1. Refer to Petra’s ‘Effective Interest in Mines’ in the following document: Analyst Guidance – Explanatory Notes. 

The Cullinan kimberlite pipe was discovered in 1902 and open pit mining commenced at the ‘Premier’ mine (as it was then known) in 1903. Ore extraction has been by underground mining methods since 1946. Ore extraction has varied between 2 and 5 Mt per annum and ore treatment between 2 and 7 Mt per annum.

The mine was renamed ‘Cullinan’ as part of its centenary celebrations and to link the mine to the illustrious heritage of the Cullinan diamond, which provided the two main polished diamonds within the British Crown Jewels (the 530 carat Great Star of Africa and the 317 carat Lesser Star of Africa).

Petra initially acquired a 37% interest in the Cullinan mine from De Beers in 2008, but increased its direct interest in the mine to 74% in late 2009 when it acquired Al Rajhi’s holding in the mine. Petra continues to mine the underground resource using block cave mining methods.

Cullinan is renowned as a source of large diamonds and frequently yields diamonds larger than 10 carats.  Furthermore, it has produced over 800 stones weighing more than 100 carats, 140 stones weighing more than 200 carats, and around a quarter of all diamonds weighing more than 400 carats.

Cullinan is also renowned as the world’s most important source of blue diamonds, providing the collection of 11 rare blues displayed in 2000 at London’s Millennium Dome alongside the Millennium Star and which included the fancy vivid blue ‘Heart of Eternity’ (27 carats polished).

Since we acquired the mine in 2008, Cullinan has produced the following important diamonds:

• A 39.9 carat diamond which sold for US$8.8 million in 2008.
• A 26.6 carat diamond which yielded a fancy vivid blue and internally flawless 7.0 carat polished stone known as the ‘Star of Josephine’ and sold for US$9.49 million at a Sotheby’s auction in 2009.
• A 507.5 carat white diamond known as the ‘Cullinan Heritage’ which was sold in 2010 for US$35.3 million.
• A 25.5 carat blue diamond which sold for US$16.9 million in 2013.
• A 29.6 carat blue diamond which sold for US$25.6 million in February 2014 and was then cut and polished into the perfect 12 carat ‘Blue Moon’.
• A 122.52 carat blue diamond which achieved a value of US$27.6 million in 2014.
• A 232 carat white diamond which was sold for US$15.2 million in September 2014.
• A 424.89 carat exceptional D colour Type IIa diamond which was sold for just under $15 million in May 2019.
• The Letlapa Tala Collection of five blue diamonds of high quality and clarity sold in November 2020 for US$40.36 million.
• A 299 carat white diamond sold for US$12.8 million in March 2021.
• Read more about our Diamond Heritage.

Other notable diamonds historically produced from Cullinan include the Premier Rose (353 carats rough), the Niarchos (426 carats rough), the De Beers Centenary (599 carats rough), the Golden Jubilee (755 carats rough) and the famous Taylor-Burton diamond (69 carats polished).

1. Resource bottom cut-off: 1.0mm.
2. Reserve bottom cut-off: 1.0mm.
3. B-Cut Resource tonnes and grade are based on block cave depletion modelling and include external waste. A portion of the Resources in these remnant blocks report into the current caving operations as low grade dilution.
4. C-Cut Resource stated as in-situ.
5. Reserves based on PCBC simulations on C-Cut phase 1 and PCSLC simulations for the CC1E.
6. Factorised grades and carats are derived from a calculated Plant Recovery Factor (“PRF”). These factors account for the efficiency of sieving (bottom cut-off), diamond liberation and recovery in the ore treatment process.
7. The PRF has been revised in line with the new Resource model and plant commissioning in 2018. The PRFs currently applied for the new mill plant per rock type are: Brown kimberlite = 73.8%, Grey kimberlite = 67.9%, Black kimberlite = 70.6% & Coherent kimberlite = 68.0%.
8. US$/ct values of 95-105 for ROM, excluding exceptional stones, and 35-45 for tailings based on expected sales values (with reference to FY 2021 sales results and considering rough diamond prices recovering to levels before the COVID-19 pandemic) and production size frequency distributions.

Notes:

¹ The Company is not able to precisely measure the ROM / tailings grade split because ore from both sources is processed through the same plant; the Company therefore back-calculates the grade with reference to resource grades.

Cullinan achieved record production in FY 2021 of 1,943,942 carats (FY 2020: 1,578,400 carats) with underground throughput of 4.6 Mt and an average ROM grade of 38.2 cpht (FY 2020: 37.3 cpht).

Production from the C-Cut and CC1 East mining areas increased to ca. 4.6 Mt in FY 2021 (FY 2020: ca. 3.9 Mt). A total of 0.4 Mt of recovery tailings were treated with an average grade of 41.0 cpht.

Cullinan’s revenue increased by 115% to US$250.6 million for the Year (FY 2020: US$116.5 million), due to a combination of a 91% increase in diamonds sold and a 13% increase in the average price per carat for the Year.

The full range of diamonds was recovered at the Cullinan mine in FY 2021, including a number of Exceptional Stones which contributed to the highest annual contribution to revenues from the sale of Exceptional Stones. These diamonds included the Letlapa Tala Collection of five blue diamonds of high quality and clarity which were sold as a suite of stones for US$40.36 million, an exceptional 299 carat Type IIa white gem quality diamond recovered in January 2021 and sold for US$12.8 million in March 2021, and an exceptional 11.82 carat blue diamond that was sold for US$9.5 million in Q3 FY 2021.

Post Year end, the Company sold the 39.34 carat exceptional Type IIb blue diamond recovered from the Cullinan mine in April 2021 for US$40.2 million (US$1.0 million per carat), being the highest price the Company has achieved for a single stone, both in terms of total sales value and per carat. Petra has also recovered and sold two further special diamonds from the Cullinan mine post Year end, being a 342.92 carat white stone and an 18.30 carat blue stone for a total upfront payment of US$13.5 million, as well as retaining a 50% interest in the profit uplift of the polished proceeds of both diamonds, after costs.

The Company will investigate the optimal plan on an ongoing basis to utilise the full extent of the large Cullinan orebody (ca. 16 ha at current production depths).

Production from the C-Cut and CC1 East mining areas increased to ca. 4.6 Mt in FY 2021 (FY 2020: ca. 3.9 Mt). A total of 0.4 Mt of recovery tailings were treated with an average grade of 41.0 cpht.

FY 2021 Capex of US$16.8 million was mainly spent on the development of the C-Cut Phase 1 block cave, development to North Crusher 2, and an improved support regime to secure long-term accessibility in the North West Corner of C-Cut Phase 1. Based on the reprioritisation of capital spend, the completion of the shaft plant interface project was deferred. The current system has proved to be reliable and will be utilised in the interim with no adverse impact on expected levels of production. FY 2022 Capex for Cullinan is guided at ca. US$48-54 million, primarily relating to underground development of the CC1E Phase 2 production areas and certain feasibility studies to be conducted related to shaft infrastructure, as well as fines residue deposit facilities and Stay in Business Capex.

Cullinan contains a ‘Tier 1’ diamond resource of 149.82 Mcts and the Company will on an ongoing basis investigate the optimal plan to utilise the full extent of the large Cullinan orebody (ca. 16 ha at current production depths).

The Company’s current mine plan has a life to 2030, but the major residual resources at the mine indicate that the actual LOM could extend beyond 2030.

Cullinan Diamond Mine (Pty) Ltd (“CDM”) holds a valid new order mining right (the ‘‘Cullinan Mining Right’’) dated 4 December 2007. The Cullinan Mining Right was initially granted to De Beers pursuant to Item 7 of Schedule II of the MPRDA and was ceded to CDM by a notarial deed of cession on 1 July 2008 pursuant to section 11 of the MPRDA and duly notarially executed and registered in the Mineral and Petroleum Titles Registration Office. .

The Cullinan Mining Right confers on CDM the exclusive right to mine for diamonds in relation to the areas it refers to until 3 December 2037. Pursuant to the MPRDA, the Cullinan Mining Right is renewable (for periods of up to 30 years for each renewal) on the basis more fully set out in section 24 of the MPRDA.

Section 2 of the Royalty Act requires CDM to pay the South African Government a royalty for minerals recovered under the Cullinan Mining Right. Pursuant to section 4 of the Royalty Act, the royalty is to be paid on gross sales in accordance with a defined formula set out in the Royalty Act. The formula applicable to rough diamonds is as follows: 0.5% + (earnings before interest and taxes, as defined in Section 5 of the Royalty Act / (gross sales x 9) x 100) but not exceeding 7%.

In addition, South Africa has a rough diamond export levy requirement of 5% as set out in section of the Diamond Export Levy Act 15 of 2007 (“Export Levy Act”). Producers are however exempt from this levy in respect of production that is exported provided that a certain percentage of their production is sold to local diamond beneficiation licence holders, on the basis more fully set out in sections 7, 8 and 9 of the Export Levy Act.

CDM is also subject to corporate tax in South Africa at the rate of 28% in terms of section 5 and other provisions of the Income Tax Act 58 of 1962.

There are no fiscal stabilisation provisions in place in relation to Cullinan Diamond Mine.

In September 2017, Petra completed the construction and commissioning of a modern, fit-for-purpose processing plant at Cullinan, with a throughput capacity of 6 Mtpa.

This has replaced the previous plant at Cullinan, which was originally commissioned in 1947 and which had  undergone numerous refurbishments over the years.  Due to its age and operational complexity, it had become expensive to maintain, requiring significant stay-in-business capex, and costly to operate, particularly given the large size of its 26 ha footprint. The plant was also based on old crushing technology, which is known to impact large stone recoveries as while diamond is the hardest substance known to man, it cannot take impact and therefore very large stones can be shattered using conventional processing techniques.  At the same time, the energy efficiency of the old plant was not aligned with the Company’s vision.

The design of the new plant was therefore planned to address these shortcomings and was considered an important factor in setting out a long-term sustainable future for the mine.

The new plant utilises gentler processing methods (comminution via attrition) instead of extensive crushing in the form of autogenous milling and high pressure grinding rolls, which are expected to reduce diamond breakage and improve recoveries across the full spectrum of diamonds, including the larger/exceptional stones for which the mine is rewnowned (the top-cut of 75mm will cater for diamonds of +3,000 carats, such as the Cullinan diamond).

In addition, the new plant has been designed to improve the efficiency of the material flow, thereby significantly lowering operating costs, and has a significantly smaller footprint of just 5 ha, with the associated reduction of engineering infrastructure deployed, including a reduction in:

• the number of conveyor belts used from 151 to 22 (from 15 km to just 3 km);
• the number of water pumps used from 121 to 9; and
• the number of electrical motors from 589 to only 84.

In efficiency terms, these changes will give effect to improvements of 12% in electricity consumption (as expressed in kWh/t) and a staggering 65% in water consumption (0.17 m³/t to 0.06 m³/t).

This is a good example of how Petra has applied the integrated environmental management principle of ‘Cradle to Grave’ planning for a new project as it has embedded environmental efficiency into the process.

The optimisation of the plant was ongoing in FY 2020, with the recovered ROM grade improving from 35.9 cpht in FY 2018 to 37.3 cpht for FY 2020.

New Cullinan Plant Presentation

New Cullinan Plant Press Release

Tours of the Cullinan mine

To arrange a tour of the famous Cullinan mine and learn more about its rich history and heritage, use this link.