Cullinan

completed

The project entails an IFC participation in a $300 million public bond offering by Petra, of which $142.8 million will be used to replace the plus 60 year old Cullinan processing plant with the balance being used to partially prepay existing debt, fund working capital and significantly increase the Group’s treasury headroom. Cullinan (the “mine”) is a 112-year old mine that was acquired by Petra Diamonds Limited (“Petra”) from De Beers in 2008. Petra has been an IFC client since 2005. It is listed on the London Stock Exchange and is geographically diversified with four producing mines in South Africa (Finsch, Cullinan, Koffiefontein and Kimberley Underground), one producing mine in Tanzania (Williamson), and one exploration project in Botswana (Petra Diamonds Botswana).The installation of the new processing plant (the “project”) which officially commences in the fourth quarter of FY 2014, is expected to be commissioned in FY 2017. Cullinan will continue to operate the old plant until the new plant is fully commissioned at which point the old plant will be decommissioned and subsequently dismantled. The new plant, with a significantly reduced footprint – 4ha - will be installed within the existing plant’s footprint. The current plant has a footprint of about 27ha. Energy and water resource efficiencies are discussed under PS3 below. Any environmental and social impacts that may arise as part of the project will be addressed through the EMP amendment exercise that the mine has commissioned. Cullinan is located in the eastern region of the Gauteng Province, some 37km east of Pretoria. The majority (65%) of its workforce comes from local (within a 50 km radius) particularly from Refilwe, a nearby settlement. Of the remaining 35%, the majority of employees come from the greater Gauteng province whilst a small number constitutes workers from outside of the Gauteng province and neighboring countries. Bronkhorstspruit and Onverwacht are other nearby settlements in addition to the town of Cullinan. The main land use in the greater region is intensive agriculture with livestock grazing in some parts. Farms in the area are generally small. Several smaller businesses and industry also occur in the area. Cullinan, and the mine itself, are regarded as a tourist attraction for the area and promote ecotourism. The mine supports small and medium enterprise initiatives within the Cullinan area. The mine is located in a typical Highveld climatic region, with warm to hot summers, moderate winters and rainfall that are higher than that of most parts of the country. The area receives most of its rainfall in the summer months between October and March. The average annual rainfall for the period from June 2001 to February 2012 is 599.14mm. The mine is situated in the upper catchment areas of the Premiermynloop and the McHardyspruit, which form part of the Pienaars River sub-system.Diamonds were first discovered at Cullinan in 1902 and open pit mining commenced in 1903. The mine was closed between 1937 and 1945 due to the economic downturn, and was re-opened to mine underground in 1947. The current mining method used is mechanized block-caving. In addition to the primary resource of the Kimberlite pipe, old course residue deposits (tailings) are additional mineral resources that are currently being reprocessed. Cullinan’s current surface operational areas consist of headgear infrastructure, a processing plant area, workshops, administration infrastructure, waste rock dumps, about 165 million tons of coarse residue deposits and fine residue deposits. This infrastructure is linked with Eskom power lines, tar and gravel roads.The treatment process used at Cullinan consists of three basic stages: ore preparation by crushing, washing and screening; concentration of the sized material and preparation by means of dense media separation; and sorting. The existing treatment plant was commissioned in 1947 and has since undergone considerable modifications and additions.