Annual Report and Accounts 2013
Petra Diamonds Limited 27
Performance Review
Strategic Review
Corporate Governance
Group Accounts
ROM Grade Volatility
At the Group’s underground pipe mines (Finsch, Cullinan,
Koffiefontein, Kimberley Underground), Petra is currently
operating in ‘mature’ caves, meaning that the block of ore being
mined is now heavily diluted. Once the majority of the kimberlite
ore has been removed, waste rock is able to ingress into the
production areas and dilutes the overall diamond grade.
Board responsibility
The Executive Directors.
The objective of Petra’s development programmes at its
underground mines is to take the next ‘cut’ of the respective
orebody, by opening up and establishing new production areas
in deeper areas of undiluted kimberlite. The Group production
profile will start changing from diluted to undiluted ore from
FY 2015 onwards, and ROM grades are forecast to rise circa 50%
once purely undiluted ore is being mined.
FY 2013 risk management
As expected, Petra experienced volatility in ROM grades at
Cullinan and Finsch. The Company is managing this issue by
developing access to undiluted ‘gapfiller’ tonnes which can
be drawn whilst the expansion plans progress. Process plant
changes have also been introduced to further mitigate
the impact of volatile grades.
Operational risk
Expansion and Project Delivery Risks
Petra has set out a clear and transparent growth profile to
increase annual production to over 5 million carats by FY 2019.
Actual production may vary from estimates of future production
for a variety of reasons and it should be noted that long-term
assumptions may be subject to change as the Company
continually evaluates its projects to optimise efficiency
and production profitability.
Board responsibility
The Executive Directors.
Petra has an enviable track record in the management
of underground diamond mining operations and is respected as
one of the ‘best in class’ teams in the diamond mining industry.
With regards to potential budget or time overruns which could
impact the completion of these expansion projects, the Group
has established procedures to control, monitor and manage
the roll-out of its development plans. Petra operates six
producing mines, which provides flexibility in terms
of overall portfolio performance.
FY 2013 risk management
Activity associated with Petra’s underground development
programmes, notably at Finsch and Cullinan, picked up
considerably in FY 2013, as evidenced by the substantial
increase in development metres recorded for the Year.
Expansion plans are on track and progressing as expected.
As mentioned in the “Retention of Key Personnel” section,
performance based bonuses coupled with the 2011 LTSP
will help ensure necessary focus on project delivery
from all levels of management.
Operational risk
Social, Safety and Environmental
The Group’s success depends upon its safety, social and
environmental performance, as failure to comply with relevant
legislation in South Africa, Tanzania or Botswana could lead to
delays or suspension of its mining and exploration activities.
Board responsibility
The Executive Directors and the HSSE Committee.
The Group takes its responsibilities in these areas seriously and
monitors its performance across these areas on a regular basis.
The HSSE Committee assists the Board in obtaining assurance that
appropriate systems are in place to deal with the management
of health, safety, social and environmental risks.
FY 2013 risk management
The HSSE Committee has identified the material sustainability
issues facing the Group and ensured that these are monitored
and effectively reported to the Board on an ongoing basis.
Operational risk
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