Diavik D

ialogue

Volume 144th quarter 2011

President’s welcome 02

Minesite wellness expo 02

Supporting the North 03

Underground mining advances 04

2011 socio-economic highlights 06

Diavik at a glance 08

Welcome everyone to our quarterly Diavik Dialogue newsletter. With the start of the new year, I’d like to take this opportunity to reflect on our operations during 2011.

Beginning with safety, we experienced eight lost time injuries and four medical treatments last year. In an effort to eliminate all injuries we continue to focus on all our safety initiatives, including take 5s, job hazard analyses, hazard identifications, safety interactions, and safety shares.

Last year, we introduced what we call ‘positive safety stand downs’, which highlight our safety successes. As well, safety is first and foremost during update meetings, which I recently held with our entire minesite and Yellowknife offices’ teams. In all our work, we continue to focus our efforts on achieving our goal of zero harm.

Moving to environmental protection, we are achieving our continuous improvement targets in terms of reducing energy consumption, hydrocarbon spills, and energy use.

It is extremely gratifying to note that in 2011 we began work to prepare our minesite for four 2.3 megawatt turbines. Our wind farm, which we expect to be operational in fourth quarter, will reduce our greenhouse gas emissions by six per cent and our diesel fuel consumption by ten per cent.

In terms of socio-economic benefits, we continue to add apprenticeships – all our apprentices are northern – and northern and Aboriginal employment totals are well above our initial projections. Of note is the fact that the majority of last year’s new hires for our underground operations are northerners.

As well, in 2011, we surpassed $2 billion in spending with Aboriginal businesses and their joint ventures. For more detail on our northern benefits, I encourage you to review our socio-economic monitoring agreement report posted on diavik.ca.

In terms of production, ore mined and processed, and carat production were on plan. Well done to the teams for achieving these goals.

Looking ahead, later this year we will close out the open-pit mining of the A418 kimberlite pipe and become an all underground mine. Much work has been done to prepare for underground mining, specifically with our efforts to begin our sub-level retreat mining method.

In closing, I encourage you to review the articles in this edition of Dialogue and I wish all a safe 2012.

Niels Kristensen President and Chief Operating Officer

02

President’s welcome

Minesite expo promotes health and wellness

Cover: Jordan and Cameron Chambers were among many who enjoyed Diavik’s holiday season display at our downtown Yellowknife corporate office. The display garnered the City of Yellowknife’s Christmas decoration award for the indoor category. Constructed by Diavik staff, the display featured several operating trains, Santa’s Village, and the North Pole, as well as a diamond mine. Also assisting with the display setup was Empire North Inc. movers who donated their time.

To promote health and wellness, Diavik recently coordinated an expo at our Lac de Gras minesite.

In all, 17 vendors, along with staff from our Health, Safety, Environment, and Training department, participated in the trade show held in our main accommodation gymnasium. Vendors included Levitt Safety, Acklands Grainger, Northern Industrial Sales, Canadian Diabetes Association, Taiga Yoga and Therapy Centre, Gaia Naturopathic Clinic, Lucki’s Fitness, D’Orient Spa, and YKFD.

Diavik teams included training, medics, environment, human resources, health,

hygiene and recreation, emergency response, and contractor Bouwa Whee Catering.

The event was held over three days in October and will be repeated in March to ensure participation for workers from both minesite rotations.

“This event showcases our on-site HSET department, the roles of individuals within the department, and what we offer our workforce.” said Occupational Health and Recreation Coordinator Steve Wood.

Our training opportunities, emergency response team, site medical facilities, as well as the value added aspects we offer through our work with local health and wellness contractor companies were all a part of the expo, he added.

“Focusing on health is a proactive approach to safety. Doing so increases overall safety and decreases safety-related incidents. A healthy employee is better capable of making cognitive as well as physical safety-related decisions,” he added.

Beyond recreational activities to improve health, Diavik works with staff on individual wellness programs.

We can measure cholesterol, blood pressure and blood glucose. We test hearing, sight, spirometry (lung function), and have tools to determine body fat levels. From these analyses, we can customize programs so individuals can improve their overall health, Wood said.

Left, John Arnold and Alex Clinton highlight the emergency response team. Right, Steve Wood conducts a respirator fit test.

03

Since 2007, Brad Rogers, a lead hand with Diavik Diamond Mine site services company Tlicho Logistics, has raised approximately $21,000 for the Stanton Territorial Hospital Foundation.

The donations are the result of a recycling program in which he has coordinated the collection of aluminium and plastic at the Diavik mine. He’s also volunteered to raise money through a head shaving contest, pledges, 50/50 draws, and hockey pools at the mine.

The donations have all gone to the Stanton Foundation because, in Brad’s words, “It is an organization that helps

Donations, sponsorships and scholarships – supporting the NorthIn 2011, Diavik continued its community support through the donation of over $375,000 to communities and organizations throughout the Northwest Territories and West Kitikmeot region of Nunavut.

Diavik has a donations and sponsorship committee comprised of employees who regularly review all applications for funding and support.

In December, Diavik’s Colleen English, right, presented KidSport NWT with their seasonsal employee donation of $25,000. KidSport NWT assists youth participation in sport by providing support for registration fess and making sure they have the equipment they need. Pictured are KidSport committee member Cayley Thomas, left. Centre are Corbin and Dawson Giraux, two of the many northerners who will have access to these funds to participate in sports.

Diavik Communities and External Relations staff, including Ray Halwas, Corey McLachlan, and Seth Bohnet, delivered our donation to the Salvation Army Christmas food hamper program.

Individual effort generates donation to Stanton

Diavik’s Brad Rogers is among those who have made significant donations the Stanton Territorial Hospital Foundation. Pictured are Rogers and Stanton Territorial Health Authority CEO Kay Lewis at the donor wall unveiling in Yellowknife.

people across the Northwest Territories and because funds donated to Stanton stay in the North.”

Recyclables are collected through a blue box program, then sorted at site and backhauled south. It means volunteering time while at site and it would not be possible without support from colleagues and supervisors.

“The support is great,” Rogers, who has worked at Diavik for 12 years, said.

“I feel like I need to jump in. It can be overwhelming, but my heart is in it and I wanted to give something back to the community.”

Funding applications and guidelines can be found on Diavik’s web site under the Our Approach/Community Investment section (click on Donations).

KidSport NWT, Foster Family Coalition of the NWT, Tlicho CART, YWCA Taiga Adventure Camp, Yellowknife Community Foundation, Diavik 150

Canadian Championship Dog Derby, Yellowknife Airport Fire Training Facility at the NWT Emergency Services Training Centre, and Stanton Territorial Hospital Foundation Protecting Jewels of the North were among over 100 recipients of Diavik donations, which come under education, recreation, culture, business, health and wellness, and environment categories.

04

Underground mining advances through sub-level retreat method At Diavik, we continue to advance underground mining of our A154 South kimberlite pipe using what is known as the sub-level retreat, or SLR, method.

After much study and engineering work, we determined that this method is the most efficient way for us to underground mine the south pipe. A key factor is the strength, or competency, of the pipe’s ore and surrounding rock.

Diavik will underground mine its A154 South and A418 pipes using SLR, while the A154 North pipe will require blasthole stoping, or BHS.

Sub-level retreat involves driving horizontal tunnels known as drifts through the kimberlite pipe to the granite contact zone. Rock from these drifts is known as development ore.

At the end of the tunnel, work crews drill rings of vertical holes up into the ore.

The rings are then loaded with explosives and blasted, collapsing the ore onto the tunnel floor. This method will result in essentially deepening the open pit.

Sub-level retreat is an underground mining method that “takes advantage of gravity,” said Diavik Superintendent Underground Operations Curtis Dunford.

With SLR, we are still driving drifts and we still drill production holes, but backfilling the mined out areas is not needed. This reduces mining costs significantly.

Once drilling and blasting is complete, a scoop tram operator then removes, or mucks out, the ore from one of the draw points. A draw point is an area where the drift meets the last ring of blasted vertical holes. The next step is to haul the ore to surface for processing.

“The most important thing is safety,” said Heavy Equipment Operator Justin Mantla.

“People ask me about working underground – it’s an opportunity,” he said. Mantla, originally from Behchoko, added that a big part of taking advantage of the opportunity is the right attitude. “If you put your mind to it you can accomplish anything.”

In terms of production levels, as of early 2012, Diavik was approximately half way into production mining the

Left: The sub-level retreat mining cycle includes constructing tunnels through the kimberlite ore body. Bottom left, operator Dean Visutski advances this production tunnel. Once the tunnel reaches the kimberlite granite contact, a sequence of drill holes, known as ring, are required for blasting, which frees the ore for removal and processing. Top centre are underground supervisors Steve Bulmer and Mike Funk at the location known as the draw point – where ore is ready for hauling to surface for processing. Top right is heavy equipment operator Justin Mantla.

05

Left: The sub-level retreat mining cycle includes constructing tunnels through the kimberlite ore body. Bottom left, operator Dean Visutski advances this production tunnel. Once the tunnel reaches the kimberlite granite contact, a sequence of drill holes, known as ring, are required for blasting, which frees the ore for removal and processing. Top centre are underground supervisors Steve Bulmer and Mike Funk at the location known as the draw point – where ore is ready for hauling to surface for processing. Top right is heavy equipment operator Justin Mantla.

Above: A view of the A154 open pit with the first portions of blasted A154 South kimberlite ore being drawn down into the underground tunnels.

first lift of the south pipe. This 20 metre layer – the bottom of the A154 open pit – is located about 300 metres below lake level.

Just over half of the ore from the first lift is not immediately removed to surface for processing. This ore needs to stay in place longer than the ore from subsequent lifts. Removing all this ore too soon would, for most of the year, open up the underground mine to freezing air, which would affect working conditions, ventilation and water removal systems, and equipment.

Even more important is the fact that if there was a gap at the draw point, rock from outside could fall through the gap, creating a hazard. If a draw point is overmucked, creating a gap, a scooptram, outfitted with a flat metal plate, is used to push ore back into the opening.

To ensure SLR is a safe and efficient underground mining method, our engineers studied this method in relation to the fact that above the underground mine is an open pit surrounded by a water retention dike.

continued page 6

06

In early 2012, Diavik released its 2011 socio-economic monitoring report, which provides a detailed summary of our annual training, employment, and business initiatives. Highlights include:

• Training: We continue to increase our apprenticeships well above our commitment of employing eight to 18. At year-end, Diavik and its contractors employed 34 apprentices. All our apprentices are northern and 19 are Aboriginal. In 2011, four northerners successfully completed their apprenticeship, bringing the total number of Diavik apprentices to have achieved journeyperson certification to 31.

• Employment:In 2011, the Diavik operations workforce averaged 1,137 people. Of these, 642 (56 per cent) were priority hire Aboriginal and non-Aboriginal northern workers. Although northern employment is below our 66 per cent commitment, we are employing almost double the number of northern workers we projected in our feasibility studies of the late 1990s.

During 2011, 60 underground miners were hired, of whom 42 (70 per cent) are northern. Of the northern hires, 24 (40 per cent of the total) are Aboriginal.

• Business: In 2011, Diavik’s combined capital and operating expenditures were $438 million. Of this, $303 million (69 per cent) was spent with northern businsses. Of the northern expenditures,

$125 million was with Aboriginal businesses and their joint ventures. This brings northern cumulative spending to $3.8 billion.

Our full-year and mid-year reports are included in the reports and publications section of our web site at www.diavik.ca.

2011 socio-economic highlights

2011operationsemploymentTotal1,137

31% southern ($135 million)

44% southern (495)

69% northern ($303 million)

56% northern (642)

2011operationsspendingTotal$438million

Underground mine engineer Chris Auld designs drill and blast layouts for underground mining of the A154 South pipe. Right is a computer generated image of the ore body (blue). Note how panels of ore are progressively mined, in effect lowering the floor of the open pit. Also illustrated are the tunnels required to access the ore from below.

Underground mining advances (continued)

Preparation work included geotechnical stability analyses modelling to simulate the reaction of the rock mass. These models input rock mass properties and excavation geometry to calculate displacement of the pit’s walls and the dike’s foundations.

Our monitoring data indicates the rock and dike continue to perform as expected and analyses indicate SLR mining will have no adverse effects on dike stability.

Over the next several months Diavik will continue to ramp up underground mining production and later this year, with the completion A418 open-pit mining, all of our ore will come from underground operations.

07

Community profile – Lutsel K’e

Lutsel K’e (pronunciation Loo-tsel-ke), also spelled Lutselk’e, means ‘the place of the small fish’ and refers to the schools of ciscoes that once fed the Dene.

This Chipewyan community, previously known as Snowdrift, is located on the south shore of the east arm of Great Slave Lake in Canada’s Northwest Territories.

Lutsel K’e is approximately 40 kilometres south of the tree line. As a result, both forest and tundra are present in the area. The community has been on its present site since 1954 when homes from the original community site, which was a few kilometres away, were moved to Christie Bay.

Lutsel K’e residents practice traditional Chipewyan Dene lifestyle, including cultural traditions such as handgames, drum dances, Dene games, ice fishing and moose/caribou hunts. Just over 300 people live in Lutsel K’e.

The community is governed by a Chief and Council who are elected to two year terms. Antoine Michel is

the current chief of Lutsel K’e. Unlike many of the communities in the Northwest Territories, Lutsel K’e does not have a mayor.

In December 2011, the community opened a new youth centre and, in January of this year, youth within the community launched a new web site, lutselkeyouth.com.

“When I arrived here in July 2011, my two priorities were getting a youth centre off the ground and a web site for youth,” said Lutsel K’e Dene First Nation Youth Coordinator Shawn Alli.

Currently, the centre is located in a Department of Education building managed by the Lutsel K’e Dene School, but Alli adds that he is hoping to have the centre operate from a dedicated location.

In 2001 Diavik and the Lutsel K’e Dene First Nation signed a Participation Agreement. The agreement includes commitments to training, employment, and business benefits.

Northwest Territories

Nunavut

Contwoyto Lake

Arctic Circle

Bathurst Inlet

Umingmaktok

Kugluktuk

WekwetiGameti

Wha TiBehchoko

YellowknifeDettahN’dilo

Fort Resolution

Lutsel K’eFort Providence

Coppermine River

Ekati Diamond MineBHP Billiton

Winter Road

Mackay Lake

Lac de Gras

Great Slave Lake

Coronation Gulf

Jericho Diamond MineTahera (closed)

Diavik Diamond MineRio Tinto/Harry Winston

Snap Lake Diamond MineDe Beers Gahcho Kue

De Beers/Mountain Province

Hay River

In 2006, the Kugluktuk Grizzlies youth group helped open the new Lutsel K’e arena, an infrastructure project in which Diavik assisted.

Diavik has coordinated trades training programs within the community, including road construction and assistance with arena construction.

The Denesoline Development Corporation is the business arm of the Lutsel K’e Dene First Nation. The development corporation has several joint ventures with companies such as Aboriginal Engineering, Great Slave Helicopters (Akaitcho Helicopters), Air Tindi, Arctic Sunwest, and Nuna Logistics.

Denesoline Western Explosives, a Denesoline Development Corporation/Dyno Nobel joint venture, supplies explosives to the Diavik Diamond Mine.Left, Jeremy Catholique and Eric Marlowe

in the Lutsel K’e youth centre.

Document #: CCOM-067-0212 RO

Top 100 employerIn selecting Diavik Diamond Mines Inc. as a Canada’s Top 100 Employer, the organization’s editorial team cited the quality of our health and safety standards, financial and family benefits, vacation and time off plans, employee communications programs, performance management, training opportunities and skills development initiatives, and our work with local communities. Right, Robin Wise, Diavik Acting Vice President Human Resources, accepts the top 100 employers certificate from Richard Yerema, pictured far right, Managing Editor of Canada’s Top 100 Employers, at the Canada’s Top 100 Employers event in Toronto.

Diavik at a glanceThe Diavik Diamond Mine, which has been awarded one national John T. Ryan safety trophy (2009) and four regional John T. Ryan safety trophies (2010, 2007, 2004, and 2003), is located 300 kilometres northeast of Yellowknife, Northwest Territories, Canada.

The Diavik Diamond Mine consists of three diamond-bearing deposits, called kimberlite pipes, located just offshore of a 20-square-kilometre island, located under the waters of Lac de Gras. To mine these underwater ore bodies, Diavik has built two dikes out from the island, which Aboriginal people call Ekadi.

Diavik is currently processing diamond ore from both its open pit and newer underground mine operations. By 2013, Diavik expects its new underground mine to be at full production.

• Totaloperationsandconstructionspending – C $5.2 billion (2000 to 2011) (72% northern)

• Threeorebodies(A154N,A154S,andA418)• Oreproduction–approximately2million

tonnes annually• Operationsworkforce–1,137(2011

average)• Totalminelife–16to22years(2003start)

In December, in partnership with Crossworks Manufacturing, we were very pleased to present the Yellowknife Seniors’ Society with a Diavik diamond donation. The one carat diamond, valued at $15,000, is the feature item in the society’s annual raffle. Pictured are Marg Green, representing the society, which includes over 400 members, and Diavik President and Chief Operating Officer Niels Kristensen at the society’s Friday lunch with a bunch event. This is the fifth year we have donated a diamond to the society. Over the past five years, the society’s raffle has raised over $150,000 for seniors’ activities.

Diavik Diamond Mines Inc.5007-50th Avenue P.O. Box 2498Yellowknife, NT X1A 2P8Canada

T (867) 669 6500 F (867) 669 9058 E diavik@riotinto.com www.diavik.ca