export coal 0

Jan-14
Jan-15
Jul-14
Jul-15
Mar-14
Mar-15
Nov-14
Nov-15
May-14
May-15
Sep-14
Sep-15
price fell from ~$70/t to ~$55/t

Dorstfontein-West
DCM-W LOM
Underground mine near Kriel 800
Economic mineable reserves 700

until 2017 600
Average production Cost 500
2014 $68/t
400
The Challenge October 2015
300
“Create a profitable business
before the Exxaro budget 200
process starts in May the 100
following year.” 0
2013 2014 2015 2016 2017 2018 2019
Actual Production Forecast

Applying the five focussing steps
In mining there are usually 2 constraints.
The strategic constraint – the Mineral Resources

available to mine
The operational constraint – the equipment /

resource that determine the throughput of
the system.

Mineral resource
The process followed
Exploit the Elevate

Strategic
Constraint
Subordinate
Earn the
right to
grow
Identify
Production Process
Exploit the
Operational
Constraint
Subordinate
Elevate

Mineral resource
Exploit the strategic constraint
Exploit the Elevate

Strategic
Constraint
Subordinate
Earn the
right to
grow
Identify
Production Process
Exploit the
Operational
Constraint
Subordinate
Elevate

Coal is not just black
500.00
450.00
Pure Rock
400.00
350.00
300.00
Lower Energy and price
250.00
200.00
150.00
100.00
50.00
Pure Carbon -
4600 4800 5000 5200 5400 5600 5800 6000 6200
Sal es price

500.00 100%
450.00 90%
Pure Rock
400.00 80%
350.00 70%
300.00 60%
250.00 50%
Lower yield
200.00 40%
150.00 30%
100.00 20%
50.00 10%
Pure Carbon -
4600 4800 5000 5200 5400 5600 5800 6000 6200
0%
Sal es price Yield

500.00 100%
450.00 90%
Pure Rock
400.00 80%
350.00 70%
300.00 60%
250.00 50%
Lower yield
200.00 40%
150.00 30%
100.00 20%
50.00 10%
Pure Carbon -
4600 4800 5000 5200 5400 5600 5800 6000 6200
0%
Sal es price Revenue/ROM Yield

Subordinate everything else
Reposition the product in the market
Update the logistics planning
Adjust plant beneficiation settings

Mineral resource
Maximise Operations
Exploit the Elevate

Strategic
Constraint
Subordinate
Earn the
right to
grow
Identify
Production Process
Exploit the
Operational
Constraint
Subordinate
Elevate

DCM-W Production
80
70
• The “Realistic” 60
budget based on 50
historic 40
performance was 30
~70 kt/m for 2016 20
• The breakeven 10
point was 0
Jun Jul '15 Aug Sep Oct Nov Dec Jan Feb Mar Apr May
calculated as '15 '15 '15 '15 '15 '15 '16 '16 '16 '16 '16
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
72kt/m '15 '15 '15 '15 '15 '15 '15 '16 '16 '16 '16 '16
Actual 69 70 58 69 53 55
• A target of 75 kt/m Budget 66 73 71 71 71
was set Target 75 75 75 75 75 75 75
Actual Budget Target

Mining Process
Mining Beneficiation Logistics
Cut Load Haul Convey

Anatomy of a continuous
Mining Section
Source: Industrial-Mining .com

Exploit the constraint
Optimise cutting time

Improve Maintenance Availability of CM’s
Temporarily hire a CM to rebuild one
New Personnel Carrier
Optimise cutting tempo

Confirm and communicate cutting sequence and
shuttle car roads
New Roofbolt Design
Subordinate Everything else
Improved belt extension procedure

In time communication
Daily bonus progress, section performance
Suppliers included
Improve operational discipline in maintenance
of roads
Improve shuttle car reliability
Adjust maintenance stock levels were necessary
Elevate the constraint
One new continuous miner was purchased

One additional shuttle car purchased as swing
machine
Support equipment (Roof bolters and tractors)
upgraded

DCM-W Production
• In January the team 100

90
Produced 67kt, 1 kt 80
more than budget 70

60
and one of the best 50
January ever 40
30
• In February the team 20
reached the target for 10
the first time 0

Jun Jul '15 Aug Sep Oct Nov Dec Jan Feb Mar Apr May
• The Team exceeded '15 '15 '15 '15 '15 '15 '16 '16 '16 '16 '16
Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
90 kt for the following '15 '15 '15 '15 '15 '15 '15 '16 '16 '16 '16 '16
Actual 69 70 58 69 53 55 54 67 75 91 92 94
months Budget 66 73 71 71 71
Target 75 75 75 75 75 75 75
Actual Budget Target

Mineral resource
Elevate the strategic constraint
Exploit the Elevate

Strategic
Constraint
Subordinate
Earn the
right to
grow
Identify
Production Process
Exploit the
Operational
Constraint
Subordinate
Elevate

Dorstfontein-West
DCM-W LOM
LOM Plan in 2015 was to mine 1200
~650 kt/a for 2 years
1000
800
600
400
200
0
2013 2014 2015 2016 2017 2018 2019 2020
Actual Production 2015 Forecast 2018 Forecast

Use drill and blast methodology to open

previously unreachable reserves
Utilise learnings from the team combined with

Exxaro experience to mine previously
uneconomical areas

Dorstfontein-West
DCM-W LOM
1000
Realised plan through
improvements was to mine 800

600
400
200
0
2013 2014 2015 2016 2017 2018 2019 2020
Actual Production 2015 Forecast
2018 Forecast Seam 4 Project

Use drill and blast methodology to open

previously unreachable reserves
Utilise learnings from the team combined with

Exxaro experience to mine previously
uneconomical areas
Capital Injection to develop 4 Seam (2018)

Dorstfontein-West
DCM-W LOM
1000
Realised plan through
improvements was to mine 800

600
Capital injection will extend the 400
LOM to 15 years from 200

September 2019
0
2013 2014 2015 2016 2017 2018 2019 2020
Actual Production 2015 Forecast
2018 Forecast Seam 4 Project

What made it successful?
A team of committed and skilled people

A can-do attitude on the mine
A real burning platform.
Employee incentives is directly tonnage based
and paid monthly
Executive support to make it work
Regular feedback and steercom meetings

In conclusion
Negative impact of selling price was mitigated

through additional volumes
Five focussing steps applied to resource and
operational constraint
Significant improvement realised both on the
short and long-term

Questions?

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www.tocpractice.

42 TOCPA International Conference

The Basics still work

www.tocpractice.com 42 TOCPA International Conference

www.tocpractice.com 42 TOCPA International Conference

Case Study of business Turnaround

www.tocpractice.com 42 TOCPA International Conference

www.tocpractice.com 42 TOCPA International Conference

Exxaro acquired Total Coal RB1 ($/t)

The legal processes to transfer 70

ownership took 11 months 60

The mines were operated 50

independently from both 40

companies during the period. 30

Exxaro assumed operational 20

control in August 2015. 10

During this time the Export coal 0

www.tocpractice.com 42 TOCPA International Conference

Economic mineable reserves 700

process starts in May the 100

www.tocpractice.com 42 TOCPA International Conference

In mining there are usually 2 constraints.

The strategic constraint – the Mineral Resources

The operational constraint – the equipment /

www.tocpractice.com 42 TOCPA International Conference

Exploit the Elevate

www.tocpractice.com 42 TOCPA International Conference

Exploit the Elevate

www.tocpractice.com 42 TOCPA International Conference

www.tocpractice.com 42 TOCPA International Conference

Sal es price Yield

www.tocpractice.com 42 TOCPA International Conference

Sal es price Revenue/ROM Yield

www.tocpractice.com 42 TOCPA International Conference

Reposition the product in the market

Update the logistics planning

Adjust plant beneficiation settings

www.tocpractice.com 42 TOCPA International Conference

Exploit the Elevate

www.tocpractice.com 42 TOCPA International Conference

~70 kt/m for 2016 20

was set Target 75 75 75 75 75 75 75

Actual Budget Target

www.tocpractice.com 42 TOCPA International Conference

Mining Beneficiation Logistics

Cut Load Haul Convey

www.tocpractice.com 42 TOCPA International Conference

Source: Industrial-Mining .com

Optimise cutting time

Optimise cutting tempo

Improved belt extension procedure

One new continuous miner was purchased

www.tocpractice.com 42 TOCPA International Conference

• In January the team 100

more than budget 70

the first time 0

Actual Budget Target

www.tocpractice.com 42 TOCPA International Conference

Exploit the Elevate

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www.tocpractice.com 42 TOCPA International Conference

Use drill and blast methodology to open

Utilise learnings from the team combined with