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Petra Diamonds Limited Sustainability Report 201210OVERVIEWOverviewLetter from the CEO"Petra considers sustainable development policies and practices to be essential to the long-term health of our business and they are therefore integral to the way we plan and structure our operations."Johan DippenaarCEO's StatementIt gives me pleasure to introduce our fourth Sustainability Report, which outlines Petra's key safety, social and environmental impacts and the way these are managed and mitigated by the Group. We consider sustainable development policies and practices to be essential to the long-term health of our business and they are therefore integral to the way we plan and structure our operations.Building a world-class diamond groupFY 2012 was a further transformative year for Petra as the Company stepped up from AIM to the Main Market of the London Stock Exchange and completed the acquisition of the Finsch mine in South Africa. As a result we are now well established as London's largest listed diamond producer and a constituent of the FTSE 250 index. We have built our business by acquiring world-class diamond mines in Africa and investing in them to create sustainable long-term operations with significantly increased production. The results have been striking - over the last five years, production has grown tenfold from just over 200,000 carats to more than two million carats, revenues have grown from US$77 million to US$317 million and the Petra Group now encompasses over 4,700 employees, as well as just over 800 contractors.The resultant benefits to Petra's stakeholders are significant. Our revitalised operations provide secure long-term employment (US$110.4 million on salaries, wages and benefits in FY 2012), training and career development opportunities (US$3.3 million on training in FY 2012), sustained community investment (US$3.3 million on CSI expenditure in FY 2012) and significant tax payments to Governments (US$51.1 million in FY 2012).Following a period of rapid growth through acquisition and consolidation, Petra is now embarking on the next important stage of its expansion. We will be delivering further growth to our stakeholders through the development of our existing assets and we are targeting to more than double FY 2012 production levels by FY 2019.Evolving governance and Group policiesTo ensure we are well positioned to deliver on our continued growth strategy, we have begun a review of policies across the Group, led by the Board-represented Health, Safety, Social and Environmental ("HSSE") Committee, which I chair. This process will lead to the development of an overarching series of Group-level strategic policies, which will aim to ensure consistent and improving standards across the Group's operations, whilst also taking account of international best practice. This is a wide ranging process, covering areas as diverse as stakeholder engagement, corporate social responsibility and community health, and reflecting the changed risks we face as a maturing company with a focus on the long-term development of our assets. Please review the section on Strategy and Governance on pages 12 to 17 for further information on developments in this area.Of key importance is the development of a revised Group Code of Ethical Conduct to provide clear guidance to all staff on the standards which the Company expects in SUMMARY$ We have built our business by acquiring world-class diamond mines in Africa and investing in them to create sustainable long-term operations$ To ensure we continue to deliver on our strategy, we have begun a review of policies across the Group, led by the HSSE Committee$ The health and safety of our employees remains our top priority and any loss of life is unacceptable$ We contribute to local communities through initiatives which address poverty alleviation, job creation and local economic development

Petra Diamonds Limited Sustainability Report 201211OVERVIEWOverviewLetter from the CEO continuedEvolving governance and Group policies continuedareas such as fairness and equality, human rights, anti-bribery and appropriate business conduct. Whilst we have not detected any weaknesses in existing processes in this area, the Board considers that recent legislative changes and the growing scale of our operations means that a formalisation and strengthening of policies in this area was necessary. We intend to finalise the updated Code shortly and to roll it out across our operations during FY 2013. Our sustainability reporting is also continuing to evolve and this Report represents a significant progression on our FY 2011 Sustainability Report. For the first time, we have set out key performance indicators ("KPIs") to measure our performance against the most material issues that we face in the area of sustainability, and we will be able to track our performance against comparative periods from FY 2013 onwards. We have also progressed from a 'C' to a 'B' level of reporting, according to the GRI Guidelines, which demonstrates the substantial increase in disclosure provided for FY 2012.Health and safety is our number one priorityThe health and safety of our employees remains our top priority and any loss of life is unacceptable. I am therefore saddened that one person lost their life at our Kimberley Underground operation during FY 2012. I would once again like to extend our sincere condolences to the family and friends of the deceased. Individual operations within the Group continue to achieve a good health and safety performance, in particular the Williamson mine which has now recorded three years without an LTI, a remarkable achievement. Finsch achieved the milestone of 1,000,000 Fatality Free Shifts in FY 2012, and both Finsch and Cullinan again achieved OHSAS 18001 certification, which is the mining industry best practice. We will aim to roll out this accreditation across all the smaller operations in due course.It is disappointing that our FY 2012 LTIFR slightly increased to 1.13 per from 0.80 in the prior year. A key focus for the Group going forward is to improve on this performance, in line with our objective of a zero harm workplace. Please review the section on Health and Safety on pages 18 to 22 for further information on our performance for the Year.Focus on employee developmentOur people play a vital role in the successful delivery of our strategy. We have therefore begun a detailed Skills Audit of our workforce to ensure we have the right mix of skills across the organisation to deliver our targeted production growth. The audit will provide us with a true representation of the skills required for each job profile within the organisation and will thereby ensure that training programmes are correctly targeted and focused. The audit will focus on profiling and developing the skills of our existing employees who have already made a significant contribution to our development. Playing a positive role in our local communitiesPetra takes a holistic and structured approach to corporate social responsibility and contributes to its local communities through a variety of initiatives which address poverty alleviation, job creation and local economic development. We identify sustainable projects in conjunction with local authorities, as the elected representatives of the communities affected by our operations. In FY 2012, we began the development of a new Group Stakeholder Engagement Policy and expect this to help us build on existing strong relationships once it is rolled out. Please refer to the section on Community on pages 39 to 44 for further information on the breadth of our engagement with local communities.Environmental stewardshipDuring FY 2012, we developed and approved a new Group-wide Environmental Policy, which formalised our commitment to conduct environmentally sustainable prospecting, mining and related activities. Each Petra operation is focused on minimising its environmental impact and in some cases we are able to actively protect and enhance our local area. This is certainly the case at Williamson, which was the winner of Tanzania's Presidential Award on Water Management and Forestry Conservation (see the case study on page 38). Please refer to the section on Environment on pages 29 to 38 for further information on our commitment to this area.Labour relations in South AfricaOver recent months, labour unrest in South Africa and the tragic events at Marikana have increased attention on the challenges facing the country. We at Petra believe that dialogue is the key and we are therefore focused on continuing to communicate openly with our employees, trade unions and local community representatives. A positive and lasting solution can only come from sustainable operations, which are structured to ensure that all stakeholders receive maximum benefit from their presence through fair and sustained employment, investment in community initiatives, preservation of the environment and through the taxes and other benefits which flow from our investment in our operations. We are fully committed to ensuring this is the case at our operations.South Africa is home to Kimberley, where the world's first kimberlite diamond deposits were found in the 1800s, and the country remains one of the world's top producers by value. In many ways it is a wonderful place to do business, with excellent infrastructure, world-class resources and expertise built up from generation to generation working on the mines. Petra is proud to contribute to a long-term future for South Africa's diamond industry.Looking aheadWe made significant progress in FY 2012 and have continued to carry this forward into FY 2013. We are putting in place the requisite policies and processes to support our corporate development and continue to improve our internal and external reporting on sustainability issues. I believe these initiatives will continue to bear fruit in FY 2013 and we will strive for further improvement in our key performance metrics.Johan DippenaarChief Executive Officer28 February 2013 Petra is proud to contribute to a long-term future for South Africa's diamond industry.