Open pit mining at Williamson in Tanzania

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Finsch

Overview

Finsch is one of the world’s important diamond mines and South Africa’s second largest diamond operation by production. The mine benefits from state-of-the-art mining infrastructure, including a modern processing plant which was recently upgraded at a total cost of approximately US$100 million.

Finsch is a major producer, having supplied over 126 million carats in its 40 plus year life to date. Petra is currently implementing a development plan to lift production from ca. 1.4 million carats per annum to ca. 1.8 million carats per annum by FY 2016 and to ca. 2 million carats per annum by FY 2019 (involving both underground and tailings production).

Finsch has produced large, special diamonds in its history and produces a number of +50 carat stones annually. In addition, the mine is known for highly commercial goods of +5 carats and is rich in gem quality smaller diamonds.

Key Facts
Location Northern Cape Province, South Africa
Size of kimberlite pipe at surface 18ha
Mine start date 1967
Acquisition by Petra Diamonds September 2011
Ownership Petra Diamonds Limited: 74%1
Senakha Diamonds Investments (Pty) Ltd: 21%
Petra Diamonds Employee Share Trust: 5%
Total Resources
(inclusive of Reserves)
50.9 Mcts
Current depth of Resources 1,000m
Mining Method Block cave and sub level cave
Depth of current mining 630m
Mine Plan 17 years
Potential Mine Life +25 years

1 Other than the percentage interest above, Petra has an interest in Sedibeng Mining, one of its BEE partners – refer document ‘Effective Interest in Mines’ here

History

The Finsch kimberlite was discovered in 1960 and the mine was officially opened in 1967. Ore extraction was initially from the open pit. Sinking of the main shaft to access the mine from underground started in 1978. Two vertical shaft complexes, tunnels and ground handling infrastructure were prepared for the continuing exploitation of the pipe with the use of highly mechanised mining methods. In 2008 the treatment plant was upgraded at a cost of approximately US$100 million.

On 14 September 2011, Petra purchased Finsch as a fully-staffed, operating mine from De Beers.

Reserves & Resources
Category Gross
Tonnes (millions) Grade (cpht) Contained Diamonds (Mcts)
Reserves
Proved
Probable 50.6 48.7 24.61
Sub-total 50.6 48.7 24.61
Resources
Measured
Indicated 47.3 61.3 29.01
Inferred 41.4 52.8 21.83
Sub-total 88.7 57.3 50.85
  1. Resource bottom cut-off: 1.0mm.
  2. Reserve bottom cut-off: 1.0mm.
  3. Block 4 Resource tonnes and grade are based on block cave depletion modelling and include external waste.
  4. Block 5 Resource stated as in situ.
  5. Changes in Reserve and Resource figures due to mining depletions, re-calibration of the Block 4 PCPC model, revised mine planning for Block 5, and re-estimation of the Finsch Resource at a 1mm bottom cut-off.
FY 2013 Results
  Unit FY 2013 FY 2012 Variance
Sales
Revenue US$m 160.6 136.9 +17%
Diamonds sold Carats 1,336,418 989,101 +35%
Average price per carat US$ 120 138 -13%
ROM Production
Tonnes treated Tonnes 2,609,935 2,260,842 +15%
Diamonds produced Carats 890,360 832,396 +7%
Grade Cpht 34.1 36.8 -7%
Tailings Production
Tonnes treated Tonnes 2,600,611 1,600,170 +63%
Diamonds produced Carats 522,106 272,222 +92%
Grade Cpht 20.1 17.0 +18%
Total Production
Tonnes treated Tonnes 5,210,546 3,861,012 +35%
Diamonds produced Carats 1,412,465 1,104,618 +28%
Costs
On-mine cash cost per tonne treated ZAR 139 134 +4%
Capex
Expansion Capex US$m 33.5 8.7 +285%
Sustaining Capex US$m 10.6 3.3 +221%
Borrowing Costs Capitalised US$m 4.5 - n/a
Total Capex US$m 48.6 12.0 +305%

Note:

Finsch performed strongly in FY 2013, contributing 1,412,465 carats (FY 2012: 1,104,618 carats) and revenue of US$160.6 million (FY 2012: US$136.9 million).

In line with Petra’s strategy to optimise recoveries from each asset, the plant cut-off was reduced at Finsch towards the latter part of the financial year to increase recovery of the higher quality smaller goods produced by the Finsch orebody, with a resultant increase in both ROM and tailings grades in Q4 over the previous quarter. Although this plant change resulted in a reduced average value per carat, due to the increased volumes of the smaller diamonds, it served to increase gross revenues and contained value per tonne.

ROM grades for FY 2013 declined to 34.1 cpht (FY 2012: 36.8 cpht) due to the increasing dilution of the current mature Block 4 working areas, however the plant changes noted above are expected to provide some positive effect on ROM grade before the development plan provides first access to undiluted ore (from FY 2015 onwards).

Costs:
The weighted average unit operating cost of R139/t (FY 2012: R134/t) at Finsch is in line with management’s expectations. Above-inflationary cost pressures associated with labour and electricity was partially offset by increased levels of throughput resulting in a 4% unit cash cost increase compared to SA CPI of 5.5%.

Capex:

Capex of US$48.6 million for FY 2013 (FY 2012: US$12.0 million) reflects a full 12 month period of sustaining Capex for operating Finsch, as well as the progression of the expansion project and associated underground development in FY 2013, as mentioned above. The majority of sustaining Capex was spent on the replacement of equipment reaching the end of its useful life.
Mine Plan

Petra’s expansion plan at Finsch will take production from ca. 1.4 Mctpa to 1.8 Mctpa by FY 2016 and then increasing to ca. 2 Mctpa by FY 2019. With gross resources of 50.9 million carats, Petra’s initial mine plan has a life of 17 years, but resources in residual Block 6 and the Precursor kimberlite are expected to prolong the actual life of mine for considerably longer.

Production is currently entirely from Block 4, which is a mature block that has mostly been mined out, meaning that the ore is by this point heavily diluted with waste rock. In order to provide earlier access to undiluted ore before the main Block 5 Cave is put in place, Petra will use the sub level cave (“SLC”) mining method over four levels from the 710 metre level (“mL”) to 780 mL at a rate of 3.2 Mtpa. Once the transition is then made from mining the SLC to the main Block 5 Cave, which is currently planned at the 900 mL, tonnages will increase to 3.5 Mtpa from FY 2021.

On 12 August 2013, Petra announced enhancements to the expansion plan at Finsch, which focus on revisions to the ore-handling system (including the implementation of a conveyor system which can transfer 710 – 780 mL SLC material to the existing loading and hoisting infrastructure on 650 mL), a further enlarged footprint of the Block 5 SLC and the doubling up of crusher capacity to complement the enhanced ore-handling and engineering infrastructure planned at the SLC and the Block 5 Cave (originally planned on the Block 5 Cave elevation only).

These measures will serve to improve production flexibility, give the ability to more efficiently manage grades and enable the earlier decommissioning of the Block 4 automated ore-handling infrastructure, resulting in long term savings in operating costs, as well as the added benefit of production efficiencies.

ROM throughput is guided at 2.83 Mt for FY 2014 at a grade of ca. 32 – 33 cpht. As the mine’s production profile gradually changes from diluted to undiluted ore, the ROM grade is expected to increase to ca. 36 cpht by FY 2015, to ca. 43 cpht by FY 2016 and to ca. 56 cpht by FY 2017 (up from previous guidance of 47 cpht, assisted by the aforementioned plant changes), when full production is sourced from undiluted ore.

The development of the declines and access tunnels, which are key deliverables at this stage of the project, are progressing in line with expectations and the development and drilling contractor services have been put in place. The successful progression of the programme is evident by the significant increase in development metres achieved for the Year (2,311 in FY 2013 versus 169 metres in FY 2012). Raiseboring activities also commenced during Q4 FY 2013 and yielded 165 metres.

Treatment of the ‘Pre 79 Tailings’ is planned at 2.65 Mt for FY 2014 and expected to be mined for a further two to three years (including FY 2014) at a grade of ca. 21 – 22 cpht (increased from prior guidance as a result of the abovementioned plant changes). Once the ‘Pre 79 Tailings’ have been depleted, treatment of the ‘Post 79 Tailings’ will continue until FY 2020, at a lower estimated grade of approximately 10 cpht.

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