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Ore mining and processing

Diamond production by OJSC ALROSA and ALROSA Group in 2012

The production strategy of ALROSA Group is aimed at improving the efficiency of existing facilities and the creation of a new generation of assets by launching facilities under construction and expanding the raw-materials base. Production efficiency is achieved via improvements in the quality of production processes, the use of advanced technologies and the hiring of the best industry professionals.
2012 was a year of successes, from the point of view of both production and finances. Despite a slight decline in diamond production planned in the millions of carats, the Company was able to achieve a significant increase in diamond production in terms of value.

In 2012, the ALROSA Group produced 34,420.3 million carats of diamonds, worth USD 2,684.4 million. Diamond production as expressed in millions of carats decreased slightly (by 0.4%) compared to 2011 due to the decrease in the volume of concentration of ore from Udachny pipe (Udachninsky MPD) and, to a lesser extent, from the flanks of the Mayat mine (OJSC Almazy Anabara); both facilities produce diamonds at high volumes and of impressive quality. At the same time, diamond production was up 4.6% in terms of value, compared to last year. The value indicator was influenced significantly by the 19.3% increase in the volume of ore concentrated at the Yubileynaya pipe (Aikhal MPD) and a 49.5% increase at the Mir pipe (Mirny MPD), as well as the average price of diamonds for the reporting period. The increase in the price of diamonds from the Jubilee pipe is due to the involvement in the ore processing of a central ore column with a high diamond content and quality. The increase in the average price of diamonds from the Udachny pipe mine was impacted by the increase in the volume of concentration of ore from the eastern ore column, bearing high-quality diamonds. The increase in prices for diamonds from the Mir and Internatzional’naya pipe mines was impacted by improved characteristics of concentration at Processing Plant Number 3 (reduction of technogenic displacement). The increase in average prices significantly affected the output of goods per tonne of ore, which grew 5.8% (from 86.08 US dollars per tonne in 2011 to USD 91.04 per tonne in 2012).

OJSC ALROSA’s results on the whole reflect the dynamics of the entire ALROSA Group. During 2012, ALROSA produced 23,497.8 million carats of diamonds, worth USD 2,047.9 million. Planned reduction in diamond mining (in millions of carats) compared to 2011 was 2%, while the growth of diamond production in terms of value was 4.4%.

Indicators for the Group’s diamond production for the year 2012 are presented in the table below:

Facility Unit 2011 2012 % of 2011
OJSC ALROSA
Udachny MPD
Diamond mining millions of carats 10,582.9 5,845.2 55.2
Product value USD millions 620.4 389.7 62.8
Aikhal MPD
millions of carats 5,261.9 8,945.1 170.0
Product value USD millions 303.8 503.8 165.8
Mirny MPD
Diamond mining millions of carats 8,137.9 8,707.5 107.0
Product value USD millions 1,037.4 1,154.4 111.3
Total for ALROSA
Diamond mining carats 23,982.7 23,497.8 98.0
Product value USD millions 1,961.6 2,047.9 104.4
OJSC ALROSA-NYURBA
Nyurba MPD
Diamond mining millions of carats 7,477.6 7,955.9 106.4
Product value USD millions 405.9 447.2 110.2
ALROSA jointly with OJSC ALROSA-Nyurba
Diamond mining millions of carats 31,460.2 31,453.7 100.0
Product value USD millions 2,367.5 2,495.1 105.4
OJSC Almazy Anabara
Diamond mining millions of carats 2,534.4 2,408.0 95.0
Product value USD millions 175.4 161.8 92.2
ALROSA jointly with OJSC ALROSA-Nyurba and OJSC Almazy Anabara
Diamond mining millions of carats 33,994.6 33,861.7 99.6
Product value USD millions 2,542.9 2,656.9 104.5
OJSC Severalmaz
Diamond mining millions of carats 556.8 558.6 100.3
Product value USD millions 24.6 27.5 111.6
Total for ALROSA Group
Diamond mining millions of carats 34,551.4 34,420.3 99.6
Product value USD millions 2,567.5 2,684.4 104.6

Key production achievements for 2012

During the reporting period, OJSC ALROSA fully reached the targets of the Company’s production development program. Among the major achievements vis-a’-vis production are the following.

  • The Aikhal mine is now working at its design capacity of 500 thous. tonnes of ore a year. To achieve this result, in 2012 we launched a vertical pit with cage winding, and conducted pilot tests of breaking ore using the stall method in the south-west ore body.
  • At the Udachny mine, currently under construction, the Company began development work in the first stope with horizons —320 m, —365 m in a newly created plot for mining and development.
  • To ensure that the planned ore-output targets are hit, we undertook a project to reinforce pit banks in the area of the south-west dike within the current pit boundary of the Komsomolskaya mine.
  • At the Mir mine, we trial-launched an automated system for hydrogeomechanical monitoring of the safety pillar.
  • We have launched the clinker section of the surface stowing complex at the Mir mine, with a switchover to low-clinker technology for preparing filling mixes.
  • At Nyurbinskaya mine, stripping of the adjacent alluvial deposit has begun.
  • Stripping operations have begun at Botuobinskaya mine.

The mining divisions of OJSC ALROSA

The volume of rock mass mined by OJSC ALROSA for the reporting period amounted to 38,839.8 thous. cu. m., exceeding the previous year’s amount by 9.4%. At the same time, our underground mines produced 1,512 thous. tonnes of ore.

In Western Yakutia, four mining divisions of ALROSA — Mirny, Udachny, Nyurba, and Aikhal mining and processing divisions — are engaged in diamond production. These companies’ shares in diamond mining and the volume of rock mined in 2012 are shown in the diagrams below:

9,4 %

growth of processing in comparison with the previous year

Mined rock, thous. m3

Detailed information on the results of mining operations at ALROSA is presented in the table below:

ALROSA Unit 2010 2011 2012 % of 2011 % of 2010
1. Mining and development thous. cu. m. 756.2 465.9 390.1 83.7 51.6
2. Overburden mining thous. cu. m. 24,204 26,594 28,158 105.9 116.3
3. Ore mining from stope and development mine faces thous. cu. m. 9,696.8 6,039.7 7,896.6 130.7 81.4
thous. tonnes 23,388 13,508 18,201 134.7 77.8
4. Concomitant extraction of off-balance ore thous. cu. m. 892 528
thous. tonnes 2,150 1,241
5. Sand recovery thous. cu. m. 160 787.1 452.6 57.5 282.9
6. Tailings recovery thous. cu. m. 264.2 238 306.5 128.8 116.0
thous. tonnes 449 405 568 140.2 126.5
7. Sand processing by dredging thous. cu. m. 970 841 1636 194.5 168.7
8. Mined rock thous. cu. m. 36,943.2 35,493.7 38,839.8 109.4 105.1

Diamond production, USD million

Rock mined, thous. m3

Aikhal MPD

Aikhal MPD is engaged in extraction on three primary deposits. The Komsomolskaya and Yubileynaya mines produce diamonds using the open-pit method, while underground mining is used at Aikhal. Ore processing occurs at two ore-concentrators: № 8 and № 14. In 2012, Aikhal MPD extracted 20.2% of goods produced, with a 50.7% share of total volume.

In 2012, ALROSA’s Aikhal underground mine reached its full capacity of 500 thous. tonnes of ore per year, while preparing for the grand opening of the mine’s third stage. The Company is implementing an ambitious programme of building underground mines at its deposits, and the launch of the Aikhal mine is an important part of that endeavour. The Aikhal deposit is one of ALROSA’s oldest fields — open-pit mining began there in 1961 and continued for over 30 years. In 1997, the design depth of +320 metres was reached; this signaled the end of open-pit mining at the deposit. Immediately after the pit was withdrawn from service in 1997, underground mining commenced on the site. The first start-up complex at the mine was commissioned in 2005, and the second one — mining 250 thous. tonnes of ore per year — in 2009. With the launch of the third stage, the mine’s capacity increases to 500 thous. tonnes of ore, which will ensure annual production of about 2.5 million carats of diamonds. According to a 2012 audit, Aikhal mine’s JORC-compliant reserves surpass 14 million carats of rough diamonds, while its resources (indicated and identified) are at over 54 million carats.

Detailed information on the results of Aikhal MPD’s mining activities is presented in the table below:

AIKHAL MPD Unit 2010 2011 2012 % of 2011 % of 2010
komsomolskaya mine
Mining and development thous. cu. m. 58.0 40.0 30.0 75.0 51.7
Overburden mining thous. cu. m. 3,200.0 3,100.0 4,450.0 143.5 139.1
Ore mining thous. cu. m. 545.0 500.0 216.3 43.3 39.7
thous. tonnes 1,320.0 1,200.0 520.0 43.3 39.4
Mined rock thous. cu. m. 3,803.0 3,640.0 4,696.3 129.0 123.5
AIKHAL mine
Mining and development linear metre 800.0 1,390.0 900.0 64.7 112.5
Ore mining thous. cu. m. 14.8 25.7 17.1 66.5 115.5
thous. cu. m. 87.0 108.4 215.7 199.0 247.9
Mined rock thous. tonnes 200.0 250.0 500.0 200.0 250.0
thous. cu. m. 101.8 134.1 232.8 173.6 228.7
Yubileynaya mine
Mining and development thous. cu. m. 55.0 100.0 60.0 60.0 109.1
Overburden mining thous. cu. m. 9,380.0 10,100.0 10,000.0 99.0 106.6
Ore mining thous. cu. m. 3,863.0 3,715.0 4,719.0 127.0 122.2
thous. tonnes 8,900.0 8,000.0 10,382.0 129.8 116.7
Concomitant extraction of off-balance ore thous. cu. m. 892.0 528.0
thous. tonnes 2,150.0 1,241.0
Mined rock thous. cu. m. 14,190.0 14,443.0 14,779.0 102.3 104.2
Total for Aikhal MPD
Mining and development thous. cu. m. 127.8 165.7 107.1 64.6 83.8
Overburden mining thous. cu. m. 12,580.0 13,200.0 14,450.0 109.5 114.9
Ore mining from stope and development mine faces thous. cu. m. 4,495.0 4,323.4 5,151.0 119.1 114.6
thous. tonnes 10,420.0 9,450.0 11,402.0 120.7 109.4
Concomitant extraction of off-balance ore thous. cu. m. 892.0 528.0
thous. tonnes 2,150.0 1,241.0
Mined rock thous. cu. m. 18,094.8 18,217.1 19,708.1 108.2 108.9

Mirny MPD

Mirninsky MPD is the Company’s oldest mining and processing facility, operating the Mir and Internazional’ny underground mines, while developing the following alluvial deposits: Irelyakh Alluvial Deposit, Vodorazdelniye Galechniki, Gornoe and Levoberezhnaya. In addition, MPD performs extraction work at the Tailings Plant Number 5 technogenic deposit, and dredging of terraced alluvial deposits at the Irelyakh deposit. Mirny MPD’s share of diamonds mined in 2012 was 46.3% in money terms or 7.8% in terms of the Company’s mining volume.

The Internazional’ny underground mine is already working at its design capacity of 500 thous. tonnes of ore, while the Mir underground mine, operating at the current capacity of 500 thous. tonnes of ore, is expected to reach its design capacity of 1 million tonnes in 2014. Reaching design capacity at Mir in 2013, although originally planned, is not possible on account of complex hydrogeological conditions. Unforeseen increases in water inflow into the underground mine workings has led to delays in hitting output targets — primarily due to the fact that, under these circumstances, the Company is not yet able to use the drill-and-blast extraction method. At the moment, a number of measures aimed at counteracting the resulting delays have been developed and are being implemented.

During the reporting period, work continued on the reconstruction of Plant Number 3 at Mirny MPD, along with work on the implementation of a number of measures aimed at expanding extraction of smaller-class diamonds, sized —2 + 0.5 mm, and ensuring greater integrity of diamond crystals at ALROSA’s concentrators. After a long period of preservation, the KSA-150 rig, designed for processing raw material coming from the Irelyakh alluvial deposit and Dredge Number 202, was put into operation,

Detailed information on the results of mining activities at Mirny MPD in 2012 is presented in the table below:

Mirny MPD Unit 2010 2011 2012 % of 2011 % of 2010
ORE DEPOSITS
MIR Mine
Mining and development thous. cu. m. 6.0
Mined rock thous. cu. m. 6.0
MIR Mine
Mining and development (open-pit) thous. cu. m. 5.0 5.0 100.0
Mining and development (underground) linear metre 2,163.0 1,958.0 1,705.0 87.1 78.8
thous. cu. m. 38.9 42.0 38.0 90.5 97.7
including ore thous. cu. m. 5.0
thous. tonnes 12.0
Ore mining thous. cu. m. 110.2 142.8 209.4 146.6 190.0
thous. tonnes 263.0 340.0 497.0 146.2 189.0
Total ore thous. cu. m. 115.2 142.8 209.4 146.6 181.8
thous. tonnes 275.0 340.0 497.0 146.2 180.7
Mined rock thous. cu. m. 149.1 189.8 252.4 133.0 169.3
Internazional'ny Mine
Mining and development linear metre 1,084.0 853.0 740.0 86.8 68.3
thous. cu. m. 19.5 19.2 18.0 93.8 92.3
Ore mining thous. cu. m. 209.0 207.7 212.3 102.2 101.6
thous. tonnes 500.0 500.0 515.0 103.0 103.0
Mined rock thous. cu. m. 228.5 226.9 230.3 101.5 100.8
Internazional'ny Mine
Mining and development thous. cu. m. 184.0 24.0
Overburden mining thous. cu. m. 2,030.0 275.0
Ore mining thous. cu. m. 41.7 162.3
thous. tonnes 100.0 383.0
Mined rock thous. cu. m. 2,255.7 461.3
ALLUVIAL MINES
Vodorazdelniye GALECHNIKI
Sand recovery thous. cu. m. 5.0 30.0 600.0
thous. tonnes 10.0 60.0 600.0
Mined rock thous. cu. m. 5.0 30.0 600.0
IRELYAKH ALLUVIAL MINE
Mining and development thous. cu. m. 1.0
Overburden mining thous. cu. m. 65.0
Sand recovery thous. cu. m. 5.0 150.0 3,000.0
thous. tonnes 10.0 287.0 2,870.0
Mined rock thous. cu. m. 5.0 216.0 4,320.0
LEVOBEREZHNAYA
Sand recovery thous. cu. m. 15.0 20.5 136.7
thous. tonnes 30.0 41.0 136.7
Mined rock thous. cu. m. 15.0 20.5 136.7
DEPOSITS FOR ALLUVIAL DREDGING
DREDGE № 201
Mining and development thous. cu. m. 70.0 20.0 15.0 75.0 21.4
Sand processing thous. cu. m. 370.0 354.0 484.0 136.7 130.8
Mined rock thous. cu. m. 440.0 374.0 499.0 133.4 113.4
DREDGE № 202
Sand processing thous. cu. m. 585.0
Mined rock thous. cu. m. 585.0
DREDGE № 203
Mining and development thous. cu. m. 285.0 165.0 150.0 90.9 52.6
Overburden mining thous. cu. m. 150.0 150.0 150.0 100.0 100.0
Sand processing thous. cu. m. 600.0 487.0 567.0 116.4 94.5
Mined rock thous. cu. m. 1,035.0 802.0 867.0 108.1 83.8
Tailings Plant № 5
Tailings recovery thous. cu. m. 264.2 238.0 306.5 128.8 116.0
thous. tonnes 449.0 405.0 568.0 140.2 126.5
Mined rock thous. cu. m. 264.2 238.0 306.5 128.8 116.0
Total for MIRNY MPD
Mining and development thous. cu. m. 603.4 275.2 227.0 82.5 37.6
Overburden mining thous. cu. m. 2,180.0 425.0 215.0 50.6 9.9
Ore mining from mucking stopes thous. cu. m. 360.9 512.8 421.7 82.2 116.8
thous. tonnes 863.0 1,223.0 1,012.0 82.7 117.3
Sand recovery thous. cu. m. 25.0 200.5 802.0
thous. tonnes 50.0 388.0 776.0
Tailings recovery thous. cu. m. 264.2 238.0 306.5 128.8 116.0
thous. tonnes 449.0 405.0 568.0 140.2 126.5
Sand processing by dredging thous. cu. m. 970.0 841.0 1,636.0 194.5 168.7
Mined rock thous. cu. m. 4,378.5 2,317.0 3,006.7 129.8 68.7

Udachny MPD

The division is developing two kimberlite mines — Udachny and Zarnitza, processing ore at Concentrating Plant Number 12, which this year worked exclusively as a second-line facility. In 2011, udachny mpd accounted for 15.6% of total diamond production ALROSA-wide value-wise, and had an 8.3% share of the mining volume. A dip in the commercial yield per tonne of ore, as compared with 2011, occurred on the back of lower diamond content in the processed ore from Udachny mine.

Open-pit mining at Udachny mine is gradually drawing to a close. The design depth of the pit has already been reached, and the quarry is exhausted, but the pit slope still contains ore, and the Company is mining the near-edge pillars. Although production from these pillars is relatively small (at 1 million tonnes per year), the cost of quarrying is significantly lower than that of underground mining, which makes the project economically viable. At the same time, the Company is developing underground operations at Udachny; underground mining is set to commence in 2014, with plans to increase capacity to 4 million tonnes of ore annually by 2017.

Data on the 2012 results of mining operations at Udachny mpd facilities are presented in the table below:

udachny mpd Unit 2010 2011 2012 % of 2011 % of 2010
UDACHNY mine
Mining and development thous. cu. m. 5.0 5.0 5.0 100.0 100.0
Overburden mining thous. cu. m. 440.0 2,084.0 1,283.0 61.6 291.6
Ore mining thous. cu. m. 4,173.4 193.5 1,294.4 668.9 31.0
thous. tonnes 10,525.0 480.0 3,385.0 705.2 32.2
Mined rock thous. cu. m. 4,618.4 2,282.5 2,582.4 113.1 55.9
ZARNITZA mine
Overburden mining thous. cu. m. 465.0 210.0 45.2
Ore mining thous. cu. m. 438.2 437.6 99.9
thous. tonnes 1,005.0 1,002.0 99.7
Mined rock thous. cu. m. 903.2 647.6 71.7
Total for Udachny mpd
Mining and development thous. cu. m. 5.0 5.0 5.0 100.0 100.0
Overburden mining thous. cu. m. 440.0 2,549.0 1,493.0 58.6 339.3
Ore mining thous. cu. m. 4,173.4 631.7 1,732.0 274.2 41.5
thous. tonnes 10,525.0 1,485.0 4,387.0 295.4 41.7
Mined rock thous. cu. m. 4,618.4 3,185.7 3,230.0 101.4 69.9

Nyurba MPD

Nyurba MPD is the most recently created of ALROSA’s mining and processing plants, operating on the Nakyn ore field and extracting diamonds from the ore and sand at Nyurbinskaya mine. Diamonds are extracted from the raw materials at Seasonal Processing Plant Number 15 and Number 16 — some of the best facilities in the world in terms of technology and automation. In 2012, Nyurba MPD had a 17.9% share in ALROSA’s diamond production by value, and accounted for 33.2% of the Company’s total mining.

During the past year, ALROSA commenced stripping operations at the Botuobinskaya mine, 3 km from the currently operating Nyurbinskaya mine. The JORC-compliant reserves at Botuobinskaya are at over 70 million carats of diamonds, with 5.13 carats per tonne. Botuobinskaya diamonds are characterised by a relatively high proportion of gem-quality stones. Overburden mining, which prepares mineral resources for excavation, is the first stage of field development; this phase will last for three years. Industrial extraction of diamonds at Botuobinskaya is expected to begin in the fourth quarter of 2015. The mine will be developed using the open-pit method, with ore being processed at the existing facilities of Nyurba MPD. As the mine reaches its design capacity of 300 thous. tonnes of ore per year, Botuobinskaya should yield about 1.5 million carats of diamonds annually. We expect Botuobinskaya to eventually compensate for the dwindling amounts of ore extracted at Nyurbinskaya mine, which has been in operation since 2000.

Detailed information on the results of Nyurba MPD’s mining activity in 2012 is presented in the table below:

NYURBA MPD Unit 2010 2011 2012 % of 2011 % of 2010
NYURBINSKAYA mine
Mining and development thous. cu. m. 20.0 20.0 51.0 255.0 255.0
Overburden thous. cu. m. 9,004.0 10,420.0 12,000.0 115.2 133.3
Ore mining thous. cu. m. 667.5 571.8 591.9 103.5 88.7
thous. tonnes 1,580.0 1,350.0 1,400.0 103.7 88.6
Sand recovery thous. cu. m. 160.0 762.1 252.1 33.1 157.6
thous. tonnes 336.0 1,608.0 532.0 33.1 158.3
Mined rock thous. cu. m. 9,851.5 11,773.9 12,895.0 109.5 130.9
Total for Nyurba MPD
Mining and development thous. cu. m. 20.0 20.0 51.0 255.0 255.0
Overburden thous. cu. m. 9,004.0 10,420.0 12,000.0 115.2 133.3
Ore mining thous. cu. m. 667.5 571.8 591.9 103.5 88.7
thous. tonnes 1,580.0 1,350.0 1,400.0 103.7 88.6
Sand recovery thous. cu. m. 160.0 762.1 252.1 33.1 157.6
thous. tonnes 336.0 1,608.0 532.0 33.1 158.3
Mined rock thous. cu. m. 9,851.5 11,773.9 12,895.0 109.5 130.9

The mining divisions of ALROSA subsidiaries

OJSC ALROSA-Nyurba

The OJSC ALROSA-Nyurba diamond-mining venture was established in 1997, and holds licenses for the development of Nyurbinskaya and Botuobinskaya primary and alluvial diamond deposits, located within the Nakyn kimberlite field in the Nyurba ulus of the Republic of Sakha (Yakutia). Field-development services are rendered in accordance with a contract for the provision of such services by ALROSA subsidiary Nyurba MPD. Thus, the facility’s mining-operation results are reflected in the data on Nyurba MPD.

OJSC Almazy Anabara

OJSC Almazy Anabara is a dynamically growing company founded in 1998. In 2012, OJSC Almazy Anabara conducted mining operations at the Mayat group of alluvial diamond deposits per a development plan for mining operations. Diamond mining in 2012 was done at the Kurung-Yuryakh and 41st Creek sites, and at the Morgogor, Istok, and Kholomolokh deposits. In 2012, the Company conducted research and industrial-development work in the deposits at the Ebelyakh River and Gusiny stream.

The results of mining operations at  OJSC Almazy Anabara are reflected in the table below:

Indicators Unit 2010 2011 2012 % of 2011 % of 2010
Mined rock thous. cu. m. 5,382.6 7,620.4 8,140.7 106.8 151.2
Mining and development thous. cu. m. 226.0 292.0 316.0 108.2 139.8
Turf stripping thous. cu. m. 3,381.5 4,183.0 5,010.9 119.8 148.2
Sand recovery thous. cu. m. 1,775.1 3,145.4 2,813.8 89.5 158.5
Cargo turnover thous. tonnes-km 17,349.0 29,203.8 32,712.1 112.0 188.6
Total volume of mechanised processing of mined rock thous. cu. m. 22,351.8 31,492.2 33,515.5 106.4 149.9
Sand washing thous. cu. m. 1,767.3 2,980.4 2,883.8 96.8 163.2

OJSC Severalmaz

OJSC Severalmaz, established in 1992, is located in the Arkhangelsk region, in north-west Russia. Industrial diamond mining began in 2005 with the launch of the first stage of the Lomonosov MPD.

In 2012, OJSC Severalmaz achieved the following key objectives:

  • Ensuring the operation of the existing facility with a mining and ore-processing capacity of 1,1 million tonnes per year;
  • building an ore-processing launch complex with a capacity of 4,4 million tonnes per year at a level that provides for a launch of operating facilities in 2013;
  • carrying out production activities for the Pomorsky Exploration Company in 2012, these activities being defined by the key tasks — search and exploration within the licensed areas belonging to ALROSA and JSC SGGK Terra, as well as exploration and production operations at OJSC Severalmaz facilities.

The main results of mining operations at OJSC Severalmaz are shown in the table below:

Indicators Unit 2010 2011 2012 % of 2011 % of 2010
Overburden mining, including by type of mining thous. cu. m. 1,316.6 8,986.0 11,780.0 131.1 894.7
Mining development thous. cu. m. 1,314.6 7,640.0 7,536.0 98.6 573.3
Capital mining operations thous. cu. m. 2.0 1,346.0 4,199.0 312.0 209,950.0
Off-balance ore thous. cu. m. 132.4 426.0 50.0 11.7 37.8
Ore mining thous. cu. m. 514.0 644.0 723.0 112.3 140.7
Ore processing thous. tonnes 964,0 1,066,0 1,100,0 103,2 114,1
Mined rock thous. cu. m. 1,963,0 10,056,0 12,508,0 124,4 637,2