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WESTERN UTILITIES CORPORATION MEETING ENVIRONMENTAL CHALLENGES WITH ENVIRONMENTAL SOLUTIONS

An introduction to the Western Utilities Corporation, established in South Africa, to address the unique challenges presented by the existence of Acid Mine Drainage in underground voids and its effects on potable water sources in environmentally-sensitive areas.

BACKGROUND

As a result of gold mining operations in South Africa's Witwatersrand Basin over the last century, underground voids have been created and have filled with water that has become contaminated. Known as Acid Mine Drainage (or AMD), this contaminated water has had a dramatic impact on ground water conditions in the Witwatersrand Basin.

THE THREAT

The threat posed by the AMD is severe; not only to the surrounding residential and agricultural communities who rely on the rivers as a source of potable water and irrigation, but also, potentially, to the Sterkfontein Caves (which form part of the 3.5 million year old Cradle of Humankind World Heritage Site) that could be flooded and irreversibly damaged, unless the seepage of the contaminated water is effectively addressed.

THE CHALLENGE

Many of the original mining houses responsible have ceased operations - or no longer exist - so the onus for finding an effective and sustainable solution rests with the few who continue to have active interests in the area. This obligation is entrenched in South Africa's Minerals, Petroleum & Resource Development Act (2002) which stipulates that "the polluter pays". A principle was enforced in a directive from the Department of Water Affairs and Forestry (DWAF) that mining houses will not be sanctioned to close any further operations in the area until the affected water has been satisfactorily rehabilitated.

THE SOLUTION

Fund, design, build and operate a state-of-the-art water treatment facility capable of being self- sustainable. Three mining houses, namely, MinTails, Harmony Gold Mine and Durban Roodepoort Deep, have accepted the challenge and have established the Western Basin Environmental Corporation (WBEC). A not-for-profit organisation, the function of WBEC is to govern the process of environmental water rehabilitation by investigating and developing sustainable initiatives in close consultation with the relevant government authorities. The proposed solution involves WBEC's registration as a Water Services Provider which will entitle it to remove the water associated with its own mines, treat it to a specified quality and to on-sell it to the industrial market. The Western Utilities Corporation (WUC) has been established to capitalise and commercialise this self-sustaining process which involves the funding, design and construction of a state-of-the-art "grey water" quality. Using a chemical precipitation treatment process (preferred for its optimum heavy metal and sulphate removal capabilities), together with a CSIR pyrometallurgical methodology (which reduces processing costs by converting various by-products back into raw materials), WUC will:

Produce water of a suitable "grey" quality for on-selling to high-volume industrial users (chiefly, to nearby platinum mines with major expansion strategies). Relieve the growing pressure on existing potable and industrial water resources in Johannesburg's rapidly developing West Rand. Eliminate the risk of contamination to water in an environmentally-sensitive site.

In line with the concept of a regional closure strategy, we envisage that the structure will be replicated across the Witwatersrand Basin.

PRESS RELEASE MEETING AN ENVIRONMENTAL CHALLENGE WITH AN ENVIRONMENTAL SOLUTION

As a result of more than a century of mining activity, an extraordinary environmental challenge has arisen in the Witwatersrand’s Western Basin – and the industry players drawn into it have come together to develop an effective, sustainable solution. Jaco Schoeman, the CEO of the Western Utilities Corporation (WUC) explains, “South Africa is a water-scarce country where potable (ie drinkable) water supplies are limited in certain areas and significant quantities of contaminated water in others. “The environmental challenge is twofold. First, how to overcome the contamination of potable water sources inadvertently caused by decades of gold mining activity; and second, how to satisfy the ever increasing demand for greater volumes of potable and “grey” (ie industrial quality) water by industry and the surrounding communities.” In the past decade – while demand on domestic, agricultural and industrial water resources across the country has steadily increased – availability has been compromised by the fact that potable water sources in the Witwatersrand Basin are threatened by contamination from Acid Mine Drainage (AMD). (AMD is a sulphuric acid solution that is generated when exposed ore comes into contact with water and air. In this case, mining operations across the Witwatersrand complex, created underground voids that subsequently filled with natural seeping water and began to discharge into the surrounding water courses.)

THE WESTERN BASIN DECANT

Currently discharging at an annualised average rate of 15 Megalitres per day, it’s a situation that poses a severe environmental threat. Not only to water resources and the fast-growing domestic and commercial populations that depend upon them, but also to one of the world’s most historically important and environmentally-sensitive sites – the Sterkfontein Caves. Unless the seepage is effectively addressed, the potential exists for this contaminated water to enter, and irreversibly damage, the caves - which form part of the 3.5 million year old Cradle of Humankind - and the nearby Krugersdorp Nature Reserve. “It is an irony,” says Schoeman, “that the gold mining industry, that has made such a significant, and positive, contribution to South Africa’s economy in the past century, should be at the centre of an issue which has such potentially detrimental consequences for one of the regions in which it has been most active.” The South African government places the onus for redressing the problem squarely on the mining industry and the Department of Water Affairs & Forestry (DWAF) has issued a directive that no mining house will be permitted to proceed with the formal closure of any operations in the area until the issues surrounding the affected water have been satisfactorily addressed. Although several of the key mining players in the region closed their operations before the problem became apparent, it’s a responsibility the broader industry acknowledges. “Those of us still involved in mining on the Reef accept that we have a moral imperative to resolve the water problems and, together, have innovated a solution that has the potential to overcome the twin challenges of contamination and burgeoning demand simultaneously,” says Schoeman. As an interim measure (to demonstrate corporate responsibility), the majority of contaminants are being removed by neutralising and clarifying the water at existing water treatment plants at Mogale Gold Mine and Harmony Gold Mine. However, to fully address the problem, a Section 21 not-for-profit organisation has been jointly established by Randfontein Estates Gold Mines Ltd (owned by Harmony Gold Mining Company Ltd), West Wits Gold Mines (owned by DRDGold) and Mogale Gold Mines Ltd (owned by Mintails RSA (Pty) Ltd). “Known as the Western Basin Environmental Corporation (WBEC), its function is to govern the process of environmental water rehabilitation associated with AMD,” says Schoeman, “and to investigate and develop sustainable initiatives in close consultation with the relevant government authorities.” WBEC’s imperatives are to:

Rehabilitate the contaminated water that is already decanting from the underground voids of the Western Basin; Minimise further contamination of potable water sources; Preserve the Sterkfontein Caves by mitigating the risk of exposure to AMD; Reduce off-take of potable water sources by industrial users by making an alternative available in its place Minimise the transmission of AMD to sensitive downstream areas (ie the Cradle of Humankind) by reducing the water level in the underground voids

WBEC has been granted the right to register as a Water Services Provider (WSP), which entitles it to remove the water associated with its own mines, treat it to a specified quality and to on-sell it to the industrial market. “It is important to stress,” says Schoeman, “that although none of the mining houses involved in WBEC will profit financially from the treatment and selling of AMD, all will ultimately benefit from its success by being able to implement closure strategies for their mining operations.” To implement and manage this self-sustaining process, WBEC has entered into a management agreement with the Western Utilities Corporation (WUC) which will construct a state-of-the-art Water Treatment Plant capable of processing 75 Megalitres of Acid Mine Drainage (AMD) per day to industrial (“grey water”) quality. “The plant will make use of a chemical precipitation treatment process that has the capability to remove heavy metals and sulphates from the contaminated water,” says Schoeman. “It also uses a pyrometal-lurgical methodology - developed by South Africa’s Council for Scientific & Industrial Research (CSIR) – to convert various by-products back into raw materials which can be sold or reused to reduce processing costs.” The ultimate aim is to create a Zero Effluent Discharge plant and, to demonstrate the viability of the technologies available, WUC has built three pilot plants at one of the old mining shafts from which AMD is currently being pumped. These are:

The SAVMIN Plant (operational since 5 April 2008) uses the SAVMIN methodology (patented by Mintek and operated by Atomaer RSA (Pty) Ltd) to treat 4 cubic metres of AMD per hour to “industrial” quality standards The Gypslim Plant (operational since 5 March 2008) which uses the Gypslim process (patented, designed and operated by the CSIR) to produce “Industrial” quality water at a processing rate of one cubic metre per hour The By-Product Recovery Plant (operational since 10 March 2008 and designed, engineered and operated by the CSIR, Key Structure Holdings and Sulphidetech) which processes and isolates by-products produced by the SAVMIN and Gypslim water treatment processes.

“Of course, development of the envisaged Water Treatment Plant will inevitably hinge on the findings of an Environmental Impact Assessment,” says Schoeman. “In advance of that, WUC has commissioned consultants Golder & Associates to determine how the water, once treated, can be redistributed to industrial users as far north as Rustenburg and as far south as Vanderbijlpark – as well as identifying the optimum location for the eventual construction of the Water Treatment Plant. However, the key to the success – and sustainability - of this solution rests on the plant’s ability to produce water of a suitable quality at a cost-effective price for on-selling to high-volume industrial users (e.g. nearby Platinum mines with major expansion strategies). Another sustainable benefit of using rehabilitated water to meet industrial demand, is the positive impact it will have on availability of potable water for the surrounding communities, as pressure on potable resources will be significantly reduced. “This is a bold and creative response to a serious environmental challenge,” says Schoeman, “and we are confident that not only can WBEC/WUC provide a sustainable solution to the issue of contaminated water in the Western Basin - but that the same solution can be rolled- out elsewhere, in South Africa and around the world, to effectively overcome the damage inadvertently caused by mining activity.” It is, in fact, already being considered as a viable option for water sources in the Central and Eastern Basin - and possibly as far as the Far Western Basin - which will have the potential to provide closure strategies for a significant number of the mines across the Witwatersrand Basin region.

ABOUT WESTERN UTILITIES CORPORATION (WUC)

WUC is a wholly-owned subsidiary of Watermark Global plc, listed on the United Kingdom’s Alternative Investment Market (AIM), and was formed to implement a commercially self-sustainable solution on behalf of WBEC.

ABOUT WESTERN BASIN ENVIRONMENTAL CORPORATION (WBEC)

WBEC is a Section 21 Company, formed by Randfontein Estates Gold Mines Limited (owned by Harmony Gold Mining Company Ltd), West Wits Gold Mines (owned by DRDGold) and Mogale Gold Mines Limited (owned by Mintails RSA (Pty) Ltd). Its function is to govern the process of environmental water rehabilitation associated with AMD in the Western Basin.

BACKGROUND

From the time South Africa’s rich ore deposits were first discovered by George Harrison in 1886, mining exploration in Johannesburg burgeoned. The seam along the North-West of Johannesburg proved particularly lucrative and was mined unrestrainedly until the early 1990’s. By the time environmental regulations were introduced (National Water Act, 1956 and Fanie Botha Accord, 1970), the negative impacts were already being felt. This has become increasingly evident in the last decade as underground voids created by mining of the Witwatersrand orebody (specifically the Western Basin Void) have filled with water and begun to discharge into the surrounding water courses at an annualised average rate of 15 Megalitres per day. Many of the mining houses active in the West Rand over the last 100 years have ceased operations – or no longer exist – thus the onus for finding an effective and sustainable solution to this significant environmental challenge now rests with the few players who continue to have active interests in the area. These include MinTails (through its operating subsidiary, Mogale Gold Mine); Harmony Gold Mining Company Ltde (through its operating subsidiary, Randfontein Estates Ltd; and Durban Roodepoort Deep (DRD), whose operations are dormant, though technically active, at West Wits Gold Mine. Aside from the moral imperative to address the seepage problem, the three remaining players are required to do so by South Africa’s National Water Act which stipulates that “the polluter pays”. In terms of this, the Department of Water Affairs & Forestry (DWAF) has issued a directive that no mining house will be permitted to close any further operations in the area until the affected water has been satisfactorily rehabilitated.