Coal resource in South Africa
Rio Tinto PLC
05 February 2008
Rio Tinto announces a coal resource of over 1 billion tonnes at Chapudi
5 February 2008
Rio Tinto has further strengthened its presence in South Africa with the
discovery of a open-pittable coal resource of 1.04 billion tonnes in the Limpopo
Province. The coal is bituminous, and is suitable for generating electricity.
Where is the deposit
The discovery at Chapudi came through Rio Tinto's coal exploration programme in
the Limpopo (Soutpansberg) coal basin of South Africa. The exploration work has
been conducted in conjunction with Rio Tinto's BEE partner, Kwezi Mining.
Exploration rights over the resource are held by two JV companies; Chapudi Coal
PTY Ltd (Rio Tinto 70%) and Kwezi Mining Exploration PTY Ltd (Rio Tinto 49%).
Deposit Location
Rio Tinto and Kwezi are continuing with exploration activities for thermal and
coking coal east of the Chapudi project.
The chief executive of Rio Tinto Energy & Minerals, Preston Chiaro, said: ' This
is a significant find in an area that has previously been viewed as having
little geological potential. The project's potential to produce thermal coal for
electricity generation comes at a time when South Africa needs to rapidly
increase its generating capacity. In addition, the basin offers the opportunity
to produce a range of products, from thermal to hard coking coal for the export
markets. We are currently planning the next phase of the project by beginning
our pre-feasibility studies.'
Chapudi Geology
The newly discovered Chapudi Resource lies within the Limpopo coal basin, in the
northern part of South Africa. The coal is hosted in sediments of the Karoo
Group, similar to other coalfields in Southern Africa. The coal seams at Chapudi
occur in mudstones that can be correlated to the Upper Ecca formations of the
Main Karoo basin.
Rio Tinto and Kwezi Mining began exploring for coal in the area in 2003, when
the 1st borehole was drilled on the farm Chapudi. This borehole intersected
significant thicknesses of coal. Since then, the Rio Tinto-Kwezi JV has drilled
about 90 boreholes in the project area, and conducted geophysical surveys to aid
the geological interpretation. A total of 12,400 metres have been drilled to
date.
The central part of the project now has sufficient drilling coverage to define a
measured and indicated resource. The rest of the project area has been drilled
to inferred resource status.
In-situ Resource (SAMREC/JORC)
The resource at Chapudi has been generated to comply with both SAMREC and JORC
code guidelines. The tabulated figures below include the Seam 6 in-situ
resource, as confined by Rio Tinto's granted tenure.
Resource Category Western Central Eastern Total Chapudi
Zone (Mt) Zone (Mt) Zone (Mt) (Mt)
Measured 90 90
Indicated 220 220
Inferred 410 320 730
All Categories 410 310 320 1,040
Note: Blank cells mean no resource in this category in the relevant zone as the
entire resource in the zone is in different category(ies).
Preliminary studies indicate that up to 40 per cent of the coal may be
recoverable for utilisation in a power station.
Significant potential for further resources exists in the area. Some of the
potential occurs on ground that already belongs to the JV (and can be
incorporated into the Chapudi resource by further drilling), whilst other
potential is on ground currently under lease application.
Future Direction
The coal has been demonstrated through test work to be suitable for combustion
to generate electricity.
Rio Tinto and Kwezi Mining are currently investigating the feasibility and
economics of establishing a mining operation to feed coal into a power station.
They are currently engaging with Eskom, and a number of Independent power
providers to this effect.
CP statement
The information in this report that relates to Mineral Resources is based on
information compiled by Steen Kristensen, who is a member of the Australian
Institute of Mining and Metallurgy. Steen is a full-time employee of Rio Tinto
Energy and has experience which is relevant to the style of mineralisation and
type of deposits under consideration and to the activity which they have
undertaken to qualify as a Competent Persons as defined in the 2004 Edition of
the 'Australasian Code for Reporting of Exploration Results, Minerals Resources
and Ore Reserves'. Steen Kristensen consents to the inclusion in the report of
the matters based on his information in the form and context in which it
appears.
About Rio Tinto
Rio Tinto is a leading international mining group headquartered in the UK,
combining Rio Tinto plc, a London listed company, and Rio Tinto Limited, which
is listed on the Australian Securities Exchange.
Rio Tinto's business is finding, mining, and processing mineral resources. Major
products are aluminium, copper, diamonds, energy (coal and uranium), gold,
industrial minerals (borax, titanium dioxide, salt, talc) and iron ore.
Activities span the world but are strongly represented in Australia and North
America with significant businesses in South America, Asia, Europe and southern
Africa.
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