Petra warns of potential diamond production hit owing to underground problems at Cullinan

Richard Duffy, CEO, Petra Diamonds

PETRA Diamonds is maintaining its production forecast for financial 2022 at 3.1 million to 3.4 million carats from its South African mines despite problems at the flagship Cullinan operation where one of the underground tunnels suddenly started closing up.

According to CEO, Richard Duffy there was a “… sudden and rapid onset of convergence, calling for immediate intervention. This resulted in the installation of additional support to protect the tunnel for the longer term and the closure of the southern access to T41.

“This, together with the previously reported closure of the northern access to the tunnel, has resulted in the 18 draw points in T41 not being accessible for the remainder of financial year 2022”.

Duffy said if the impact on output from the convergence was not mitigated then it could result in a drop of between 75,000 carats and 100,000 carats on Cullinan’s forecast production for 2022. This meant Cullinan’s production could be at the lower end of previous guidance of between 1.7 million and 1.9 million carats if there were no mitigation measures.

But he indicated a plan to mitigate the impact on production was “in progress” and it could include taking tonnages from surface dumps to be treated through the recovery plant to replace the missing tonnage from underground.

Duffy ruled out increasing tonnages from other sections of the underground mining operations because he said this could  negatively affect the overall mine plan. “It’s a setback but it is manageable and the team is on top of things”.

Illegal mining

Turning to the Williamson mine in Tanzania, Duffy said production ramp-up at the re-opened mine started during the quarter and 14,400 carats of diamonds were produced.

He commented: “Encounters with illegal miners have continued and, while the company is working hand-in-hand with local law enforcement agencies, local communities and district and regional government officials to counter these incursions, the ramp-up of operating activities post the care and maintenance period may be adversely affected.”

According to the quarterly trading update published today by Petra there were 143 illegal incursions onto the Williamson mine lease area during the September quarter resulting in six security officials and two police officials suffering minor injuries while 15 arrests were made.

“Discussions with the Government of Tanzania to reach agreement on various issues at the Williamson mine are on-going with a view to conclude during financial year 2022.”

In May this year Petra settled – on a ‘no admission of liability basis’ – claims brought against it in London over “alleged breaches of human rights associated with third-party security operations at the Williamson mine”. The cost of that settlement was £4.3m.

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