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Exploration activity

Replenishment of its resource base is a crucial priority for ALROSA Group. Exploration is the key to maintaining the diamond production volume at a level that will allow the Group to maintain its global leadership. The Company’s exploration activities are focused on a number of tasks, from replenishing the mineral-resource bases of existing facilities to identifying new deposits of scalable commercial interest.

ALROSA’s programme for geological study and renewal of the Company’s mineral-resource base in Western Yakutia and the North-West region of the Russian Federation for the years 2011-2018 formulates two main objectives as follows:

  • an increase in diamond reserves and category P1 inferred resources derived from the exploration of new, and additional exploration of known deposits as well as from prospecting and evaluation work on identified ore occurrences;
  • an increase in category P2 and P3 inferred resources, obtained as a result of integrated search operations.

Achieving these goals presumes the following:

  • discovery as part of large-scale exploratory activities of diamond- and kimberlite-bearing bodies, and their surveying within the boundaries of industrially developed kimberlite fields: Nakynsky, Alakit-Markhinsky, Mirninsky in the Sakha Republic (Yakutia) and Zolotitsky in the North-West region of the Russian Federation;
  • discovery of kimberlite fields at the stage of doing small-and medium-scale prospecting in promising new areas;
  • preliminary exploration of poorly-studied areas with the marking of land for prospecting.

We trust that the implementation of the programme we have developed will shore up the Company’s raw-materials base, while providing stable and profitable operations at ALROSA Group during the programme period, as well as in subsequent years.

Reserve and resource increment

According to the results of the exploration work, a total increase in reserves of 35.8 million carats has been ensured, mainly on the strength of exploration of the Ebelyakh and Gusiny alluvial deposits, and the evaluation of the Khara-Mas alluvial deposit. Translation of diamond reserves from category C2 to C1 as a result of exploration work was not performed.

Resources (P1 + P2 + P3) increased in 2012 relative to the figure for 2011 by 73.04 million carats (1,390.86 compared to 1,316.96). At the same time, P1 resources increased by 46.7 million carats (419.06 compared to 372.36) P2 resources — by 51.25 million carats (279.25 compared to 228.00). The lowest-category P3 resources actually decreased by 24.05 million carats (692.55 compared to 716.6).

The 2012 goal for adding to reserves and natural diamond resources was met at a level of 102.3%. The increase in reserves and inferred resources was ensured via evaluation and exploration work at operational and near-operational deposits. Specifically:

  • the diamond reserves at the Ebelyah and Gusiny alluvial deposits are protected by SRC Rosnedra;
  • a special project has been created for the exploration of deep horizons of the Internatzional’naya pipe’s deposit at absolute heights of —820 m / —1,050 m;
  • geological materials accompanying a feasibility study of the conditions with an accounting of reserves at the Irelyakh alluvial deposit as of 01.01.2012 were sent to the SRC [FBU GKZ];
  • the SRC compiled and reviewed a report on the accounting of residual reserves at the Gornoe deposit as of 01.01.2012, considering new conditions;
  • at the Dal’nyaya pipe, a bulk sample weighing 10,136 tonnes and a whole-rock kimberlite sample weighing 50 tonnes are concentrated. The high diamond potential of the central ore column is confirmed;
  • exploration work at the Maysky kimberlite body continued. Per the results of the ore concentration, an accounting of diamond reserves as of 01.04.2012 is made;
  • experimental development of the Verkhne-Munskoe diamond deposit commences. At the Zapolyarnaya pit, two bulk samples are selected and transported to the ore stockpile. Overall, 2,258 tonnes of kimberlite were concentrated this season;
  • Stage II prospecting and evaluation work aimed at clarifying the morphology and diamond content of the ore body at +200m have continued.
214 199,7

running meter
Core-drilling


Key results of geologic and mining exploration in 2012

In 2012, prospecting & surveying and exploration for diamonds was done mainly in the Sakha Republic (Yakutia), as well as, to some extent, in the Arkhangelsk Region and the Republic of Karelia.

The growth in exploration in 2012 as compared to 2011 was primarily due to activity at newly licenced exploration areas: the Muogdanskaya and Sektelyakhskaya, as well as exploration sites (the Dal’nyaya and Zarnitza pipes, the Upper Muna (Verkhne-Munskoe) deposit).

113,0 

%
Core-drilling growth in comparison with 2011

In 2012, there was a negligible falling off in in-mine exploration — in terms of both drilling and ore-concentration volume — a result of changes at the work sites and a redistribution of work done on them. In particular, changes in the volume of drilling in comparison to 2011 were mixed: at deposits operated by Mirny MPD there was an increase in exploratory drilling, while at the deposits of the Aikhal, Udachny, and Nyurba MPDs, the volume of drilling was down.



The key indicators for geologic and mining exploration are presented in the table below

Key indicators Unit 2010 2011 2012 % of 2011 % of 2010
Geologic exploration
Core-drilling linear metre 190,996.9 189,502.1 214,199.7 113.0% 112.1%
Well boring for explosions and technical construction linear metre 0 0 4,447 0.0% 0.0%
Trial pits linear metre 886.2 838.8 1,389.7 165.7% 156.8%
Trenching m3 0 50 0 0.0% 0.0%
Seismic surveys survey points 5,525 5,900 5,900 100.0% 106.8%
Electrometry survey points 2,535 2,301 2,350 102.1% 92.7%
Magnetometry km2 20 18.96 20 105.5% 100.0%
linear km 2,600 2,600 1,800 69.2% 69.2%
Gravimetry km2 41 70 120 171.4% 292.7%
> linear km 600 600.4 603.8 100.6% 100.6%
AMS-5 km2 1,255 2,380 4,565 191.8% 363.7%
AMS-10 km2 5,590 9,490 5,570 58.7% 99.6%
Above-ground geophysical activities (area) km2 80 60 60 100.0% 75.0%
survey points 3,200 2,400 2,400 100.0% 75.0%
Onsite exploration
Core-drilling linear metre 28,902.8 32,841.7 30,936.2 94.2% 107.0%
Auger drilling linear metre 755.0 0.0 0.0 0.0% 0.0%

Exploration activities in the Sakha Republic (Yakutia)

Geological exploration of mineral resources in the Sakha Republic (Yakutia) was conducted per 28 licences, at 44 sites, and included the following types of activity:

  • groundwater monitoring at three sites that do not require licencing;
  • search for buried structures per two licences, at two sites;
  • extraction of groundwater under a single licence at a single site;
  • exploration at seven sites, per seven licences;
  • search and survey/evaluation work at 21 sites, per 17 licences;
  • integrated aerogeophysical survey and aeromagnetic survey at a scale of 1:10000 and 1:5000 at four sites;
  • specialist activity on 25 sites;
  • prospecting and exploration fields with commonly occurring minerals per five licences, at three sites.

In 2012, exploration for diamonds was conducted in 10 districts of the Yakutia diamondiferous province.

Small-medium-scale (regional) exploratory work aimed at identifying new kimberlite fields was conducted in the Muno-Tyungskoe, Morkokinskoe, Ygyattinskoe, Prilenskoye, and Nizhne-Olenekskoe diamondiferous areas. More detailed activity aimed at identifying kimberlite bodies were conducted in the areas of activity of the Company’s MPDs (the Daldyno-Alakitsky, Sredne-Markhinsky, Malo-Botuobinsky and Anabarsky diamondiferous areas) as well as in the Central-Yakutian (anticipated) diamondiferous area.

The most impressive results were obtained within the confines of the Nakyn kimberlite field (Sredne-Markhinsky area), where a comparison of seismic anomalies revealed diamondiferous kimberlite breccias and veins with injections of kimberlite. Another resounding success occurred at the Alakit-Markhinskoe field (Daldyno-Alakitsky district), where the presence of a central ore column of industrial diamond content was discovered in the Zarya kimberlite pipe, and the evaluation of several kimberlite bodies was completed. In addition, during the reporting period, a representative batch of diamonds and accompanying minerals from the Dyukunakh buried alluvial deposit (Morkokinsky district) was extracted and collected for research.

Exploration work in the North-West of the Russian Federation

In the North-West of Russia, work was done at nine sites, per five licences, including: per five licences at five search sites, as well as specialty work at four sites. At the most promising target of Verkhnekepinsky-3, geophysical areal surface surveying was done, and drilling at 17 anomalies was completed. At the Severozapadny-2 site, located in Karelia, work was halted due to the poor prospects of finding commercial diamond deposits within the boundaries of the site.

Scientific support for exploration

As part of the framework of scientific support of exploration work, in 2012 the Company carried out the following activities:

  • a study of the deep-earth as well as structural-tectonic areas of the Yakutsk diamondiferous province most likely to bear diamonds, in order to forecast occurrences of kimberlite magmatism;
  • a comprehensive study of the collections of diamonds from kimberlite bodies and alluvial deposits in the diamondiferous province of Yakutsk;
  • a study of the material composition of kimberlite ores from indigenous sources of varying productivity;
  • mineragenic zoning of diamondiferous territories of Angola and Botswana, aimed at selecting areas promising vis-a-vis the detection of primary and alluvial diamond deposits.

Financing of exploration and prospecting activities at OJSC ALROSA

  24,6 

%
geological prospecting and in-mine exploration expenditures growth in 2012

The consolidated budget for exploration and prospecting activities conducted in 2012 was RUB 5,1332 billion. The work was financed internally. Expenditure on geological prospecting and in-mine exploration in 2012 increased compared to 2011 and 2010 by 24.6% and 80.4%, respectively.

The exploration budget for 2012 was at RUB 4,3942 billion. Expenditure on 2012 exploration surpassedthe figures for 2011 and 2010 by 25.2% and 81.1%, respectively. Savings in the exploration budget in the amount of RUB 268.5 million were due to the implementation of administrative and technical measures to husband materials and equipment as well as human resources, as well as a number of other factors:

  • reduction in the volume of processing of geological samples from the Verhne-Munskoe diamond deposit;
  • a change in the time frame for receipt of a licence to explore the Zarya kimberlite pipe and the alluvial deposit at the Piropoviy creek;
  • ahead-of-schedule termination of exploration in the Tovskaya area of OJSC SGGK Terra due to the absence of positive geological results.
21,0 

%
in-mine exploration expenditures growth in 2012

The budget for exploration work was at 739.0 million rubles. Compared with the same period in 2011-2010, there was an increase in expenditure on in-mine exploration by 21,0% and 76,2%, respectively.

Budget for prospecting and mining work, RUB million

Exploration activities at OJSC ALROSA subsidiaries

OJSC ALROSA-Nyurba

In 2012, OJSC ALROSA-Nyurba carried out geological exploration work per two licences, at four sites. Exploration work is done on the basis of subcontractual agreements with subsidiaries of OJSC ALROSA, including Botuobinsky Geological Expedition (prospecting and exploration) and Mirninsky Geological Expedition (monitoring, hydro-geological, exploration, and prospecting work). Prospecting work was conducted to search for primary and alluvial diamond deposits, and to assess land for barrenness to allow for infrastructure construction at the Nakynsky diamond-mining complex.

OJSC Almazy Anabara

Exploration work for diamonds was conducted mostly in the north-western part of the Yakutsk diamondiferous province. Diamond mining and the bulk of exploration for diamonds are done by this company in the basin of the Anabar River, in the Anabarskiy diamondiferous area. Geological exploration for diamonds in 2012 was done as part of the following projects: the flanks of the Mayat alluvial deposit — Mayat (lower) and Mayat (upper), Levoberezhny, Pravoberezhye of the Morgogor River, and the Khara-Masskaya area.

OJSC Severalmaz

During the reporting period, OJSC Severalmaz performed exploration work per the appropriate licenses, in the Zimneberezhny diamondiferous region, at the Svetlinskaya, Kodinsky, Brusovitsky, and Otugsky geological sites. Exploration and operational exploration work was conducted by Pomorskaya exploration company at the Pionersky and Arkhangelsky-4 sites. Industrial construction work was also done at the Gidrorezhimny site; a 3E water-supply well was built at the Vodozaborny site.

Among the key results of the exploration work performed we would like to note an increase in reserves for the northern part of the Pionerskaya pipe by 20-25%. In addition, an increase in diamond content at depths of 380-500 m by 30-35% is projected. According to preliminary data from mineralogical studies, the mass of gem-quality diamonds in the pipe is about 67%, with approximately 21% of high quality.

OJSC ALROSA’ 2013 plans for exploration activities

In 2013, exploration will be carried out by five specialised divisions of OJSC ALROSA: Amakinskaya, Botuobinsky, Mirninskaya, and Arcticheskaya expeditions, as well as an R&D company, in 10 districts of the Yakutian diamondiferous province: the Sredne-Markhinsky, Muno-Tyungsky, Daldyno-Alakitsky, Morkokinsky, Ygyattinsky, Malo-Botuobinsky, Prilensky, Nizhne-Oleneksky, Verkhne-Oleneksky, and Anabarsky, as well as in the Zimneberezhny diamondiferous region of Arkhangelsk Oblast.

The exploration activities will be financed internally by OJSC ALROSA. Physical volumes in 2013 are scheduled to be at the levels stipulated in the licence agreements. The volume of the core activity — core drilling — should decrease by 13.3%. The bulk of exploration work is scheduled to occur in the Sakha Republic (Yakutia), with only a small part of it being done in the North-West region of the Russian Federation.

In order to ensure the smooth operation of mining and processing plants, prospecting, hydrogeological and other special geological studies will be conducted. Prospecting work in 2013 will be carried out per the orders of mining and processing plants, in accordance with the plans of mining operations at Yubileynoe, Aikhal, Nyurbinskoe, and Mirnoe existing fields, as well as others. RUB 705.5 million has been budgeted for these purposes; this amount is 95.4% of the expected spending for the year 2012.

In total, per the Company’s plans, geological survey activity will be internally financed and performed per 26 licences, at 47 sites.

Exploration and evaluation work is aimed at ensuring the growth of high-quality reserves and inferred resources via prospecting of deposits, as well as geological and financial evaluation of promising sites. The increase in reserves and inferred resources of diamonds is expected to be 13.4 million carats. In the Sredne-Markhinsky district, continued exploration of the Mayskoe kimberlite body is planned, along with an evaluation of reserves at the Nyurbinskaya alluvial deposit. Exploration of deep horizons of the Internatzional’naya pipe will begin in the Malo-Botuobinsky district. In the Daldyno-Alakitsky district, exploration is planned on the Dal’nyaya, Zarya, and Zarnitza pipes; an evaluation of the Khvosty Concentration Plant No. 12 technogenic alluvial mine will also continue. Exploration work at the Verkhne-Munskoe deposit will continue in the Muno-Tyungsky area.

Prospecting work in the Yakutsk diamondiferous province will continue, along the two most important vectors: the search for diamond deposits in the areas of mining and processing plants’ activity, and small to medium-scale prospecting of understudied areas in order to identify new kimberlite fields. In 2013, the share of activities of a regional nature will prevail, on account of the growing need to prepare areas for prospecting. Such work will be conducted primarily in the Morkokinsky, Ygyattinsky, Nizhne-Oleneksky, Verkhne-Oleneksky, Prilensky and Muno-Tyungsky diamondiferous areas. Exploration proper will happen mainly in the Sredne-Markhinsky, Anabarsky, Daldyno-Alakitsky and Malo-Botuobinsky diamondiferous areas.

In the European part of the Russian Federation, exploration will be carried out at two sites within the Arkhangelsk diamondiferous province. Most of the prospecting will focus on promising areas adjacent to the Lomonosovo and Griba deposits. The priority geo-scientific tasks are: innovative research aimed at optimising prospecting methods, the selection of promising prospecting areas, and adaptation of new search methods and training materials to prospecting conditions.