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Moving to Undiluted Ore

Our business will be transformed once our expansion programmes have opened up access to new blocks of ore, undiluted by waste rock

Since acquiring each of our underground mines in South Africa, Petra has been operating in mature caves, where the existing block of ore to be mined has been nearly depleted.

Once the majority of the ore in one block has been removed, waste from the side walls of host rock will start to fall into the cave and subsequently report to the drawpoints, thereby heavily diluting the material being extracted. This means that the overall diamond content per tonne mined (“grade”) is much lower than that of the pure kimberlite ore.

Petra’s expansion programmes are designed to take the next ‘cut’ by deepening and establishing new sub level and block caves in undiluted kimberlite.

As the development plans progress, the grade of each tonne mined is therefore expected to rise significantly, increasing the margin per tonne mined. See our detailed operational guidance sheet for more information on how we expect grades to increase up to FY 2019.

This process is well underway, as evidenced by the rising ROM grades achieved at Finsch and Cullinan of +28% and +29% respectively in FY 2017. Further improvements are expected in FY 2018, which will be the first year in Petra’s history when it will be sourcing the majority of its underground tonnes from undiluted ore in the new mining areas of its operations.

What this means for Petra

1. Increasing grade

The shift in Petra’s production profile from mostly diluted to mostly undiluted ore at Finsch and Cullinan is expected to be the major contributor which will see the Group’s operating margin rise from 33% in FY 2017 to 45 – 50% by FY 2019. Petra has a high level of confidence in the average grade of the pure kimberlite ore at its mines, as each mine has a long production history and each orebody has been extensively drilled and sampled.

2. Higher quality diamonds

Currently tailings production, which involves the reprocessing of old tailings dumps, makes up a significant portion of our production profile. The diamonds recovered from these dumps are generally two to three times lower in value in comparison to diamonds recovered from the primary mining operations (either the open pit at Williamson or underground at the South African mines). As the percentage of tailings production reduces and is replaced by higher value and higher grade ROM tonnes, our average value per carat at each operation is expected to rise.

3. Rising margins

The increasing grade and the higher value diamonds recovered will serve to have a positive effect on our operating margins. At the same time, our expansion programmes will be delivering increased efficiencies in terms of ore-handling systems and processing, which are expected to also have a positive impact on our operating margins.

Moving to Undiluted Ore

Moving to undiluted ore

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