Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Technical Presentation (February 2016)
62 slides from Petra Diamonds's technical presentation, Feb 4, 2016
Slide 1: Cullinan Site Visit – 4 February 2016
Cullinan Site Visit – 4 February 2016
Slide 2: Important Notice
Important Notice These Presentation Materials do not constitute or form part of any invitation, offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities in the Company nor shall they or any part of them form the basis of or be relied upon in any manner
Slide 3: Cullinan Site Visit Itinerary
Cullinan Site Visit Itinerary 09:30 Arrive at Cullinan Diamond Mine 09:45 Overview briefing on Petra and Cullinan & safety briefing 11:00 Underground visit 13:15 New plant visit 14:10 Changehouse 14:30 Lunch with management, Q&A, diamond viewing 16:00 Mine visit ends 3
Slide 4: Petra Overview
PETRA OVERVIEW 4
Slide 5: Moving into Undiluted Ore
Moving into Undiluted Ore / Schematic • Caving is a safe and proven mechanised mining method; provides access to higher volumes of ore than other methods • Current underground mining taking place in diluted, mature caves nearing end of lives • Expansion programmes to take next ‘cut’ by deepening and
Slide 6: Growth & Margin Expansion
Growth & Margin Expansion Operating margins expected to rise from ca. 36% to +50% by FY 2019 • Group tonnage throughput to remain flat, but increase in ROM grades to lead to ca. 60% growth in production • Lower value tailings to reduce from 29% in FY 2015 to 4% of carat production by FY 2019 Split o
Slide 7: Outlook – Growth and Margin Expansion
Outlook – Growth and Margin Expansion FY 2019 production target of ca. 5.0 Mcts; revenue of ca. $0.85bn 900 6 30 FY 2015 FY 2016 25 5 production of production Carat production (million carats) 3.2 Mcts; target of 3.3 – FY 2007 revenue of 3.4 Mcts Tonnes treated (Mt) production $425m 4 20 of 0.2 Mcts
Slide 8: Petra Portfolio – FY 2015 vs FY 2019
Petra Portfolio – FY 2015 vs FY 2019 Gross Production Gross Revenue FY 2015 actual: 3.2 million carats FY 2015 actual: US$425.0 million 23% 28% Finsch 43% 6% Cullinan 65% 2% Williamson 4% 15% Koffiefontein Kimberley 10% Underground 4% FY 2019: ca. 5 million carats1 FY 2019: ca. US$0.85 billion1 29%
Slide 9: Cullinan Overview
CULLINAN OVERVIEW 9
Slide 10: Cullinan Diamond Mine (“CDM”) Overview
Cullinan Diamond Mine (“CDM”) Overview 1902 1903 1905 1930 1932 1945 1997 2008 2009 Cullinan kimberlite Open pit mining Recovery of the De Beers Mine closed due Mine reopened Premier Mine acquired by Petra increased pipe originally commenced at 3,106 carat acquired to depression and and pit dewatere
Slide 11: Iconic Diamonds
Iconic Diamonds • Exceptional diamonds (+$5 million stones) contributed on average $21 million p.a. from FY 08 to FY 15 Historic Recoveries pre-Petra Recoveries by Petra The Cullinan The Golden Jubilee The Cullinan Heritage The Cullinan Dream 3,106 ct rough 755.5 ct rough 507.55 ct rough 122.5 ct ro
Slide 12: Safety Performance
Safety Performance LTIFR* Number 1.0 20 18 0.8 16 14 0.6 12 10 0.4 8 6 0.2 4 2 0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fatalities 0 0 0 3 0 0 0 0 1 0 0 0 0 0 1 0 LTI 8 19 13 15 14 11 8 3 2 2 5 5 5 7 7 11 LTIFR 0.41 0.80 0.60 0.53 0.48 0.41 0.41 0.20 0.13
Slide 13: Major Diamond Resource
Major Diamond Resource Gross (Jun 2015) Contained AUC AUC Tonnes Grade Diamonds Category (millions) (cpht) (Mcts) Reserves Proved - - - Probable 48.0 47.8 22.95 Sub-total 48.0 47.8 22.95 Resources Measured - - - BA5 & Indicated 253.9 70.6 178.10 BAW Inferred 172.0 10.0 17.33 Sub-total 425.8 45.9 195
Slide 14: ROM Grade Turnaround in Progress
ROM Grade Turnaround in Progress 45 39.9 39.1 40 37.2 34.0 35 30.7 30 27.8 26.8 25.7 Grade (cpht) 25 22.0 Declining ROM grade as result of maturing of cave (waste ingress), exacerbated by high level of development waste in FY 2014 and FY 20 2015 from host rock that had to be handled by ore-handling
Slide 15: Mining Overview
MINING OVERVIEW 15
Slide 16: Plan View of Cullinan Mining Areas
Plan View of Cullinan Mining Areas BB1-E BA5 (630L) C-Cut P1 (839L) AUC South & BAW Phase 1 16
Slide 17: Cullinan Mine Plan – High Level
Cullinan Mine Plan – High Level Current mining taking place in B-Cut at 732m and rehabilitation mining on 645m C-Cut Phase 1 – new block cave being established on western side of orebody; production build up from H2 FY 2016 – 16 yr mine plan Dramatic simplification of ore-handling system C-Cut Phase
Slide 18: Block Caving Schematic
Block Caving Schematic Undercut tunnel is made through the Undercut orebody and material is broken up Production level is created below; draw points are set Draw bells / Draw points up and a fan is drilled above each one; ore starts to ‘cave’ Production level under its own weight and is removed from
Slide 19: C-Cut Phase 1
C-Cut Phase 1 839 Level Grade Elev.=1184, 3 Shaft 885L ——-— Grade Elev.=1231,572m Bottom Elev.=-1233,.072m Indercut Level 824L south Crushers
Slide 20: New Plant – Significantly Reduced Footprint
New Plant – Significantly Reduced Footprint COMPARISON – CURRENT vs AG MILLING PLANT Current plant commissioned in 1947 Current Plants New AG Milling Plant (Main, DTP & OSP) 6.0Mt ROM capacity 2.8 Mt ROM Initial feed: Throughput p.a. 2.5 Mt Tailings 4.0 Mt ROM 2.3 – 2.5 Mt Tailings Total footprint c
Slide 21: New Plant – Simplified Process Flow Diagram
New Plant – Simplified Process Flow Diagram Note 1: 6Mtpa ROM ready 21
Slide 22: C-Cut Phase 1 Expansion Programme
C-CUT PHASE 1 EXPANSION PROGRAMME 22
Slide 23: Production Start-Up Under Cut level – 824L
Production Start-Up Under Cut level – 824L Under Cut Rings Blasted 23
Slide 24: Undercut Development – 824L
Undercut Development – 824L Under Cut Holing Tunnel 21 Support Installation 24 Drilling Under Cut Secondary Support
Slide 25: Production Start-Up – Extraction Draw Bells – 839L
Production Start-Up – Extraction Draw Bells – 839L Magda, please get update from Michel / Cor Draw Bell Development First Draw Bell Blasted January 2016 25
Slide 26: Blue Tunnel Development – 824L/839L
Blue Tunnel Development – 824L/839L Blue Development Blue Development : Drilling 26 Blue Development – Rock Seal Blue Development : Secondary Support
Slide 27: Production Start-Up – Conveyor and RAW – 895L
Production Start-Up – Conveyor and RAW* – 895L * Return Airway 27
Slide 28: Ore-handling Reduced from 11x to 4x
Ore-handling Reduced from 11x to 4x 28
Slide 29: Engineering infrastructure – Ground Handling 895L
Engineering infrastructure – Ground Handling 895L Conveyors Conveyors 29 Intersection Intersection
Slide 30: Engineering Infrastructure – Ground Handling Crusher and Tip
Engineering Infrastructure – Ground Handling Crusher and Tip Production Tip 1 Crusher Chamber 30 Crusher Civil Construction Crusher South 1
Slide 31: Cullinan – Road Ahead
Cullinan – Road Ahead FY FY FY FY FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Development programme 2011 2012 2013 2014 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 Development of Declines & Access Tunnels Blasting of Under Cut at 824L New Production levels at 839L Development of Shaft #1 to 943L Production from C-Cut
Slide 32: C-Cut Phase 1 – Project Summary
C-Cut Phase 1 – Project Summary 0% 20% 40% 60% 80% 100% 92% Actual Development - Waste 83% Planned 36% Development - Blue 33% 14% Under Cut Rings 15% Draw Bells 0% C-Cut Phase 1 was 0% 69% complete as 55% at 31 December Contact Support 55% 2015 98% Engineering Design 98% 64% Engineering Construction
Slide 33: New Cullinan Mill Plant
NEW CULLINAN MILL PLANT 33
Slide 34: New Plant Aerial Overview
New Plant Aerial Overview 1. ROM Feed 2. ROM Silo and 9 14 Return Silo 3. Mill Section 10 4. XRL Recovery 12 3 5. HPGR Crusher 6. DMS Plant 11 7. Final Recovery 8. Tailings Disposal 6 5 9. Slimes Disposal 4 7 13 10. New Eskom 8 2 Substation 11. MV Substation 12. Re-mined Material 13. Pump Station 1
Slide 35: Benefits of New Plant
Benefits of New Plant • Construction cost of ca. ZAR1.65 billion (ca. $142.8 million) Strong stand-alone economics • Payback of ca. 3 years and IRR of 25% • Top-cut of 75mm (will cater for diamonds of +3,000 carats, such as the Cullinan diamond) ‘Softer’ liberation protecting • +25mm material only e
Slide 36: Latest Processing Technology
Latest Processing Technology Autogenous (“AG”) Milling • Utilise inter-particle crushing in an abrasive manner compared to impact forces in traditional crushers • Benefits are reduced diamond breakage, improved liberation and early stage reduction of ore to below the bottom cut off size of the plant
Slide 37: History of Large Diamond Recoveries
Number of Stones 10 12 14 16 18 20 0 2 4 6 8 1903 1905 1907 1909 1911 1913 1915 1917 1919 1921 1923 1925 1927 1929 1931 1947 1949 1951 1953 1955 1957 1959 1961 +100 1963 1965 1967 +200 1969 1971 1973 1975 1977 Tonnes History of Large Diamond Recoveries 1979 1981 1983 1985 1987 1989 1991 +100 +200 ca
Slide 38: Plant Project Milestones
Plant Project Milestones Q1 FY16 Q2 FY16 Q3 FY16 Q4 FY16 Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun 15 15 16 16 16 16 17 17 Contract signed: start, site prepared Bulk Earthworks: Completed (contractor off site) Civils SMPP (Structural, Mechanical,
Slide 39: Mill Plant – Project Summary
Mill Plant – Project Summary 0% 20% 40% 60% 80% 100% 42% Overall Program Actual 46% 90% Planned Eng & Design 94% 90% Procurement 90% 63% Fabrication & Delivery 66% Construction 15% Mill Plant was 42% 19% complete as at 31 Earthworks 100% Construction 100% December 2015 27% Civil Construction 40% 2%
Slide 40: Costs & Capex
COSTS & CAPEX 40
Slide 41: Operating Cost History and Make-up
Operating Cost History and Make-up 200 On-mine cash cost per tonne treated 6 Million tonnes treated R/t treated 180 5 160 140 4 120 100 3 • Risk of rising electricity costs 80 2 managed through efficient design of 60 new infrastructure 40 1 20 • Maintenance and management of 0 0 new and old infrastr
Slide 42: C-Cut Phase 1 Project: Actual Expenditure to Budget
C-Cut Phase 1 Project: Actual Expenditure to Budget 1,200 4,500 4,000 1,000 3,500 800 3,000 Rand (millions) H1 FY 2016 2,500 600 YTD Actual - R493m YTD Budget - R490m 2,000 400 1,500 1,000 200 500 0 0 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Budget - 570 704 84
Slide 43: Outlook
OUTLOOK 43
Slide 44: Cullinan – Production Plan
Cullinan – Production Plan • ROM tonnages to rise 60%, but ROM carat production expected to rise +200%, due to increase in grade as result of mining undiluted C-Cut tonnes Tonnes treated and grades Carat production and average diamond values 3.0 200 7.5 60 Million carats $/ct cpht Million tonnes 6.0
Slide 45: Cullinan Outlook
Cullinan Outlook • Improving grades – grade to rise gradually from ca. 26 cpht to +50 cpht by FY 2019 • Improving product mix – due to production from undiluted areas and higher proportion of ROM vs tailings • Improving recoveries – new plant to optimise recoveries from Cullinan • Improving mining c
Slide 46: Corporate Social Responsibility
CORPORATE SOCIAL RESPONSIBILITY 46
Slide 47: Safety, Health & Employee Wellbeing
Safety, Health & Employee Wellbeing • OHSAS 18001:2007 certified • 3,755 medicals carries out during FY 2015 • Chronic disease management and awareness • Bulk SMS system is utilised to remind employees and supervisors of health checks for chronic conditions Breast Cancer awareness in Refilwe Annual
Slide 48: Environmental Management
Environmental Management • ISO 14001 certified; next surveillance audit 15-19 February 2016 • Annual internal environmental audits carried out • No major incidents have been reported within the last year • Alien invasive species are continuously controlled mine wide • Energy saving initiative: Repla
Slide 49: Training and Development
Training and Development • Key focus for Petra (ca. $6.7 million on staff training and development in FY 2015 across whole Group) • Leadership Development Programme helps Petra identify and develop future leaders within the organisation: • 69 employees participated in FY 2015 (36% female / 64% male)
Slide 50: Education Initiatives
Education Initiatives Long-term strategy to address the Career Day 2015 scarcity of technical skills in the industry • All learners in Grade 10 to 12 Implementation of a Maths and from local schools Science Centre at 3 local schools were invited to CDM’s Career Day • Assisting with improving Maths &
Slide 51: Education Initiatives continues…
Education Initiatives continues… Bursary programme – bursaries awarded to 5 beneficiaries: • 2 learners studying for Mining Engineering (1 was on Petra scholarship and 1 employee) • 1 learner studying Electrical Engineering • 2 Metallurgy Engineering (one learner used to be on Petra Experiential Lea
Slide 52: Community Projects
Community Projects Group social spend increased to ca. $1.7 million in FY 2015 (FY 2014: $1 million) Community projects include: Expansion of Onverwacht Primary School • The mine has committed to build 4 classrooms, library and the administration block (commencing in March 2016) after re-zoning appr
Slide 53: Community Projects
Community Projects Leshidi Place of Safety • Place of safety for orphaned and vulnerable children in Refilwe. • Adopted by the Petra Foundation as a CSI flagship project for CDM • CDM bought some groceries, bedding, toys and board games for the festive season Matric Awards CDM has sponsored the 2015
Slide 54: Community Work on Mandela Day
Community Work on Mandela Day 54
Slide 55: Community Work on Mandela Day
Community Work on Mandela Day 55
Slide 56: Appendix
APPENDIX 56
Slide 57: Location
Location Focus on kimberlite KX36 discovery & surrounding area 57
Slide 58: Current Trading – H1 FY 2016 Results
Current Trading – H1 FY 2016 Results Unit H1 FY 2016 H1 FY 2015 Variance FY 2015 Sales Revenue US$m 25.0 77.7 -68% 122.2 Diamonds sold Carats 227,759 314,957 -28% 700,896 Average price per carat US$ 110 2471 -56% 1742 ROM Production Tonnes treated Tonnes 1,180,399 1,292,895 -9% 2,513,004 Diamonds pr
Slide 59: Capex Overview
Capex Overview • Total expansion Capex of ca. R6.5 billion (ca. US$550 million) • R4 billion capital spent to date (H1 FY 2016); remaining Capex of R2.5 billion (ca. US$190 million) to FY 2019 • Capex fully funded from current debt facilities, treasury and mine cashflows • Split of Capex guidance at
Slide 60: Labour Relations Risk Mitigation
Labour Relations Risk Mitigation • Labour relations at Cullinan have been stable in FY 2015 and H1 FY 2016 • No migrant labour – 70% of employees come from local/provincial area to Cullinan • Strong focus on internal communications and engagement with employee representatives • Petra concluded 3 yea
Slide 61: Power Risk Mitigation
Power Risk Mitigation • Diamond mining industry is light user of power in comparison to other commodities (no smelting / refining) • Cullinan already operating under allotted power capacity (used to run at historically higher tonnage levels) • Eskom consults with industry pre load shedding, enabling
Slide 62: Further enquiries: Petra Diamonds
Further enquiries: Petra Diamonds Cathy Malins cathy.malins@petradiamonds.com +44 20 7494 8203 www.petradiamonds.com
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