Kumba engages DMR on expanded Sishen Mine rights

The Sishen Iron Ore Company (SIOC) has had to apply to the Department of Mineral Resources (DMR) to secure additional mining rights around the expansion of its Sishen Mine in the Northen Cape.

In a statement released yesterday it was said that SIOC, a division of JSE listed Kumba Iron Ore, “will engage actively with the DMR to ensure the expeditious resolution of this matter”.

Kumba is rolling out an expansion of its Sishen Mine and said it has made significant progress.

“Shareholders have previously been advised that the Sishen Western Expansion Project (“SWEP”) is designed to extend the anticipated Life of Mine at the Sishen Mine,” said the company.

“A major milestone in the development of the project was the relocation of the Transnet railway line from its previous position to the west of the current Sishen pit, to the far western extent of the SIOC property”.

The properties on which the railway line was situated are 30m wide, and traverse approximately 14km over the Sishen mine area in a north to south direction, immediately adjacent to the current Sishen pit. As part of a sequenced programme to progress the SWEP project, agreements have been concluded with Transnet in terms of which SIOC would be granted ownership of the surface rights over the properties where the railway line used to run, and in turn SIOC would grant surface right ownership to Transnet for the properties where the new railway line would be established”.

The company said registration of the ownership rights to reflect this transaction is currently pending at the Deeds Registry. The relocation of the railway line was completed in May 2013.

“As a consequence of Transnet having previously held the surface rights over the Rail properties, the Rail properties are excluded from the Sishen Mining Right area”.

The statement said SIOC has applied to the Department of Mineral Resources to obtain the necessary rights in relation to the Rail properties.

The 2013 mining schedule does not contemplate any mining activities over the Rail properties, but it is currently contemplated that these areas would be affected by pre-stripping from 2014”.

The status of the application for the Mining Rights does not, at this time, require an adjustment of SIOC’s total reserve base for the Sishen mine of 918.9Mt as at 31 December 2012, as SIOC is confident that there is a reasonable expectation of these rights being granted by the DMR”.

However, said the company, while the Ore Reserves in the Rail properties are not considered materially significant, constituting approximately 3.3% of the Ore Reserve, should the applications be unsuccessful, the expansion of the Sishen pit in a westerly direction may be materially affected by virtue of the fact that in the medium and long term SIOC would potentially not be able to access approximately 33% of the Sishen reserve currently included in SIOC’s Life of Mine.

The current Ore Reserve classification in the area affected by the applications may require adjustment in the 2013 Resource and Reserve statement to reflect the adjusted confidence level associated with the exploitation of these reserves”.

Should the matter not be resolved at the time of reporting on SIOC’s reserves in relation to Kumba’s financial year which ends on 31 December 2013, the Company will conduct a detailed assessment to determine whether to restate the Ore Reserve classification”.

The company said it keep shareholders update about developments of the matter”.


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