Kimberley Underground

Kimberley Underground comprises three kimberlite pipe mines in close proximity: Bultfontein, Dutoitspan and Wesselton. These mines were integral to the economic development of South Africa as their output effectively financed development of the nascent gold industry. They are currently mining at depths of between 845 and 995 metres below surface.

The mines have a history of producing large diamonds and fancy yellows, such as the Oppenheimer (253 carats rough). The largest diamond ever recovered at Kimberley Underground was +800 carats and the mine is also the source of the Kimberley Octahedral, at 616 carats currently the largest uncut diamond in the world.

Petra’s expansion plan at Kimberley Underground envisages production rising from approximately 57,000 carats per annum in FY 2011 to approximately 150,000 carats per annum by FY 2013.

The Kimberley mines were amalgamated into De Beers by 1890. All the pipes are typical kimberlites pipes and in each kimberlite pipe a number of kimberlite facies are present. The Dutoitspan pipe was mined as an open pit to a depth of 122 metres and Wesselton and Bultfontein were mined as open pits to a depth of 76 metres. The mines were then converted to chambering (a combination of shrinkage stoping and sub-level caving) as an underground mining method during the period 1890 to 1950. In the 1950’s underground mining converted to more efficient and safer block caving methods, the mining method currently still being used to exploit reserves on all three of the mines.

The mines were closed by De Beers in August 2005 and subsequently Petra operated Kimberley Underground under care and maintenance from September 2007. Petra was given approval to operate the mines under De Beers’ licence, demonstrating the level of confidence the industry leader has in Petra’s overall ability to rehabilitate and operate deep underground diamond mines. This care and maintenance period enabled Petra to complete all the rehabilitation work required in order to ready the operation to recommence production. The acquisition completed in May 2010.

• Resource bottom cut-off (Dutoitspan West Extension): 1mm
• Resource bottom cut-off (all other underground blocks): 0.5mm
• Reserve bottom cut-off: 1mm
• Main changes due to a reduction in ROM grade based on accurate waste measurements taken from producing drawpoints at Bultfontein and Dutoitspan. Wesselton ROM grade based on 1060L bulk sampling, adjusted for external waste

FY 2011 marked the first full year for Kimberley Underground under Petra management, following completion of the acquisition in May 2010. The Company was particularly encouraged by the prices achieved for Kimberley Underground production, with the average of US$333 for the period considerably exceeding initial expectations.

A substantial stockpile of ore, estimated to be 0.3 Mt has been built up on surface at Wesselton whilst no processing facility has been available.

The slimes and tailings disposal difficulties with the new plant at Joint Shaft were largely addressed during H2 FY 2011 and tonnages processed increased from 176,527 in H1 FY 2011 to 267,128 in H2 FY 2011. At the current bottom-cut discard size of 2mm, the grade is expected to revert to the planned 14 cpht during FY 2012 as the oversize circuit has now been brought into production. The Joint Shaft plant is expected to deliver approximately 80,000 carats for FY 2012.

Petra announced a revised business plan for processing at Wesselton at the time of the Company’s full year trading update in July 2011, which involves a combination of a mobile pan plant together with a new plant (similar to that constructed at Joint Shaft). The mobile pan plant operation is currently being commissioned and is expected to process some 40,000 tpm. Subsequently, the main plant at Wesselton is expected to be commissioned in April 2012 and will treat a further 40,000 tpm. Wesselton is expected to contribute approximately 50,000 carats during FY 2012.

Unit costs of approximately R191 per tonne were negatively impacted by reduced throughput. Management expects the unit costs to improve once the Wesselton plant is fully operational.

Of the US$13 million Capex, approximately US$9.5 million was spent on improvements to the Joint Shaft treatment plant. A further US$3.5 million was applied to the acquisition of adjacent land, buildings and infrastructure relating to water reticulation and slimes handling facilities (by assuming a rehabilitation guarantee).

Petra’s mine plan at Kimberley Underground is expected to see production rise from approximately 57,000 carats in FY 2011 to approximately 150,000 carats by FY 2013.

Petra has a current mine plan of 11 years, which could be extended as the Company more thoroughly investigates the resources of these mines at depth and the East Blow at surface.