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Annual Report and Accounts 2011

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Cullinan

 

At a Glance About About
Cullinan:

Revenue contribution:

Graph

Revenue

US$140.2m
+10%

Diamonds sold

944,405 carats
+4%

Average price per carat

US$148
+5%

The average value per carat (ROM and tailings combined) at Cullinan was US$148 for FY 2011, up 47% in comparison to the US$101 achieved in FY 2010 (being the average for FY 2010 of US$141 after adjusting for the sale of the 507 carat Cullinan Heritage for US$35 million).

Cullinan is renowned as an important source of large and high value Type II diamonds and in its history has produced four of the world's top 20 high quality large diamonds, 745 stones of +100 carats and more than a quarter of all diamonds +400 carats. In FY 2011, 11 stones from Cullinan each sold for in excess of US$1 million; such stones are regarded as a regular feature of Cullinan's production profile.

Cullinan performed well in terms of throughput, with total tonnages treated (ROM and tailings) exceeding expectations. ROM grade of 36.6 cpht was approximately 6% lower than the prior year of 38.9 cpht, due to:

  • an increase of the bottom-cut for slimes discard from 0.8mm to 1.3mm (partially contributing to the increased average value per carat achieved); and
  • the far higher than average rainfall experienced in many parts of South Africa, including Cullinan, which results in ore-handling difficulties relating to the clay, mud and moisture content of the ore.

ROM grade at Cullinan is expected to remain under pressure whilst production continues to be from the mature areas of the mine, due to the significant dilution of the ore drawn in these older production zones. However, the grade is forecast to rise to 50 cpht once the new cave is established from FY 2015 onwards as part of the C-Cut development programme on the 830m level and undiluted ore is mined and treated.

Although tailings throughput increased significantly to 575,605t during the Period, carats produced from tailings dropped by 49% to 44,246 carats as the high grade OSP tailings dump was depleted as planned in the preceding year. The Company is now processing the regular tailings material. The tailings grade of 7.7 cpht achieved for the Period is expected to rise to approximately 10 cpht from FY 2012, once a re-crush system of material larger than 6mm has been incorporated into the operation.

Despite South African cost pressures, unit costs per tonne at Cullinan decreased by 2% due to increased volumes and other initiatives to mitigate cost pressures. Longer term, once the development plan has significantly progressed, further unit cost efficiencies are expected to be driven by initiatives such as a simplified ore-handling system underground and further streamlining of the plant.

Development plan update

Cullinan contains a world-class resource base of 203.7 Mcts (including 16.9 Mcts in tailings), and the Company is planning to capitalise on this by undertaking an expansion programme at the mine to take annual production to 2.4 Mcts by FY 2019 (comprising 2.0 Mcts ROM and 0.4 Mcts tailings). This expansion plan will eventually access the first portions of the major C-Cut resource (estimated to contain some 133.1 Mcts) and will also involve a large tailings operation.

The C-Cut development programme at Cullinan is on track to access a new block cave which will produce at a rate of 2.0 Mcts per annum for around 16 years. The decline to access the new production level has passed the 839m level below surface, with the breakaway for the 830m undercut level having been established. Tenders have been received for shaft deepening (and related infrastructure) to 930m below surface and the award of this contract is imminent.

Petra is currently investigating the addition of a decline on the northern side of the pit which has the potential to fast-track the kimberlite development of the new block cave and subsequent production build-up.

Whilst the C-Cut development programme is underway, Petra has established new drawpoints in both the BB1E and AUC South sections of the Cullinan pipe. This will allow the Company to draw from these production areas to maintain volumes and manage the grade whilst the new block cave is established in the C-Cut.

Capex at Cullinan increased to US$33.9 million for the Period, predominantly applied to the underground development work, the continued upgrading of the plant and the new underground fleet equipment.

Petra continues to ramp up a major tailings operation at Cullinan to treat the 165 Mt tailings deposit and a new modular, tailings plant is currently under construction. The Company plans to treat 1 Mt of tailings in FY 2012, gradually increasing to ca. 4 Mt from FY 2014.

FY 2011 – gross numbers


  Unit FY 2011 FY 2010 Variance
Sales      
Revenue US$m 140.2 127.0 +10%
Diamonds sold carats 944,405 903,861 +4%
Average price per carat US$ 148 141 +5%
ROM production      
Tonnes treated tonnes 2,323,403 2,160,907 +8%
Grade cpht 36.6 38.9 -6%
Diamonds recovered carats 851,193 841,293 +1%
Tailings production      
Tonnes treated tonnes 575,605 248,380 +132%
Grade cpht 7.7 34.9 -78%
Diamonds recovered carats 44,246 86,638 -49%
Total production      
Tonnes treated tonnes 2,899,008 2,409,287 +20%
Diamonds recovered carats 895,439 927,931 -4%
Costs      
On-mine cost per tonne ZAR 164 167 -2%
Total capex US$m 33.9 20.4 n/a