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Cullinan – The World’s Most Celebrated Diamond Mine
31 October 2011
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Important Notice
These Presentation Materials do not constitute or form part of any invitation, offer for sale or subscription or any solicitation forany 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 reliedupon in any manner or for any purpose whatsoever.
These Presentation Materials must not be used or relied upon for the purpose of making any investment decision or engaging inan investment activity and any decision in connection with a purchase of shares in the Company must be made solely on thebasis of the publicly available information. Accordingly, neither the Company nor its directors makes any representation orwarranty in respect of the contents of the Presentation Materials.
The information contained in the Presentation Materials is subject to amendment, revision and updating in any way without noticeor liability to any party. The presentation materials contain forward-looking statements which involve risk and uncertainties andactual results and developments may differ materially from those expressed or implied by these statements depending on avariety of factors. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of theinformation or opinions contained herein, which have not been independently verified.
The delivery of these Presentation Materials shall not at any time or in any circumstance create any implication that there hasbeen no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) ofthe Company since the date of these Presentation Materials.
The Presentation Materials are confidential and being supplied to you for your own information and may not be reproduced,further distributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (except the recipient’sprofessional advisers) or published, in whole or in part, for any purpose whatsoever. The Presentation Materials may not be usedfor the purpose of an offer or solicitation to subscribe for securities by anyone in any jurisdiction.
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Petra - A Diversified Production Portfolio
Production
South Africa • Cullinan
• Koffiefontein
• Kimberley Underground
• Finsch
• Fissures
• Helam
• Sedibeng
• Star
Tanzania • Williamson
Finsch
Cape Town
Western Cape
Eastern Cape
Northern Cape
South Africa
Free State
KwaZulu‐Natal
Gauteng
JohannesburgNorth West Province
Limpopo
Mpumalanga Cullinan
Star
Helam
Sedibeng
Kimberley
Koffiefontein
Durban
Williamson
Building A Leading Diamond Producer
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Cullinan
July 2008
74% Petra26% BEE Partners
Block Cave
20 Year Mine Plan
Williamson
November 2008
75% Petra25% Government of United Republic of
Tanzania
Open Cast
20 Year Mine Plan
Kimberley UG
May 2010
74% Petra26% BEE Partners
Block Cave
12 Year Mine Plan
Finsch
74% Petra26% BEE Partners
Block Cave
18 Year Mine Plan
Koffiefontein
July 2007
74% Petra26% BEE Partners
Front Cave
20 Year Mine Plan
Petra’s growth path – establishing a reserves and resources base of +300 Mcts
Successful track record:• Focus on efficiencies: right-size operation, restructure cost base & empower management• Utilise in-house capabilities to execute Capex programmes• Optimise plant processing & security to ensure recovery of full spectrum of diamonds• Achieve best rough diamond prices through open tender system
September 2011
CULLINAN OVERVIEW
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An Introduction To Cullinan
• One of the most celebrated diamond mines in history
• One of the world’s largest diamond resources by in-situ value
• Source of “The Cullinan”, the world’s largest diamond ever (3,106 carats)
• Only significant source of truly rare and highly prized blue diamonds
• Has produced a quarter of all the world’s diamonds over 400 carats; 126 stones of +200 carats; 619 stones of +100 carats
• Petra ramping up production from ~1Mctpa to ~2.4Mctpa (2Mctpa ROM & 0.4Mctpa tailings)
• Life of mine plan of ~16 years (actual life of +50 years)
Cullinan – Writing The History Of Diamonds
The Cullinan – 3,106 carats roughLargest gem diamond ever discovered
Also source of the largest polished diamonds in the world, incl. The Great Star of Africa (530 carats)
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Cullinan – Iconic Gems
The Centenary599.10ct rough,
273.85ct polished1986
The Golden Jubilee755.50ct rough,
545.65ct polished1986
The Premier Rose353.90 ct rough 137.02 polished
1978
The Niarchos426.50ct rough
128.25ct polished1954
The Taylor Burton240.80ct rough, 69.42ct polished
1966
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The Safia338.46ct rough, 90.97ct polished
1990’s
The Cullinan Heritage
507 carats rough 2009
The Blue Heart30.82ct polished
1909
‘Specials’ Recovered By Petra
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• The Cullinan Heritage (507 carat white diamond pictured) – sold as a rough stone on tender in February 2010; achieved world record US$35.5m; sold to Chow Tai Fook
• 26 carat rough blue diamond – cut and polished to 7 carats (pictured) – sold for US$9.4m (US$1.349m per carat)
• 39 carat rough blue diamond – sold for US$8.8m
• In addition, Petra has recovered and sold a further 16 stones for +US$1 million each (totalling 1,294 carats / US$40.8 million)
The Cullinan Heritage diamond – a 507 carat white diamond recovered at Cullinan in September 2009
The ‘Star of Josephine’ – a 7.03 carat, fancy vivid blue, internally flawless diamond, the highest rating for a blue diamond
An Aerial Perspective
• Existing plant footprint ~ 27 hectares, including 13.5km of conveyor belts• Ongoing objective to simplify and streamline processing route
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Treatment Plant Flow Diagram
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SHAFT
WASHING PLANT
TAILINGS DUMP
-75+35mm -1.2mm
-35mm -35+6mm
COARSEDMS
RECOVERY&
SORTHOUSE
Mixed Feed
Mixed Feed
STOCKPILE
RECRUSH CRUSHERS
-75+35mm RETREAT
DMS
-12mm
PREPARATION PLANT
-35mm
-6+1mmFINESDMS
LARGE DIAMOND RECOVERY PLANT
SLIMES DAM
-1.2mm
+75mm
CRUSHING CIRCUIT
Cullinan – Consistent Production Of Specials
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0
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1903
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1907
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1911
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1915
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1921
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1925
1927
1929
1931
1950
1952
1954
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1958
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1971
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1975
1977
1979
1981
1983
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1987
1989
1991
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1995
1997
1999
2001
2003
2005
2007
2009
2011
+100 & +200 carat stones recovered at Cullinan
+100 carats
+200 carats
Major Tailings Project
Resource of 165 Mt (16.9 million carats)
• Design work for new tailings treatment facility completed; construction progressing well
• Facility will treat 1Mt (100,000 carats) in FY 2012, ramping up to 4Mt (400,000 carats) from FY 2014
• Resources sufficient for 40 years at this level
• FYs 2010 & 2011: Petra has completed treatment of high grade OSP tailings; now processing ROM tailings through existing plant facility
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South Dump
West DumpNorthDump
SHE Overview (July to June)
Cullinan Diamond Mine maintains the highest standards, and is; • ISO 14 001 Certified• OHSAS 18 001 Certified• ISO 9001 Certified
Corporate Social Investment (CSI)
• Cullinan plays an active and supportive role in the local community
• The mine contributes to a wide number of community projects – below are just a few examples:
SMME Support and Skills DepartmentCullinan Sports CentreImfundiso Jewellery SchoolRefilwe Orphan Care ProjectCullinan Field BandLocal NGOsTshepong Disability CentreChokoe Primary School
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MINING OVERVIEW
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Grade Distribution And Underground Schematic
Petra is currently mining the BB1E, BA5 and AUC blocks – development work moving into the higher grade BAW and AUC South areas
17BB1E
AUC & BB1E
BA5 & BAW
Notes:1. Resource bottom cut-off: 1mm2. Reserve bottom cut off: 1mm3. Resource tonnes and grade are based on block cave depletion modelling, and include external waste4. Reserve carats and grades are factorised as per the following resource to reserve liberation factors: "brown" kimberlite 75.8%, grey kimberlite 71.4%, and hypabbysal kimberlite 71.8%5. A total of 18 new drawpoints were added to the reserve
Major Diamond Resource – 30 June 2011
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Category
Gross Net attributable
Tonnes (millions)
Grade (cpht)
Contained Diamonds
(Mcts)Tonnes
(millions)Grade (cpht)
Contained Diamonds
(Mcts)
Reserves Proven - - - - - -Probable 14.051 36.89 5.183 10.397 36.89 3.836Sub-total 14.051 36.89 5.183 10.397 36.89 3.836
Resources Measured - - - - - -Indicated 251.289 71.51 179.708 185.954 71.51 132.984Inferred 168.502 10.04 16.918 124.692 10.04 12.519Total Resources inclusive of Reserves 201.808 149.338
Block Caving Schematic
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C-Cut Expansion Programme
Objective: develop new block cave on Western side of orebody; access higher grade BAW & AUC South areas; produce at a rate of 2 Mctpa for ~16 years (supplemented by 0.4 Mctpa of tailings production)
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C-Cut Expansion Programme
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Phase one: establish new tunnels on 747, 732 and in the BA5 at 630 levels to ensure that underground production is maintained at current levels
Phase two: ramp up production to ~3 Mtpa (~1 Mctpa) by FY 2015, then to ~4 Mtpa(~2 Mctpa) by FY 2019
• Upgrade material handling infrastructure, incl:
• Upgrading existing winders
• Driving decline below existing production levels to shaft bottom of 950m
• Raiseboring and slyping existing shaft from 580m down to 950m level
• Conveyor belt system replaced by FY 2016 (yielding significant cost savings)
• New optimal production level at 810 - 850m
• Grade expected to increase to 43 cpht and then to 50 cpht due to high grade western section and access to fresh undiluted ore
• Mine plan will only exploit 21% of C-Cut resource to 1,073m, leaving extensive resources for future development
C-Cut Expansion Plan – Current Status
• Decline to access new production level has passed 839m level; breakaway for 830m undercut level has been established
• Tenders received for shaft deepening (and related infrastructure) to 930m; award of this contract is imminent
• New drawpoints established in BB1E and AUC South sections of the pipe to provide gap filler tonnes whilst new block cave established
• Additional ‘gap filler’ tonnes being taken from BA5 block on 630 level (previously abandoned areas have been rehabilitated)
• Bring BA West block into production in a phased approach to gain access to resource above present infrastructure
• Petra will develop an additional decline on the Northern side of the orebody - will fast-track the kimberlite development of the new block cave and subsequent production build-up
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FINANCIALS AND GUIDANCE
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Production Forecast
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Will take production to 2.4 million carats by 2019
0.5
1.0
1.5
2.0
2.5
3.0
FY 2
012
FY 2
013
FY 2
014
FY 2
015
FY 2
016
FY 2
017
FY 2
018
FY 2
019
Carats (Mct)
ROM OSP & DMS Tailings
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
FY 2
012
FY 2
013
FY 2
014
FY 2
015
FY 2
016
FY 2
017
FY 2
018
FY 2
019
ROM Tonnes (Mt)
ROM
ROM tonnes (Mt) To remain at around 2.4Mtpa; gradually increasing from FY 2015 to 4Mtpa by FY 2019
ROM grade (cpht) 2012 & 2013 reduce to ~36cpht; gradually increasing from FY 2015 to 50cpht by 2019 as mature areas are replaced by new blocks.
Tailings tonnes (Mt) FY2012 planned to treat 1Mt; rising to 4Mtpa by 2014
Tailings grade (cpht) From FY2012 – 10 cpht; estimate to remain flat thereafter
Cash on-mine cost / ROM tonnes To remain at around R180 (real terms), until C-Cut phase 1 is fully operational, yielding cost benefits associated with more efficient ore handling systems; unit costs of around R160 / ROM tonne by FY 2018
Cash on-mine cost / tailings tonnes Remaining flat at around R35 / tonne
Analyst Guidance
• Cullinan LOM: Plan up to 2027; residual C-Cut resource extends LOM + 30yrs • Ownership: 74% • LOM environmental closure liability: R130 million • FY 2011 tax shield estimated: R700 million• Group management fees: R36 million pa• BEE loans due: US$56 million
Cost Make-up And Challenges
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OPEX for Cullinan was R161/t treated (FY 2011)
• ROM mining and treatment costs contained below R200/t since take-over
Ongoing issues being addressed:
• Rising cost of electricity through effective design, maintenance and management of new and old infrastructure
• New designs to cater for high degree of automation
• Advancement of a group procurement strategy to yield benefits related to economies of scale
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Cullinan Outlook
• Spectacular diamonds – regular production of ‘specials’
• Major resource – world’s second largest indicated resource by in-situ value
• Improving recoveries – ongoing plant changes
• Improving grades – grade to rise from ~36 cpht to ~50 cpht when new mining block established
• Very robust economics – positive cashflow even at depth of downturn
• Lower mining costs – Petra focus on increasing efficiencies
• Longevity – 16 year mine plan will only exploit 21% of total resource
Strategy to grow production from 1 million to 2.4 million carats pa
Appendix
Ownership Structure
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The History Of Cullinan
1902 Cullinan kimberlite pipe originally discovered by Sir Thomas Cullinan - at 32ha surface area, largest diamondiferous kimberlite ever found in SA
1903 Open pit mining commenced at ‘Premier Mine’ - at time of outbreak of WW1 14,000 were employed at mine
1930 De Beers acquired controlling interest in Premier through scheme of arrangement with Anglo American
1932 Mine closed due to depression and lack of market for luxury goods
1945 Mine reopened and pit dewatered for development of underground mine
1997 Premier (Transvaal) Diamond Company amalgamated into De Beers Consolidated
2003 Mine renamed ‘Cullinan’ as part of centenary celebrations
2008 Mine acquired by Petra Diamonds Cullinan Consortium on16 July as a going concern – acquisition cost of R1bn –Petra had an initial effective interest of 37%
2009 Petra increased its interest in the mine to 74% by buying outAl Rajhi’s interest
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Cullinan – FY 2011
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Unit Year ended30 June 2011
Year ended30 June 2010
Variance
SalesRevenue US$M 140.2 127.0¹ +10%Diamonds sold Carats 944,405 903,861 +4%Average price per carat US$ 148 141¹ +5%²ROM ProductionTonnes treated Tonnes 2,323,403 2,160,907 +8%Diamonds produced Carats 850,633 841,293 +1%Grade Cpht 36.6 38.9 -6%Tailings ProductionTonnes treated Tonnes 575,605 248,380 +132%Diamonds produced Carats 44,246 86,638 -49%Grade Cpht 7.7 34.9 -78%Total ProductionTonnes treated Tonnes 2,899,008 2,409,287 +20%Diamonds produced Carats 894,879 927,931 -4%
¹ Revenue for FY 2010 included the sale of the 507 carat Cullinan Heritage diamond for US$35.3 million; without this exceptional sale,average value for FY 2011 was US$101 (average for FY 2011 is up 47% in comparison)
• 11 stones from Cullinan sold for in excess of US$1m each – considered ROM production• ROM grade lower due to increase of bottom cut for slimes discard from 0.8mm to 1.3mm & excessive rainfall • Tailings grade to improve to ~10 cpht once re-crush system incorporated into processing (FY 2012)• Capex mainly applied to underground development & new underground fleet; continued upgrading of plant
