Cullinan is one of the world’s most celebrated diamond mines and the source of the two largest diamonds in the British Crown Jewels
Cullinan is renowned as a source of large, high-quality gem diamonds, including Type II stones, as well as being the world’s most important source of very rare blue diamonds.
Cullinan earned its place in history with the discovery of the Cullinan diamond in 1905, the largest rough gem diamond ever found at 3,106 carats, which was cut to form the two most important diamonds in the British Crown Jewels. Many of the world’s most famous diamonds herald from Cullinan, and it continues to produce world-class diamonds under Petra’s stewardship.
The Cullinan orebody contains a major diamond resource of 194 Mcts and the Company is capitalising on this by undertaking an expansion programme at the mine to take annual production to ca. 2.2 Mcts by FY 2019 (comprising ca. 2.0 Mcts ROM and ca. 0.2 Mcts tailings). However, the residual resources at the mine suggest the overall mine life could be in excess of 50 years.
|Location||Gauteng Province, South Africa|
|Size of kimberlite pipe at surface||32ha|
|Mine start date||1903|
|Acquisition by Petra Diamonds||July 2008|
|Acquisition cost||ZAR 1bn|
|Ownership||Petra Diamonds Limited: 74%1
Kago Diamonds (Pty) Ltd: 14%
Itumeleng Petra Diamonds Employee Trust: 12%
(inclusive of Reserves)
|Current depth of Resources||1,073m|
|Mining Method||Block cave|
|Depth of current mining||747m|
|Mine Plan||To 2030|
|Potential Mine Life||+50 years|
1. Refer to Petra’s ‘Effective Interest in Mines’ in the following document: Analyst Guidance – Explanatory Notes.
The Cullinan kimberlite pipe was discovered in 1902 and open pit mining commenced at the ‘Premier’ mine (as it was then known) in 1903. Ore extraction has been by underground mining methods since 1946. Ore extraction has varied between 2 and 5 Mt per annum and ore treatment between 2 and 7 Mt per annum.
The mine was renamed ‘Cullinan’ as part of its centenary celebrations and to link the mine to the illustrious heritage of the Cullinan diamond, which provided the two main polished diamonds within the British Crown Jewels (the 530 carat Great Star of Africa and the 317 carat Lesser Star of Africa).
Petra initially acquired a 37% interest in the Cullinan mine from De Beers in 2008, but increased its direct interest in the mine to 74% in late 2009 when it acquired Al Rajhi’s holding in the mine. Petra continues to mine the underground resource using block cave mining methods.
Cullinan is renowned as a source of large diamonds and frequently yields diamonds larger than 10 carats. Furthermore, it has produced over 800 stones weighing more than 100 carats, 140 stones weighing more than 200 carats, and around a quarter of all diamonds weighing more than 400 carats.
Cullinan is also renowned as the world’s most important source of blue diamonds, providing the collection of 11 rare blues displayed in 2000 at London’s Millennium Dome alongside the Millennium Star and which included the fancy vivid blue ‘Heart of Eternity’ (27 carats polished).
Since we acquired the mine in 2008, Cullinan has produced the following important diamonds:
Other notable diamonds historically produced from Cullinan include the Premier Rose (353 carats rough), the Niarchos (426 carats rough), the De Beers Centenary (599 carats rough), the Golden Jubilee (755 carats rough) and the famous Taylor-Burton diamond (69 carats polished).
|Category||Tonnes (millions)||Grade (cpht)||Contained Diamonds (Mcts)|
1. Resource bottom cut-off: 1.0mm.
2. Reserve bottom cut off: 1.15mm.
3. B-Cut resource tonnes and grade are based on block cave depletion modelling and include external waste.
4. C-Cut Resource stated as in-situ.
5. Factorised reserve grades and carats are derived from a Plant Recovery Factor (“PRF”) per geological facies.The PRF for the new plant (currently under construction) accounts for the efficiency of sieving (bottom cut-off), diamond liberation, concentration and recovery in the ore treatment process. Historic liberation factors are applied to the current plant (Brown Kimberlite = 75.8%, Grey Kimberlite – 71.4%, Hypabyssal Kimberlite = 71.8%).
6. All Mineral Reserves are according to PCBC scheduling of block caves and Mine2-4D scheduling of development and pillar mining.
|Unit||FY 2016||FY 2015||Variance|
|Average price per carat||US$||1261||1742||-28%|
|On-mine cash cost per tonne treated||ZAR||257||154||+67%|
|Borrowing Costs Capitalised||US$m||15.9||7.9||+101%|
1 Excluding exceptional diamonds, the average value for FY 2016 was US$109 per carat.
2 Excluding exceptional diamonds, the average value for FY 2015 was US$119 per carat.
Production decreased 7% to 680,813 (FY 2015: 729,496 carats) due to the decision taken to reduce ROM throughput during FY 2016 to focus on grade control.
The mitigating measures to manage the ROM grade at Cullinan as the mine transitions from the old mining areas to the new block cave continued to yield results in FY 2016, with a continued improved in the ROM grade to 30.3 cpht achieved for H2 FY 2016 versus 25.7 cpht for H1 FY 2016.
Cullinan contains a world-class diamond resource of 194 Mcts and we are capitalising on this by undertaking an expansion programme at the mine to take annual production from 0.7 Mcts in FY 2016 to ca. 2.2 Mcts by FY 2019 (comprising 2.0 Mcts ROM and 0.2 Mcts tailings).
The C-Cut Phase 1 expansion programme at Cullinan is designed to develop a new block cave on the western side of the orebody to access the higher grade BAW and AUC south areas of the orebody and will also involve a large tailings operation. Our current mine plan has a life extending to 2030, but the major residual resources at the mine indicate that the actual life of mine could be in excess of 50 years.
We are ramping up ROM tonnage throughput from 2.3 Mt in FY 2016 to 4.0 Mtpa by FY 2019. As the production profile gradually switches from the old diluted mining areas in the B-Cut to the new undiluted mining areas in the C-Cut, the ROM grade is expected to increase from 28.0 cpht in FY 2016 to between 55 and 58 cpht by FY 2019, when Cullinan’s C-Cut Phase 1 block cave is in full production.
Cullinan’s total resource includes a major tailings dump, estimated to contain 17.2 Mcts. Since taking over the mine in 2008, we have starting reprocessing this dump and have constructed a new tailings treatment facility. Tailings treatment is expected to be 0.4 Mtpa in 2017 and reaching a steady state of 2.4 Mtpa at a grade of 7-8 cpht from FY 2018 onwards.
Click on schematic to enlarge.
The orange block demonstrates both the C-Cut Phase 1 block cave that we will bring into production from FY 2016 onwards. The blue block represents C-Cut Phase 2 which is available for mining post the end of our current mine plan (2030).
Cullinan Diamond Mine (Pty) Ltd (“CDM”) holds a valid new order mining right (the ‘‘Cullinan Mining Right’’) dated 4 December 2007. The Cullinan Mining Right was initially granted to De Beers pursuant to Item 7 of Schedule II of the MPRDA and was ceded to CDM by a notarial deed of cession on 1 July 2008 pursuant to section 11 of the MPRDA and duly notarially executed and registered in the Mineral and Petroleum Titles Registration Office. .
The Cullinan Mining Right confers on CDM the exclusive right to mine for diamonds in relation to the areas it refers to until 3 December 2037. Pursuant to the MPRDA, the Cullinan Mining Right is renewable (for periods of up to 30 years for each renewal) on the basis more fully set out in section 24 of the MPRDA.
Section 2 of the Royalty Act requires CDM to pay the South African Government a royalty for minerals recovered under the Cullinan Mining Right. Pursuant to section 4 of the Royalty Act, the royalty is to be paid on gross sales in accordance with a defined formula set out in the Royalty Act. The formula applicable to rough diamonds is as follows: 0.5% + (earnings before interest and taxes, as defined in Section 5 of the Royalty Act / (gross sales x 9) x 100) but not exceeding 7%.
In addition, South Africa has a rough diamond export levy requirement of 5% as set out in section of the Diamond Export Levy Act 15 of 2007 (“Export Levy Act”). Producers are however exempt from this levy in respect of production that is exported provided that a certain percentage of their production is sold to local diamond beneficiation licence holders, on the basis more fully set out in sections 7, 8 and 9 of the Export Levy Act.
CDM is also subject to corporate tax in South Africa at the rate of 28% in terms of section 5 and other provisions of the Income Tax Act 58 of 1962.
There are no fiscal stabilisation provisions in place in relation to Cullinan Diamond Mine.
Petra is building a modern, fit-for-purpose processing plant at Cullinan, with a throughput capacity of 6 Mtpa, for a capital cost of ca. R1,650 million (US$142.8 million).
This will replace the current plant at Cullinan was originally commissioned in 1947 and has undergone various refurbishments over the years since its initial construction. Due to its age and operational complexity, it is expensive to maintain, requiring significant stay-in-business capex, and costly to operate, particularly given the large size of its footprint. It is also based on old crushing technology, which Petra believes does not offer the best potential for optimal diamond recoveries.
Benefits associated with the new Cullinan plant include:
The construction of the new Cullinan Plant is progressing well and in line with expectations. The commissioning of the new plant is planned to commence during Q3 FY 2017 and is expected to be complete and fully operational during Q4 FY 2017.
To arrange a tour of the famous Cullinan mine and learn more about its rich history and heritage, use this link.