Diamond Fact Sheet

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About Diamonds

For centuries the exquisite beauty and inner fire of diamonds have made them prized above all other gems, and each diamond is endowed with a character uniquely its own.

Demand for gem-quality diamonds (which form the vast majority of Petra’s production on a value basis) is driven by their use in the retail and luxury goods sectors. Due to their entrenched association with certain culturally and socially important events (i.e. engagements, weddings and anniversaries) a solid foundation for diamond demand can be found in countries such as the United States and, to a growing extent, developing countries such as China and India.

What are diamonds?

Diamonds are crystallised forms of carbon. Assembled in the most tightly bound crystalline configuration, a diamond is the hardest structure known to man; a diamond can only be scratched by another diamond.

Diamonds were formed billions of years ago, deep within the earth. Their formation required very specific conditions, involving the exposure of carbon-bearing materials to a high heat and enormous natural pressure. These conditions occur on Earth, in the layer known as the mantle, approximately 150 to 200km beneath the Earth’s surface, where a combination of high pressures and temperatures exist. Most diamonds are more than three billion years old, two-thirds the age of the Earth.

Diamonds were carried towards the Earth’s surface in rare eruptions of molten rock, or magma, which originated at great depths. This magma emanated from deep cracks and fissures and erupted in small but violent volcanoes, rising to the surface to create a carrot shaped ‘pipe’ which is embedded with mantle xenoliths, including diamonds. These pipe formations are called kimberlites after the city of Kimberley in South Africa, where they were first discovered in the 1860s.

Only a small number of diamonds survived the journey to the Earth’s surface; fewer still are of gem quality that can be made into precious pieces of jewellery.

Not only do kimberlite pipes give diamonds to the world, but they also serve as a window into the physical and chemical conditions deep within the Earth; there is probably no other group of rocks presently found at surface that originated from as great a depth.

How diamonds are found: exploration

Generally, kimberlites occur in clusters of up to five or more, in close proximity to each other. They are not necessarily all the consequence of a single volcanic event. Indeed, they may have resulted from several different events over a period of time, adding to the complexity of sampling and proving their economic potential.

Geologists use many methods to explore for kimberlites, including satellite remote sensing, geophysics and reconnaissance sampling. Any kimberlites discovered can then be drilled to establish whether or not they contain economic quantities of diamonds.

The first step is generally to investigate areas with a history of diamond recovery, and then to follow up with stream or deflation sampling for evidence of kimberlite indicators such as garnets. Thereafter, the use of geophysics to search for magnetic anomalies is applied. Sampling and drilling are then used to confirm whether the anomalies are indeed kimberlites.

Once an anomaly has been confirmed as a kimberlite, HMA sampling of representative material is carried out as a quick and efficient method of assessing whether the kimberlite has the potential to be diamondiferous. Micro-diamond and mini-bulk sampling are then used to establish if there is the potential for those kimberlites prioritised by HMA sampling to host an economic concentration of diamonds.

If positive results are achieved through the initial processes mentioned above, then a company will be in a position to commence bulk sampling material by drilling the deposit and extracting core for analysis. The aim is here to establish the economics for mining a particular kimberlite, and will give indications of grade, cost per tonne and average value per carat. From here, a production decision can be made.

How diamonds are recovered: mining

Hard rock mining

All of Petra’s operations are mining ‘hard rock’ kimberlite pipe diamond orebodies, as opposed to alluvial deposits (i.e. deposits of diamonds which have been removed from the primary kimberlite source by natural erosive action over millions of years, and eventually deposited in a new environment such as a river bed, an ocean floor or a shoreline).

Open Pit mining

Petra is employing open pit mining at the Williamson mine in Tanzania and the Ebenhaezer satellite pipe at Koffiefontein in South Africa. Mining of a diamond-bearing kimberlite starts with the excavation of a pit into the kimberlite pipe. In this process, called “open-pit” or “open-cast” mining, the initially weathered ore material is removed with large hydraulic shovels and ore trucks. Hard rock is drilled and blasted with explosives so the broken material can be removed.

Block caving

Block caving is currently used as the mining method at Finsch, Cullinan, and Kimberley Underground mines in South Africa. Block caving was first introduced at Kimberley, South Africa in 1951 and is now used extensively as an underground mining method. It has proved to be a safe, low cost, high volume mining method. In recent years advances in block caving technology have allowed the mining method to be used for ore extraction in many large-scale orebodies world-wide.

Utilising this method, the full orebody or an approximately equi-dimensional block of ore is fully undercut to initiate caving. The undercut zone is drilled and blasted progressively and some broken ore is drawn off to create a void into which initial caving of the overlying ore can take place. As more broken ore is drawn progressively following cave initiation, the cave propagates upwards through the orebody or block until the overlying rock also caves and surface subsidence occurs. The mechanisms by which caving takes place under the influence of redistributed stresses and/or gravity are extensively studied and well known.

The broken ore is removed through the production or extraction level developed below the undercut level and connected to it by drawbells through which the ore gravitates to drawpoints on the extraction level. In most current block caving operations, the broken ore is removed from the drawpoints by LHD vehicles, although the Kimberley Underground mines still use the more traditional gravity-based grizzly or slusher systems. From the extraction level, the ore is transported to the haulage level and out of the mine, sometimes following underground crushing. Block caving may be used in massive orebodies which have large, regular “footprints” and either dip steeply or are of large vertical extent. It is initially a capital intensive process, requiring considerable investment in infrastructure and development before production can commence. However, once the caves have been propagated, it is a low cost mining method which is capable of automation to produce an underground “rock factory”. Historically, block caving was used for large-scale, low strength and usually low grade orebodies which produced fine fragmentation.

Sub-level caving

This method owes the first part of its name to the fact that work is carried out on intermediate levels (that is, sub-levels) between the main production levels. It follows the same basic principles as the Block Caving mining method, but the caves are smaller in size and not as long lasting. This method of mining is quicker to bring into production than block caving, as the related infrastructure does not require the level of permanence needed for a long-term block cave. However, the operating costs are slightly higher, as more drilling and blasting is required.

Petra utilises this mining method to supplement Block Caving, in order to provide production flexibility. For example, at the Finsch mine sub-level caving will be used as part of the mine’s expansion programme to maintain underground production levels during the transition from the Block 4 cave to the Block 5 cave.

Front caving

The front cave mining method is used at Petra’s Koffiefontein mine in South Africa. Front caving was developed from the overdraw system used on the two lower levels of the sub-level caving operations at the Shabanie Mine, Zimbabwe. In essence, the method involves retreating on one or more levels from an initiating slot which can be in the centre of the orebody as at Koffiefontein, or against the orebody boundary. The lower level is the production level on which so-called semi-permanent drawpoints are fully developed ahead of undercutting on the upper level. This upper level also provides initial temporary drawpoints from which the swell from each blasted ring is drawn. The undercut is retreated in stages to points above the semi-permanent drawpoints in a manner similar to that used in sub-level caving. Ideally, the method should work best with two production levels rather than one.

Fissure mining

Petra is mining ‘fissure’ orebodies at the Helam, Sedibeng and Star mines in South Africa. Erosion will eventually wear down a kimberlite ore body until only the root zone remains, leaving only this narrow ‘fissure’ zone of magmatic kimberlite to be mined. These fissures are vertical orebodies that are generally very narrow, with an average width of less than 70cm. Fissure mining, otherwise known as ‘dyke mining’, yields much lower tonnages and is generally complex because the ore body is narrow. More than one type of kimberlite can be present within dyke systems due to multiple intrusive phases varying in both space and time. This, too, can further complicate the mining process. Few companies have successfully tackled fissures for long periods, and Petra is regarded as a leader in the fissure mining field.

Processing

Once a diamond operation yields ore, the diamonds must be sorted from the other materials. Excavated ore is transported to a processing plant.

The kimberlite is first crushed and then processed through the plant, which consists of a series of screens, jigs and scrubbers and a gravity pan or DMS plant to remove lighter particles and create a concentrate of heavy material, which includes the diamonds.

Diamonds are then extracted from this material by using an X-ray machine and/or grease table and checked by hand sorting. Most diamonds luminesce under X-rays and can therefore be identified and separated in final recovery. However, some diamonds – particularly more valuable Type II stones – do not respond well to X-rays, so grease tables are used to recover such stones. As diamonds are hydrophobic (meaning they repel water), they stick to the grease while the rest of the wet concentrate runs off.

Waste material is then stored in tailings dumps. Some of these may contain economic grades due to early, inefficient processing of high grade kimberlites and alluvial deposits. The opportunity exists to reprocess tailings dumps in order to recover those diamonds that were missed first time around.

Sorting and distribution

Once mined, rough diamonds are delivered to sorting experts who categorise and assign a value to them — no mean feat considering that no two diamonds are the same. Diamonds are sorted into parcels according to their shape, size, clarity and colour, but within these categories there are thousands of variants which can affect the price. It is at this point that gem quality diamonds are separated from industrial diamonds. Otherwise known as ‘boart’, industrial diamonds are small, lower-quality stones that can be used in equipment such as drill bits and lathes.

Find out more information about Petra’s diamonds sales.

Cutting and polishing

The process of transforming a rough diamond into a polished gemstone is both an art and a science. A well-cut diamond reflects light within itself, from one facet to another, as well as through the top of the diamond, bringing out its spectral brilliance.

The cutting and polishing of a diamond crystal always results in a dramatic loss of weight; rarely is it less than 50%. Sometimes the cutters compromise and accept lesser proportions and symmetry in order to avoid inclusions or to preserve the carat rating.

After a stone has been cut, it is then polished and classified again, according to the 4Cs: Colour, Carat, Clarity and Cut. Due to each stone having its own unique characteristics, diamonds are non-fungible and their value can vary significantly based upon the many variances of the 4Cs mentioned above. For more information on the 4Cs, please review: http://www.gia.edu/lab-reports-services/about-the-4cs/index.html

Retail

Diamonds have come to represent the ultimate gift of love and commitment, and it is therefore fitting that the cornerstone of diamond jewellery sales worldwide is the engagement ring. Whilst diamonds qualify as luxury goods, they are much more than this, expressing as they do powerful human emotions.

For hundreds of years, diamonds have been given to celebrate the most important moments in people’s lives, such as engagements, weddings, anniversaries and the birth of a child. All over the world, thousands of diamond retailers cater to these needs, from small, independent jewellers to mass market superstores, and there has recently been huge growth in sales online. Purveyors of antiques also have an important place in the market given that the value of a diamond endures and appreciates over time.

As diamonds continue to broaden their socio-economic and geographical appeal, designers duly respond and there is a diamond size and style to suit every taste.

Our diamonds

The mines within Petra’s portfolio produce the full spectrum of diamonds, including fancy coloured diamonds, the rarest and often the most valuable. Cullinan is renowned as the world’s only reliable source of blue diamonds, Williamson is known for its ‘bubblegum pink’ diamonds and Finsch and Kimberley Underground are known for fancy yellow diamonds.

Petra’s mines have the capacity to produce world-class gems and Cullinan in particular is renowned as the source of large Type II diamonds (see glossary).

Petra has mined and sold several exceptional diamonds including the following:

An exceptional 25 carat blue

25 carat blue diamond In April 2013, Cullinan once again gave the world an exceptional blue diamond, being a 25.5 carat blue considered to be a high quality gem of top colour. Following a highly competitive sales process at the company’s marketing division in Johannesburg, the diamond was sold in May 2013 for US$16.9 million (or US$663,114 per carat).

The Cullinan Heritage

507 carat diamond This 507 carat diamond was recovered on South Africa’s ‘Heritage Day’ in 2009 at Cullinan and was quickly ascertained to be the nineteenth largest high quality gem diamond ever discovered. Petra sold this historic stone in February 2010 for US$35 million, being the highest price on record for a rough diamond.

The Star of Josephine

26 carat blue diamond In October 2008, Petra recovered a 26 carat blue stone at Cullinan, demonstrating the mine’s ability to produce blue diamonds of significant size. This important diamond yielded a cushion-shaped cut stone of just over 7 carats, and achieved the highest colour and clarity grading for a blue diamond, being fancy vivid blue and internally flawless. Petra sold this perfect gem through an auction house for US$9.49 million, or US$1.35 million per carat, which at the time was the world record price per carat achieved for any gemstone at auction. This exceptional blue is now known as The Star of Josephine.

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