Koffiefontein

Koffiefontein is one of the world’s top diamond mines by average value per carat and produces exceptional white and coloured diamonds, a regular proportion of which are of between 5 and 30 carats. In 1994, a 232.34 carat diamond was recovered at Koffiefontein, being the largest rough diamond ever produced by the mine.

Underground mining of the high value, low grade Koffiefontein kimberlite pipe is supplemented by tailings treatment from a 65 Mt tailings deposit and mining of the 5 hectare satellite pipe named Ebenhaezer (presently only open cast mined to a depth of 35 metres).

Diamonds were first discovered on the Koffiefontein farm in 1870. Mining started in the form of small claims that were later amalgamated into Koffiefontein Mine Limited. De Beers acquired control of Koffiefontein Mine Limited in 1911. Mining operations were then continuous until the advent of the Great Depression in 1932 when work was suspended. Between 1950 and 1953, a prospecting shaft was sunk which was followed by limited production. The mine was reopened in 1970 and preparations for increased production were completed in August 1971. Immediately after completing the preparations, production from the open pit commenced and proceeded to a depth of 270 metres.

Underground development started in 1974 through a sampling programme. Underground production briefly took place in 1982 but ceased soon thereafter due to the 1981 slump in the diamond market. These operations were resumed in March 1987. During the period 1972 to the end of 2004, approximately 69.5 million tonnes of kimberlite ore were mined and 6.1 million carats of diamonds were recovered.

In February 2006, De Beers ceased mining when the old order mining right for Koffiefontein expired and in July of that year Petra commenced operating the mine under care and maintenance conditions. Petra completed the acquisition of the mine in July 2007 and was subsequently able to commence diamond recoveries by starting to process the stockpile through the plant.

• Resource bottom cut-off (Koffiefontein underground and Ebenheazer): 0.5mm
• Resource bottom cut-off (Eskom tailings): 1mm
• Reserve bottom cut-off: 1mm
• 690L Probable Reserve moved back to Indicated Resource pending mine plan re-evaluation based on numerical modelling

Koffiefontein is one of the world’s top kimberlite mines by average value per carat, achieving US$564 for FY 2011, up 40% on the comparative period despite the fact that the overall average has to some extent been reduced by the higher proportion of lower value tailings production in the total sales mix.

Post year-end, a six carat pink diamond from Koffiefontein was sold for US$601,000, illustrating the exceptional fancy pinks that this mine can produce.

The high average value per carat achieved in FY 2011 caused revenue at Koffiefontein to rise by 35% to US$30.8 million for FY 2011, despite the fall in production. ROM production for the year was 35,139 carats (H1 FY 2011: 27,390 carats; H2 FY 2011: 7,749 carats). Tailings production was 12,817 carats for the period (H1 FY 2011: 7,110 carats; H2 FY 2011: 5,707 carats).

The reduced underground production at Koffiefontein was mainly due to a greater than expected level of waste ingress from the remnant columns at 48 level resulting in revised plans and reduced extraction in H2. The tonnage shortfalls at Koffiefontein were exacerbated by the production stoppages, remedial actions and retraining at the mine following the fatality in January 2011 (as reported in Petra’s interims in February 2011). Production at the high grade 52 recovery level was interrupted for most of H2 FY 2011 as a result.

Whilst the waste ingress and reduced production from 52 level have significantly affected the ROM grade at Koffiefontein (3.1 cpht in H2 FY 2011 as compared to 5.9 cpht in H1 FY 2011), the development work to access high grade ore at the 58 level front cave has been expedited and cave initiation is planned for H2 FY 2013. As at Cullinan, Petra’s development plan at Koffiefontein will eventually establish new production levels where the Company will have access to fresh, undiluted ore. Once this has been achieved, Petra expects the overall grade at Koffiefontein to improve to approximately 8 cpht, but it is expected that lower grades will be reported until FY 2014.

To give operational flexibility, Petra has recommenced production at the satellite Ebenhaezer pipe, which is an open-cast operation at a maximum depth of 35 metres and with a surface area of six hectares. The Company will use tonnages from Ebenhaezer to augment the capacity of the plant at Koffiefontein.

The ramping up of the tailings programme at Koffiefontein is now complete, with the Company reaching its targeted throughput in excess of 0.5 Mt.

For FY 2012, Petra expects production of 50,000 to 55,000 carats from ROM, Ebenhaezer and tailings production combined.

Unit costs per tonne improved during FY 2011 due to the higher volumes of lower cost tailings tonnages processed.

Capex of US$11.0 million for FY 2011 was mostly spent on underground development and mining equipment.

Petra is well advanced in the establishment of an expansion plan at Koffiefontein and annual production is expected to exceed 1 Mtpa in approximately three years. This will deliver over 100,000 carats per annum (ROM and tailings) by FY 2017.

Petra’s development plan at Koffiefontein should eventually establish new production levels at 58 level where the Company will have access to fresh, undiluted ore.

The deepening process to 58 level is well advanced and thereafter the mine will continue to be deepened to 68 level.

Petra foresees a long life for the operation and has a current mine plan of 14 years, though the orebody remains open-ended at depth.