Petra Diamonds Limited
Annual Report and Accounts 2013
10
Strategic Review
CEO’s Review
I am pleased to report that FY 2013 (“the Year”) marked a further
progression of our strategy to develop a world-class diamond
mining group. The key successes of the Year were the delivery
of further substantial growth in production (+21% to 2.67 Mcts)
and revenue (+27% to US$402.7 million), alongside the acceleration
of our expansion programmes, all of which were achieved
with an improved safety performance, demonstrating our
focus on this key area.
However, the Year was not without challenges and our performance
was impacted by a delay in the roll-out of the Cullinan tailings
project, the volatility of the ROM grade at Cullinan due to the
mature nature of the current working areas, and the labour
relations climate in South Africa. Despite this, the focus that we
apply to addressing such challenges meant that in Q4 FY 2013
we recorded very strong production (772,103 carats), which
bodes well for further production growth in FY 2014.
Petra’s expansion programmes are now progressing apace,
as evidenced by the substantial uplift in development metres
recorded at both Finsch and Cullinan for the Year. The development
will continue to accelerate in FY 2014, with access being established
to the Finsch Block 5 Sub-Level Cave during FY 2014 and initial
production tonnages from FY 2015. Access to the Cullinan C-Cut
Phase 1 is on schedule for FY 2015, with initial production
tonnages from FY 2016.
The schematic ‘Moving into undiluted ore’ to the right
demonstrates how our expansion programmes will open
up new mining areas in pure kimberlite.
As the production profile at both these major mines gradually
switches over from diluted to undiluted ore, the diamond
content of the ore mined will increase significantly. At the same
time as we gain access to these higher grade tonnages, our unit
costs will further improve due to higher volumes and increased
efficiencies, particularly in the ore-handling systems, and we
therefore expect to substantially increase our operating
margins in the coming years.
Petra’s approach is to continually seek opportunities to optimise
its mine plans. The most important concepts in mining are access
to the orebody and optimal production flexibility; these focus
areas will ensure that a mine can withstand foreseen or unforeseen
production issues (including grade volatility), as well as take
advantage of opportunities, such as the potential for future
ramp-ups. This thinking was evident in the refinements we
announced in our Market Guidance update on 12 August 2013,
with a particular emphasis on optimisation of ore-handling
systems, establishing ways to access undiluted ore as early
as possible and maximising access to an orebody’s footprint,
thereby enhancing all-important production flexibility.
FY 2013 marked a further progression of our strategy to develop a world-class
diamond mining group.
A year of significant progress
SUMMARY
$
The delivery of further substantial growth
was achieved with an improved safety
performance, demonstrating our focus
on this key area.
$
Our expansion programmes are now
progressing apace, as evidenced by the
substantial uplift in development metres
recorded at both Finsch and Cullinan
for the Year.
$
As the production profile at both Finsch and
Cullinan gradually switches over from diluted
to undiluted ore, the diamond content of
the ore mined will increase significantly.
$
Our unit costs will be further improved
due to higher volumes and increased
efficiencies, particularly in the ore-handling
systems, and we therefore expect to
substantially increase our operating
margins in the coming years.
Johan Dippenaar
Chief Executive Officer
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