VENETIA UNDERGROUND PROJECT (VUP)

December

• De Beers reported that the construction of the Venetia Underground Project is still progressing with the decline advancing to 1 550 m together with progress being made with the shaft sinking.
• The decline from surface is 2 km in length as it develops down to 540 m. Development of the decline is at a rate of 140 m a month.
• Headgears of the two shafts have been constructed and are advancing at a rate of 66 m/month to reach a depth of 1 080 m below the surface.
• De Beers and its holding company Anglo American has reappointed Worley Parsons RSA under a new contract with amendments to the project execution synopsis which is in line with Anglo American's new model. The project scope will provide for a techno-economic underground mining and infrastructure solutions.
• Worley Parsons responsibility as Engineering Procurement Construction Management (EPCM) will consist of project management, project controls, quality management.
• De Beers reported an increase of 4% to 6.3 Mc in production compared to Q3 of 2015.

September

• Anglo American is the holding company of De Beers and Anglo American has 85% shareholding in De Beers. The Venetia Mine and Venetia Underground Project is 100% owned by De Beers.
• De Beers announced that the underground development is on schedule and might start production before 2022.
• The Venetia Underground Project will employ 6 000 people during mining operations, including 2 000 in the construction sector by 2019.
• The vertical shaft sinking operations are advancing with all groundwork such as the surface facilities, headgears and terraces being established. Genrec Engineering Pty Ltd (part of Murray and Roberts) who was the fabrication and erection contractor for the headgears at the mine work has completed their work and they are no longer on site.
• The sinking of the production shaft is one-quarter complete reaching a depth of 250 m and the service shaft reaching a depth of 150 m. The 7.5 km decline access is being developed at a rate of 130 m a month with a decline of 2.5 km already reached, declining 9° to a depth of 1 000 m.
• Ground and water handling systems have not been awarded to any contractors.
• De Beers will focus on ensuring the decline reaches 540 m below surface within the next 2 years, with all shaft sinking operations completed by 2018.
• Rigid Dump Trucks (RDT) transport in excess of 40 million tonnes of material per year. To retrieve the diamonds they will haul out 91.4 million tonnes of material per year which will contain with every tonne of rock, dust, water, red earth and kimberlite ore winched up in the vertical production shaft, a projected 0.765 carats of diamonds.
• Underground mining will reduce the amount of waste the trucks are hauling from the open-pit. As of now they are mining 40 to 50 million tonnes of waste per year. Once the underground operation has commenced, this will be reduced by half.
• Venetia uses 7 of their own Joy Global large diameter drill rigs for blasting, and African Explosives Ltd (AEL) operates a further 3 Pit Viper big diameter drilling rigs. Subcontractors drill in areas where working space is constrained of drilling is close to the edges of the pit. There are 12 small diameter drill rigs, the majority of which are owned by Atlas Copco.
• Blasted fragments, rock and ore is shoveled by seven 600 tonne CAT 660 shovels into 42 large RDT bins.
• During the rainy season 440 mm of water accumulated at the bottom of the pit, which will take five months to dewater, there is 1,2 Million cubic metres of water in the bottom of the pit which is being pumped out at 300 cubic metres per hour and used in the processing plant.
• SRK Vancouver constructed a 3D Model that forecasted the dominant structural geometries at depths, below the pit.
• Speedspace has provided the mine with 2 730 m² of prefabricated modular buildings.

June

• De Beers Consolidated Mines (DBCM) reported that there has been steady progress and the Venetia Underground Mine (VUP) is projected to meet the 2022 target date for completion.
• In Q1 2016, the production decreased by 12% to 932 000 carats, due to the finalisation of the sale of the Kimberley Mines.
• Anglo American projected that the estimated $2.1 billion VUP will extend the present Life of Mine (LoM) to 2046.
• The 2 vertical shafts (each 7 m in diameter) are being sunk to a depth of 1 080 m, an operation that will take until 2028, and Murray & Roberts Cementation is doing the shaft sinking for the VUP.
• The initial modules (for shaft sink) of the production shaft were pre-erected on the ground, with the production shaft headgear about 86 m in height and the crane lifted all of those modules.
• The pre-sink gantry is a necessity to get down to about 60 m (stage 4 level, about 20 m in length), before implementing the main sinking structures and this is a multi-deck platform on which the workers can move.
• The kibble holes (through which two 10 tonne skips) are used to bring out the blasted material and depending on the blast, it takes about 40 skip lifts to get the blast muck cleaned out.
• This is a manual process of drilling and blasting the shaft bottom (3 m a blast, 3 m a day, every day) for 2 years, until they can reach about 1 080 m.
• The production shaft and service shafts are presently at about 14 0m to 145 m and 100 m deep respectively (about 3 months behind schedule) and will ultimately reach a depth of 1 000 m.
• The construction of the underground tunnels and infrastructure will take place from the shafts, with the decline ramp reaching a depth of about 1 km, providing access to the initial ore bodies.
• The drill rig unit (attached to the winder) is lowered down the shaft, where it is then hung on the stage.
• There are 3 drill rigs on each 1 of these drilling units and it drills the shaft bottom, drilling about 180 holes for every blast at about 3 m deep.
• There are 2 drilling units (1 is executable, the other is a spare) and after drilling the bottom and blasting the bottom, there is a mucking cycle during which 2 vertical shaft muckers (fixed on the stage) are lowered down the shaft, mucking the shaft bottom and filling the kibbles.
• The kibbles are winched up the shaft, tipped on surface into 2 chutes and the waste is trucked to the dump.
• When the mucking is complete, it then goes through a blow over cycle (using compressed air) to clean the shaft bottom before drilling can re-commence.
• During construction, the removal of rock to build shafts, tunnels and infrastructure will engender enough rock to pave a road from Musina (Limpopo) to Cape Town (Western Cape) and back, while generating the revenue required for DBCM to fund the mining investment, without taking on bank debt.
• DBCM last suffered a fatality in 2008 and this drives the dedicated approach to the integration of surface and underground mine (under construction), beneath our operating open-pit.
• Mining of the 3 open-pit kimberlites will ultimately be phased out, with K1 taking the mine through to 2022 (underground mining starting at about 50m below point where production above ground stopped), K2 closing off at the end of 2016 and K3 projected to end in 2017
• The working cost of underground mining is lower than surface mining, producing lower waste and a lower environmental impact.
• As part of the VUP, houses are being built (nearby Musina) to accommodate workers, support will be given to improve roads, about 1 500 jobs already created for local community and another 500 to be conscripted when major underground work commences.

March

• Anglo American reported that the Venetia Underground Project (VUP) is projected to treat about 132 Mt of material containing an estimated 94 Mc.
• The estimates are scheduled tonnes and carats as per the Life of Mine (LoM) Plan (approved in 2015), with the Inferred Resources (39.5 Mt) constituting 24% (22.4 Mc) of the estimated carats.
• De Beers Consolidated Mines (DBCM) cut their costs of production from $111/carat in 2014 to $101/carat in 2016.
• Between 2015 and 2017, DBCM’s capital expenditure is projected to decline by around $200 million to $500 million, mainly due to the completion of the mine development in Canada.
• DBCM is capping their exploration budget for 2015 and 2016 at $35 million and limiting exploration activity to Botswana, South Africa and Canada.
• The 2016 Production Programme for Debswana, De Beers Joint Venture (JV) with the Botswana Government has been revised to 20 Mc, which will still account for more than 70% of DBCM’s total production.
• At DBCM, the total diamond production for Q4 2015 decreased 16% to 7.1 Mc.
• The Venetia production declined, due to the reduction in tonnes treated and the offset by increased production at Kimberley with a consistent decision to reduce production in line with trading conditions.
• The Q4 production increased 17% compared to Q3 2015, due to the improved grade at Orapa and as a result of an annual planned 6 day plant shutdown at Venetia in Q3 2015.
• DBCM is maintaining a flexible approach to production and have the capacity to increase the production via their tailings operations at Venetia and Jwaneng.
• The construction of the Venetia Underground Mine continues to progress, with the decline advanced to more than 1 100 m and the VUP is 21% complete.
• The underground operation is projected to become the key source of ore at Venetia from late 2022.
• There will be a reduction in employees with more than 1 500 job losses, across Canada and Sweden, with the South African Plant being restructured.
• In February 2016, the National Union of Mineworkers (NUM) issued a statement questioning the rationale and process for the restructuring undertaken at DBCM’s Venetia Mine and the notices have been issued to 189 employees.
• The details and rationale for issuing S189s at Venetia have been communicated to NUM prior to issuing the notice.
• DBCM’s Venetia Mine employ 1 534 of the 2 236 employees and there are 189 positions affected, of which 152 relate to the Venetia Mine, with 68 positions which may be reduced without retrenchments or natural attrition from retirements or redeployment of employees.
• The remaining 121 positions will be focussed at the Corporate Office in Kimberley, the Corporate Office in Johannesburg, the Venetia Mine and the VUP.
• DBCM and Venetia Mine have an excellent Employment Equity Record and the potential retrenchments are a last resort.

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