50th

Diavik D

ialogue

Volume 153rd quarter 2012

President’s welcome 02

Transition to underground 02

Mine rescue team successful 03

Wind farm delivers 04

Employee’s dedication rewarded 05

Successful diamond tender sale 05

Kaizen raises production 06

Community profile – Wekweètì 07

02

With the conclusion of A418 kimberlite open-pit mining on September 14, Diavik officially completed its transition to an all underground mine.

“The operations crew did an exceptionally good job on the ramp recovery and on mining the last benches down to 9165 under difficult geotechnical conditions,” said Diavik Diamond Mines Inc. Manager, Open Pit

Transition to underground completeand Technical Services, Nik Auerboeck. The A418 open pit’s lowest level, or bench 9165, is just over 250 metres below lake level.

“Over those last few weeks, we were working with limited space, which made things challenging,” he added.

“We successfully completed the open pit below budget, recovered more ore

than planned, and, most important, we accomplished this without a single lost time injury or medical treatment.”

As part of the transition, Diavik worked with its open-pit mining contractor, Aboriginal-owned I&D Management, to secure future employment for the vast majority of I&D staff.

Diavik’s open-pit mining began in 2003 in the adjacent A154 open-pit, from which A154 North and A154 South kimberlite ore bodies were mined. The first A418 open-pit ore was mined in 2008. A154 open-pit mining concluded in 2010.

Since 2010, Diavik has mined ore from open-pit and underground operations as it transitioned to a fully underground mine. Diavik will continue to mine all three of the pipes underground, and full underground production levels are expected in 2013. A fourth pipe, designated A21 and located south of existing mining operations, continues to demonstrate potential.

With the final open-pit loads of A418 ore mined, Diavik is ramping up to full underground production in 2013. This phase is expected to continue to 2023, and potentially beyond.

President’s welcomeWelcome to Diavik Dialogue, our quarterly newsletter.

During third quarter, our Diavik team marked a major milestone – transition to an all underground mine. The safe transition to an underground operation required the commitment of everyone at Diavik and as such everyone shares in this success.

Keep in mind; we operate in a very challenging environment and as our open pit operations wound down, we simultaneously constructed our new underground mine.

Diavik is now at the mid-point of its mine life and with the transition complete, we expect our operations to continue to 2023 and potentially beyond.

The ‘shift change’ from open pit to underground officially occurred with the last loads of A418 open pit ore being mined on September 14. We now look forward to 2013 as our first full year of underground production.

In other developments, commissioning of our wind farm was well advanced during the third quarter and by the end of September, the wind farm was delivering initial power to our mine grid.

Diavik now has a renewable energy source which will help us reduce our reliance on diesel fuel. Early indications are that this facility can easily deliver ten per cent of our power needs and we anticipate results well above that minimum.

In closing, I would like to take this opportunity to recognize our mine rescue team for their excellent results at the international mine rescue competition. Our team, comprised of mine operations’ volunteers, competed with the best in the world and brought home third place.

Congratulations to all on these achievements.

Niels Kristensen President and Chief Operating Officer

Cover: During the third quarter, construction of Diavik’s wind farm was completed and it delivered its first power to the mine’s grid. The facility – the Northwest Territories first large-scale wind farm – includes four 2.3 megawatt turbines. See page 4 for article and more images.

03

Congratulations to our Diavik mine rescue team on their performance at the 8th International Mine Rescue Competition held in Donetsk, Ukraine, on September 12 and 13. 

Our team, including Captain Kelsey Loessl, Vice-Captain Nathan Pitre, Brent Karstad, James Venera, Brad Rogers, Andrew Furlong, Coach John Arnold, and Coordinator Alex Clinton, was among 26 teams from 13 countries to participate. The international competition includes emergency medical care, apparatus technician, engineering analysis, and performance of rescue action events.  

In the rescue event, the competition’s most challenging, our Diavik team finished in third place, with teams from Australia and the Ukraine taking first and second respectively.

“The rescue event is the competition’s most significant and most challenging event, so coming third, is a huge achievement and speaks to the skill level of our team,” said Diavik Health and Safety Superintendent Mike Lowing.

The rescue event involves a team entering a simulated coal mine, changing ventilation, controlling a fire, documenting the state of the mine, and rescuing an injured miner.

“It was a complex practical scenario, with five judges who only spoke Russian. With the assistance of a translator, information was communicated between the judges and the teams,” Lowing added. “This was our first time competing at the international level and every team member trained hard to prepare. What we learn from competing we bring back home and apply to our site to make it even safer.”

The chief judge was impressed with our teams professionalism and requested a team-signed Diavik hard hat for the State Militarized Mine Rescue Museum in Donetsk.

The Diavik mine rescue team is drawn from the Diavik emergency response team, which includes over 60 volunteers from across minesite departments.

Our mine rescue team successful at world competition

Diavik’s mine rescue team won third place at the 8th International Mine Rescue Competition. Pictured is the team performing a simulated rescue of an injured miner.

For the second year in a row, Diavik Diamond Mines Inc. has been selected as a Canada’s Top 100 Employer.

“At Diavik, we strive to provide workers with the best possible work environment, and our greatest focus is on health and safety. This will always be key to our operations,” said Diavik Diamond Mines Inc. President and Chief Operating Officer Niels Kristensen.

For the competition, the Canada’s Top 100 Employers selection committee evaluated the quality and characteristics of Diavik’s workplace, including:• Physicalworkplace• Workatmosphere• Health,financial,andfamilybenefits• Vacationandtimeoff• Employeecommunications• Performancemanagement• Trainingandskillsdevelopment• Communityinvolvement

In it selection, Mediacorp cited Diavik’s unique work location, retirement/pension plan, health and benefits plan, maternity leave top-up program, scholarships program, and our leadership in community support.

Publishing company Mediacorp Canada Inc., which manages the Canada’s Top 100 Employers competition, studied over 75,000 employers, inviting over 15,000 companies to participate.

Diavik selected as a Canada’s Top 100 Employer

04

On September 28, Diavik’s wind farm delivered its first power to our minesite grid.

Diavik now has the Northwest Territories’ first large-scale wind farm and the world’s most northern large-scale wind-diesel hybrid power facility.

“By securing a renewable energy source, we offset our reliance on diesel fuel, lower our carbon footprint, and reduce our fuel haul on the seasonal winter road,” said Diavik Diamond Mines Inc. Sustaining Capital Projects, Manager Grant Stewart.

“The final design and construction of the wind farm would not have been so successful without the help of many Diavik employees, too many to name, but included key members Brian Smith, Ken Quackenbush, Gord Stephenson, Craig Kulay, and Chris Bertoli,” said Stewart.

The project began in 2007 with installation of a meteorological tower to collect wind data. The tower would later be donated to a local partnership to study wind potential for the Giant Mine reclamation project.

The three-year Diavik study confirmed that there was a viable wind resource and Diavik then conducted a full

Wind farm delivers first power to mine’s grid

feasibility study, which indicated robust economics.

In 2010, Rio Tinto and Harry Winston Diamond Corporation approved approximately $30 million in funding and the project shifted to permitting, site preparation, commissioning, and construction.

All components, some 60 loads, were transported up the 2012 winter road and, as of September, commissioning was nearing completion.

“Our initial goal was to ensure that the wind farm provided at least 10 per cent of our power demand, with potential to go beyond that level. In the early days of operation, the wind farm has comfortably delivered 25 per cent of our power needs,” Stewart added. Diavik’s wind farm has an installed capacity of 9.2 megawatts – at that level it has the potential to supply approximately 40 per cent of the mine’s power needs.

05

Diavik employee’s dedication rewardedAttends Olympics as part of Rio Tinto Heroes program

It’s not very often you get asked to meet with the vice president and he tells you that you’re going to the Olympics.

But, one day in April, that’s just what happened to Terry McEachern, a reliability technician at the Diavik Diamond Mine.

“It was hard to describe. Wow,” was his initial reaction.

Dubbed Rio Tinto Heroes, workers nominated 2,000 of their co-workers who best represented the company’s values of accountability, teamwork, integrity, and respect. In all, the 80 selected by Rio Tinto’s senior management in London represented 20 countries from Australia to Canada to Zimbabwe.

“Terry’s commitment to our values is clear. One of the many ways he demonstrates these values is how he works with others,” said Diavik Diamond Mines Inc. Vice President, Operations, Marc Cameron.

For example, on a Sunday, one member of his team called just prior to the start of his work rotation because one member of his family was very ill and another had gone missing, Terry did not hesitate to help. His response: “Family comes first.” He approved the leave instantly, did the paperwork that night, and told his colleague to book his flights to be with his family.

“I’ve always done my best to value those I work with and appreciate everything they do. If you invest the time in your people, it brings out the best in them,” Terry said.

Terry said he and his wife, Jeanne, were thrilled with seeing the Olympics and taking in the sights of London. “We took the tube to the Tower of London. Saw the crown jewels, London Bridge, the parliament buildings, went to Harrods, and saw Buckingham Palace. It was all amazing,” he said.

“Everyone was great. We met people from all over the world. When we arrived we met Rio Tinto Chief Executive Tom Albanese,” Terry said.

“I talked with Tom Albanese for 15 minutes and he told me about when he was at Diavik in the 1990s. I thanked him for everything and he said, ‘Thank you for what you do for Rio Tinto.’ ”

Overall, Terry said the Rio Tinto Heroes experience was incredible. “We were just metres away from the Canadian four by 100 metre relay team when they went from a Bronze medal finish to disqualification. Their expressions went from celebration to dejection, but it was all part of the games,” he said.

“The entire experience was indescribable. The closing ceremony was like going to a different world.”

As part of Rio Tinto’s first ever global employee recognition program, Diavik’s Terry McEachern, and his wife Jeanne, were among 80 individuals working at Rio Tinto’s global operations chosen to attend the 2012 Summer Olympics.

Each year, Rio Tinto’s rough diamond customers are invited to purchase the largest rough diamonds from Diavik, Argyle, and Murowa diamond mines.

Known as the specials tender sale, rough diamonds weighing over 10.8 carats were featured at the recent sale.

The most expensive diamond, Diavik Selene, an extraordinary white gem weighing 22.5 carats, was sold to specialist Israeli diamond company, Eshed Diam.

“The 94 parcels of diamonds, which included 26 diamonds greater than 20 carats each, attracted very strong bidding and global participation, including Rio Tinto’s Select Diamantaires, who were among the 29 successful companies,” said Rio Tinto Diamonds General Manager of Sales Patrick Coppens.

“The strong participation and results of this specials tender, as well as the recently concluded Argyle pink diamond tender, demonstrates the consistent demand and competition for rare and valuable diamonds,” he added.

Tender sale features large diamonds

The tender was also notable for its inclusion of a number of large fancy coloured diamonds, including beautiful yellow diamonds from all three Rio Tinto mines.

Some 31 Diavik stones, ranging in size from 11.5 carats to 155.5 carats, were included in this year’s tender sale.

Rio Tinto is the only mining company that sells its diamonds by mine and country of origin, and occupies a unique position as the only miner certified by the Responsible Jewellery Council, the industry organization committed to promoting responsible practices throughout the jewellery industry from mine to retail.

A Diavik rough diamond, weighing 22.5 carats (top of picture below), captured the highest price at the 2012 Rio Tinto special tender diamond sale. The tender sale includes diamonds mined from Rio Tinto’s diamond mines in Canada, Australia, and Zimbabwe.

06

Ramping up to full underground mine ore production means ensuring our mining teams use loading and hauling equipment as efficiently as possible, and maximizing operating time during each 12 hour shift.

Some of the key challenges – dead time between consecutive shifts and delays to shift start or early finish.

To tackle these challenges of dead time, members of our underground mining staff joined forces with colleagues from our Business Improvement department to conduct what is known as a ‘Kaizen event’.

A Kaizen event is one of the Lean business improvement tools and this was the first of its type executed at Diavik. It goes beyond brainstorming and idea generation because improvements are implemented during the Kaizen event.

“Kaizen events are designed to generate rapid, continuous improvement to existing business problems,” said Diavik Diamond Business Improvement Manager Liezl van Wyk.

“This allowed us to identify unnecessary long cycle times, where time is wasted and improvement opportunities exist. We built a process map describing the current ‘unoptimized’ shift sequence and then developed the ‘ideal optimized’ shift sequence.

‘Kaizen event’ increases production

With this data, the team then conducted what’s known as a gap analysis, determining changes that would make improvements on how the shift is managed.

Day two was dedicated to implementing changes to create smoother transitions between consecutive shifts. For example, heavy equipment operators had concluded shifts by parking equipment at surface, with no loads, as opposed to keeping them in cycle and parking up at designated underground locations, with materials in the truck box. It meant implementing a system that tracked equipment location and transporting workers to the various pieces of equipment.

Members of the team that participated in the Kaizen event attended each crew change meeting, rolled out the action items to the oncoming shift crews, and followed up with the same instructions for the following crew. This reinforced and embedded the changes identified during the event and made sure we could track its effectiveness.

“We were able to critically analyze the issue and identify the true root causes, and we found a vast improvement after just one day,” said Diavik Underground Operations Superintendent Steve

Rowles. “This work enabled us to identify solutions, which resulted in the significant successes we’ve now seen since mid-August,” he added.

With the improvement identified and implemented, the Kaizen’s third day focused on sustaining the change, van Wyk added.

“The results were improved productivity,” added Chris Auld, Diavik Planner, Underground Engineering. Auld, who participated in a similar project several years ago – the Diavik open-pit mine ‘ore to door’ project, which improved open-pit equipment cycle times, brought that experience to the Kaizen event.

Once the Kaizen event was implemented, cycle times were improved by over an hour, and crews consistently achieved or exceeded daily ore production targets.

Daily Ore Production

Kaizen

TargetThe Kaizen event team included Diavik’s Business Improvement Specialist James McKay, Superintendent Underground Steve Rowles, Planner Underground Engineering Chris Auld, Mine Captain Mike Funk, UG Dispatcher John Pedersen, and Business Improvement Manager Liezl van Wyk. The team also included Mining Engineer David Sams from Rio Tinto in London.

Ore Pass #1Full Truck

Pre-OpTrams Full

Truck LoadingEmpty TruckPre-Op

FirstTruck Dump

For the Diavik shift optimization Kaizen event, conducted over three days, the group developed a detailed process map from the start of a shift, to when the 12 hour shift finishes and the next 12 hour shift begins (from the last load of ore dumped by one shift to the first loaded by the next).

07

Community profile – WekweètìThe community of Wekweètì (meaning rock lakes in Tlicho), is a Tlicho community with a population of 141 people. Wekweètì is located about 195 kilometres north of Yellowknife. Formerly known as Snare Lake, the community name was officially changed to Wekweètì in 2005. This change occurred as a result of the Tlicho Agreement.

The community has no road access, but is accessible by air.

Wekweètì is the closest community to the Diavik Diamond Mine, located 186 kilometres away. Wekweètì is also the closest community to the region’s main power supply – the hydro dams and powerhouses on the Snare River. The newest of these is owned by the Dogrib Power Corporation, a Tlicho Investment Corporation business.

Originally a hunting outpost, permanent settlement of Wekweètì did not occur until the 1970s when Tlicho elder and Chief Alexis Arrowmaker and several families settled in what is now Wekweètì. Chief Arrowmaker sought a more traditional lifestyle for his people.

In 2012, Wekweètì hosted the Tlicho Annual Gathering in July. This event rotates to each of the four Tlicho communities. The purpose of the Annual Gathering is to bring people together to share in the social, political, and cultural activities of the Tlicho.

Northwest Territories

Nunavut

Contwoyto Lake

Arctic Circle

Bathurst Inlet

Umingmaktok

Kugluktuk

WekweètìGameti

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 KueDe Beers/Mountain Province

Hay River

Document #: CCOM-112-1112 R0

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.

Diavik Diamond Mines Inc. has been selected as a Canada’s Top 100 Employer for two years in a row.

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.

With completion of open-pit mining in September 2012, Diavik transitioned to an all underground mine. In 2013, Diavik expects its new underground mine to be at full production.

• Transitiontoallundergroundminecomplete – September 2012

• Windfarmdeliversfirstpowertomine–September 2012

• ThreeorebodiescalledtheA154South,A154 North, and A418 pipes

• 2012mid-yeardiamondproduction– 3.4 million carats

Diavik was among 15 teams participating in the sixth annual Law Enforcement Torch Run for Special Olympics First Air Herc Pull. The event, held at the Yellowknife Airport in September, raised almost $11,000. Thanks to Herc Pull team Diavik volunteers Michael Kant, Jamen Oliver, Mary Cox, Steve Norn, David Sams, James Larocque, Jon Brennan, Barry Ettinger, Evelyn Larocque, Ashley Rivers, Liezl van Wyk, Hayley McLean, Kenna Snow, Heather Noseworthy, and Dayna Meredith.

Team Diavik at the Herc Pull

• Totaloperationsandconstructionspending through mid-2012 – C $5.5 billion, of which $3.8 billion is northern and $2.1 billion is Aboriginal

• 2012mid-yearoperationsworkforce–1,165 (642 northern)

• Totalminelife–16to22years(currentlyin year ten)

• Reserves–18.9milliontonnesat 3.1 carats per tonne (December 2011)

• Roughdiamondproductionsince2003–75 million carats

NORTH

Satellite image July 2012

Diavik Diamond Mines Inc.5007-50th Avenue P.O. Box 2498Yellowknife, NT X1A 2P8 Canada

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

Wind Farm