Diavik Diamond Mines Inc. Wind Farm Project

Liezl van Wyk

25 September 2013

2

Where we are located

3

Diavik Diamond Mine at a Glance • 5 John T Ryan safety awards

• Reserves: 18.9m tonnes at 3.1 c/t

• Mining 3 kimberlite pipes

• Average workforce: 1,165

• Construction 2000-2002

• Production began in 2003

• Sept 2012 – transition to all underground complete

5

• Remote and off-grid

• No Transmission grid future options

• Energy cost >25% of operational cost

• 100% diesel driven – supply chain starts in Alberta

• Ice road for 6 weeks for >70 million liters diesel resupply

- 2000 loads per winter road season

• Risk exposure – climate change, fuel price & volatility

- Diesel cost > $1.32/liter; tariff > $0.31/kWh

• Power security critical safety priority

– Arctic temperatures below -30C

– Underground Mining beneath diked Lac de Gras

Energy context for northern mines

Electrical Grid basics

• 2 Powerhouses

– PH1: 5 x 4.4 MW Cat generators

– PH2: 4 x 4.4 MW Cat generators, 2 x 3.6 MW

• 13. 8kV network, good QOS

• Power Factor: >0.9 (< 0.83 for UG)

• High and low heat recovery on gensets, connected to glycol loops

• Manually operated power grid

• System grounded via NGR

• System loads of 22 – 26 MW

Diavik Diamond Mines Inc. – A RIO TINTO COMPANY

7

Understanding Current Energy & Load Profiles

Total Site kW Load Profile

23.1 MW

0

5,000

10,000

15,000

20,000

25,000

11/01/27 00:00 11/02/01 00:00 11/02/06 00:00 11/02/11 00:00 11/02/16 00:00 11/02/21 00:00 11/02/26 00:00 11/03/03 00:00

Time

kW

To

tal

Process Plant kW Load Profile

5.4 MW

0

1,000

2,000

3,000

4,000

5,000

6,000

11/01/27 00:00 11/02/01 00:00 11/02/06 00:00 11/02/11 00:00 11/02/16 00:00 11/02/21 00:00 11/02/26 00:00 11/03/03 00:00

Time

kW

To

ta

l

108 M-l diesel

storage

1.2 MW

0

200

400

600

800

1000

1200

1400

11/04/23 00:00 11/04/24 00:00 11/04/25 00:00 11/04/26 00:00 11/04/27 00:00 11/04/28 00:00 11/04/29 00:00 11/04/30 00:00 11/05/01 00:00 11/05/02 00:00

kW

To

ta

l

Time

Paste Plant kW Load Profile

UG NSS kW Load Profile

6.0 MW

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

11/01/27 00:00 11/02/01 00:00 11/02/06 00:00 11/02/11 00:00 11/02/16 00:00 11/02/21 00:00 11/02/26 00:00 11/03/03 00:00

Time

kW

To

tal

Energy Options

• Connecting to existing grid and expanding hydro capacity – ROI prohibitive

• Solar – NPV negative with low penetration

• Geothermal – low temperature differentials

• Wind – largest penetration and NPV positive

• Diesel will continue to account for majority of energy source

Wind Farm at a Glance

• Four E70 Enercon 2.3 MW turbines (9.2MW total)

• Projected to provide 17 GWh of renewable energy per year

• Reliability – direct drive, gearless generator

• Blade de-icing system

• Reduce diesel consumption by 10% (YTD >3.0M liters)

• Reduce carbon footprint by 6% (12,000 tonnes CO2–e)

Project Economics

• Project competed for Diavik and Rio Tinto capital

• Capex Budget: $33M

• Actual spend: $31M

• Positive NPV

• Payback < 8yrs

• Economies of scale selection

• Higher risk model than typical Diavik project strategies

Project Timeline

• 3 year wind assessment concluded: Dec ‘10

• Capex approval Rio Tinto: May ‘11

• NRCan, NavCan, AANDC, EC approvals: June ‘11

• Enercon turbines contract sign: July ‘11

• Geotechnical drilling & micro siting: July ‘11

• Roads, foundation, crane pads: Aug - Nov ’11

• Winter road shipment to site: Febr/Mar ‘12

• Tower, nacelle and blade lifts, electrical work: July- Sept ‘12

• Commissioning: Sept/Oct ’12

• Operational: End Sept 2012

12

Logistics had to be well thought out..

Wind Farm Challenges

• 2012 – 2013 winter was the coldest in 20+ years

• Lubricants and Electronics need to operate at -30 to -40C

• Little frost build up on blades tolerated (blade heating)

• Tower heating for access and electronics

• Accurate calculation of diesel litres displaced & spinning reserve

Comparisons of Actual to Model (1/2)

• Yield (kWh) – Good operating months: 7% ahead of model

– Cold/poor performing Jan/Dec delivered <15% of yield budgeted

– Forecasting the P90 in Genivar model (15GWh) vs P50 originally in budget (17.2 GWh)

• Capacity Factor

– Genivar Net CF: 21 %

– Same period actual: 22% (excl Jan, Dec)

– CF monthly profile variances with model

– P50 to P75 values in Genivar model

– Resource model vs Turbine supplier

• Different assumptions (22% vs 27%), different losses included

0%

5%

10%

15%

20%

25%

30%

35%

1 2 3 4 5 6

Capacity Factor

Enercon Model

Actual

Comparisons of Actual to Model (2/2)

• Penetration Ratios – Maximum achieved 52%

– Average of 9% (excl Dec, Jan)

– High ratios tend to be associated with high voltages (>14.5kV)

• Wind Speed: Model @ 60m: 7.22 m/s – YTD Resembles 2008 data closest

– Average of 6.3 m/s (excl Dec, Jan)

Supply – demand management focus

0

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5

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40

Mo

n 1

Oct

20

12

Sat

6 O

ct 2

012

Thu

11

Oct

20

12

Tue

16

Oct

20

12

Sun

21

Oct

20

12

Fri 2

6 O

ct 2

012

Wed

31

Oct

201

2

Mo

n 5

No

v 2

012

Sat

10 N

ov

201

2

Thu

15

No

v 2

012

Tue

20

No

v 20

12

Sun

25

No

v 20

12

Fri 3

0 N

ov

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2

Wed

5 D

ec 2

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Mo

n 1

0 D

ec 2

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Sat

15 D

ec 2

012

Thu

20

Dec

201

2

Tue

25

Dec

20

12

Sun

30

Dec

20

12

Fri 4

Jan

201

3

Wed

9 J

an 2

013

Mo

n 1

4 J

an 2

013

Sat

19 J

an 2

013

Thu

24

Jan

20

13

Tue

29

Jan

201

3

Sun

3 F

eb 2

01

3

Fri 8

Feb

201

3

Wed

13

Feb

201

3

Mo

n 1

8 F

eb 2

013

Sat

23 F

eb 2

013

Thu

28

Feb

201

3

Tue

5 M

ar 2

013

Sun

10

Mar

201

3

Fri 1

5 M

ar 2

013

Wed

20

Mar

20

13

Mo

n 2

5 M

ar 2

013

Sat

30 M

ar 2

013

Thu

4 A

pr

2013

Tue

9 A

pr

201

3

Sun

14

Ap

r 20

13

Fri 1

9 A

pr

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3

Wed

24

Ap

r 2

013

Mo

n 2

9 A

pr

201

3

Sat

4 M

ay 2

01

3

Thu

9 M

ay 2

013

Tue

14

May

201

3

Sun

19

May

201

3

Fri 2

4 M

ay 2

013

Wed

29

May

20

13

Mo

n 3

Ju

n 2

013

Sat

8 Ju

n 2

013

Thu

13

Jun

20

13

Tue

18

Ju

n 2

01

3

Sun

23

Ju

n 2

01

3

Fri 2

8 J

un

201

3

Wed

3 J

ul 2

013

Mo

n 8

Ju

l 201

3

Sat

13 J

ul 2

013

Thu

18

Jul 2

013

Tue

23

Ju

l 20

13

Sun

28

Ju

l 20

13

% P

en

etr

atio

n r

atio

W

ind

Sp

ee

d m

/2

Wind farm Performance Statistics kW Total

% Penetration ratio

Average wind speed m/s

Design kW

First winter operational challenges

0

50

100

150

200

250

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400

Oct Nov Dec Jan Feb Mar Apr May June July

Compound % Availabilities

% Availab WT4

% Availab WT3

% Availab WT2

% Availab WT1

On track to meet budgeted supply

-1,000,000

1,000,000

3,000,000

5,000,000

7,000,000

9,000,000

11,000,000

13,000,000

10/

12/2

012

4:4

5:0

0 P

M1

0/15

/20

12 2

:15

:00

PM

10/1

8/2

012

11:

45

:00

AM

10/2

1/2

012

9:1

5:0

0 A

M10

/24

/201

2 6

:45

:00

AM

10/2

7/2

012

4:1

5:0

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M10

/30

/201

2 1

:45

:00

AM

11/

1/20

12 1

1:15

:00

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11/

4/2

012

7:4

5:0

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M1

1/7

/201

2 5

:15

:00

PM

11/

10/2

012

2:4

5:0

0 P

M11

/13

/201

2 1

2:1

5:0

0 P

M11

/16

/201

2 9

:45

:00

AM

11/1

9/2

012

7:1

5:0

0 A

M11

/22

/201

2 4

:45

:00

AM

11/2

5/2

012

2:1

5:0

0 A

M11

/27

/201

2 1

1:4

5:0

0 P

M1

1/30

/20

12 9

:15

:00

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3/2

012

6:4

5:0

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M1

2/6

/201

2 4

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:00

PM

12/

9/2

012

1:4

5:0

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M12

/12

/201

2 1

1:1

5:0

0 A

M12

/15

/201

2 8

:45

:00

AM

12/1

8/2

012

6:1

5:0

0 A

M12

/21

/201

2 3

:45

:00

AM

12/2

4/2

012

1:1

5:0

0 A

M12

/26

/201

2 1

0:4

5:0

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M1

2/29

/20

12 8

:15

:00

PM

1/1

/201

3 5:

45:0

0 P

M1/

4/2

013

3:15

:00

PM

1/7

/201

3 1

2:4

5:0

0 P

M1/

10/2

013

10

:15

:00

AM

1/1

3/20

13 7

:45:

00

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1/1

6/20

13 5

:15:

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AM

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9/20

13 2

:45:

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AM

1/22

/201

3 1

2:1

5:0

0 A

M1

/24

/201

3 9

:45

:00

PM

1/2

7/2

013

7:1

5:0

0 P

M1

/30

/201

3 4

:45

:00

PM

2/2

/201

3 2:

15:0

0 P

M2/

5/2

013

11

:45:

00 A

M2/

8/2

013

9:1

5:00

AM

2/1

1/20

13 6

:45:

00

AM

2/1

4/20

13 4

:15:

00

AM

2/1

7/20

13 1

:45:

00

AM

2/1

9/20

13 1

1:15

:00

PM

2/2

2/2

013

8:4

5:0

0 P

M2

/25

/201

3 6

:15

:00

PM

2/2

8/2

013

3:4

5:0

0 P

M3/

3/2

013

1:15

:00

PM

3/6

/201

3 1

0:4

5:00

AM

3/9/

20

13 8

:15:

00 A

M3/

12/

2013

6:4

5:0

0 A

M3/

15/

2013

4:1

5:0

0 A

M3/

18/

2013

1:4

5:0

0 A

M3

/20/

2013

11:

15:0

0 P

M3

/23

/201

3 8

:45

:00

PM

3/2

6/2

013

6:1

5:0

0 P

M3

/29

/201

3 3

:45

:00

PM

4/1

/201

3 1:

15:0

0 P

M4/

4/2

013

10

:45:

00 A

M4/

7/2

013

8:1

5:00

AM

4/1

0/20

13 5

:45:

00

AM

4/1

3/20

13 3

:15:

00

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4/16

/201

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0 A

M4

/18/

2013

10:

15:0

0 P

M4

/21

/201

3 7

:45

:00

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4/2

4/2

013

5:1

5:0

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M4

/27

/201

3 2

:45

:00

PM

4/3

0/20

13 1

2:15

:00

PM

5/3/

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13 9

:45:

00 A

M5/

6/2

013

7:1

5:00

AM

5/9/

20

13 4

:45:

00 A

M5/

12/

2013

2:1

5:0

0 A

M5

/14/

2013

11:

45:0

0 P

M5

/17

/201

3 9

:15

:00

PM

5/2

0/2

013

6:4

5:0

0 P

M5

/23

/201

3 4

:15

:00

PM

5/2

6/2

013

1:4

5:0

0 P

M5/

29/2

013

11

:15

:00

AM

6/1/

20

13 8

:45:

00 A

M6/

4/2

013

6:1

5:00

AM

6/7/

20

13 3

:45:

00 A

M6/

10/

2013

1:1

5:0

0 A

M6

/12/

2013

10:

45:0

0 P

M6

/15

/201

3 8

:15

:00

PM

6/1

8/2

013

5:4

5:0

0 P

M6

/21

/201

3 3

:15

:00

PM

6/2

4/20

13 1

2:45

:00

PM

6/27

/201

3 1

0:1

5:0

0 A

M6/

30/

2013

7:4

5:0

0 A

M7/

3/2

013

5:1

5:00

AM

7/6/

20

13 2

:45:

00 A

M7/

9/2

013

12

:15:

00 A

M7

/11

/201

3 9

:45

:00

PM

7/1

4/2

013

7:1

5:0

0 P

M7

/17

/201

3 4

:45

:00

PM

7/2

0/2

013

2:1

5:0

0 P

M7/

23/2

013

11

:45

:00

AM

7/2

6/20

13 9

:15:

00

AM

7/2

9/20

13 6

:45:

00

AM

kWh

Energy generated : Oct 2012 - July 2013

Total Windfarm

Turbine 1

Turbine 2

Turbine 3

Turbine 4

Linear (Target)

Environment

• Windfarm within existing lease

• EnvCan, WLWB: Consideration of bird and caribou migration pattern; analogy to impact on cattle due to lacking case studies

• Voluntary bird mortality surveys

• Minimized footprint (crane pads used as laydown areas, fly rig for geotech foundation drilling)

• Early involvement and open communication with AANDC

• Archaeological study done for sacred aboriginal artifacts on project site

Communities

• Demonstrates wind power as a viable option for the North

• Early involvement of communities through engagement letters

• Community consultation showed no concerns with the project

• Presentations for EMAB (includes community representatives)

• Donated weather tower to Det’on Cho Earth Energy Giant Mine wind study

Project Innovations

Healthy list of In-house Innovations:

• Earthing/grounding

• SCADA

• Logistics

• Contracting

• Project costs

Mining well suited to construct at lower cost due to inhouse:

• Drilling and blasting

• Surveying

• HME and ground works

• Skills/trades

• Safety systems

• Batch plant & concrete mixing

Questions