Gem Diamonds Limited — Environmental & Social Information 2011

Dec 31, 2011

Sustainable Development Report 2011

about thIs report

In thIs, our fourth sustaInable Development report, we present a full account of our sustaInabIlIty Impacts over the 2011 calenDar anD fInancIal year.

Since the publishing of our first sustainable development report in 2008, the content, depth and structure of our corporate social responsibility programme and sustainable development reporting has evolved, to represent Gem Diamonds’ most material impacts and is reflected in this report. As such, this report marks our first stand alone stainability review, having separated the report from our Group Annual Review.

We believe this reflects a natural progression for our reporting and highlights our increased commitment towards the sustainable development agenda.

The boundary of this report covers all of Gem Diamonds global operations, including subsidiaries, joint ventures and leased facilities.

DATA quAliTy

Gem Diamonds operates in a diverse set of jurisdictions, resulting in operation specific Health, Safety, Social and Environmental policies and management systems implementation that ensures host country legislation compliance as a minimum standard. As a Group, Gem Diamonds strive toward compliance with relevant international best practice standards, and as such, each operation undergoes an internally developed biennial audit to determine adherence to the International Finance Corporation Environmental, Health, and Safety standards.

Independent external verification of our existing Safety, Health and Environmental management system is undertaken annually by IRCA Global. Each operation is required to perform an annual Environmental Management Plan compliance audit and an integrated Health, Safety, Social and Environmental legal

compliance audit. Other site specific verification, compliance and performance audits are also conducted at specified intervals.

Our commitment to transparency is reflected by our commitment to voluntary reporting standards. Since 2009, we have been developing and implementing an expanding system to monitor Global Reporting Initiative parameters. A phased approach to implementation was selected to ensure that indicators are fully embedded within our business processes, with the aim of full Global Reporting Initiative disclosure by the end of 2013. Data contained in this report is unaudited and comprises internal company data. We believe that this will be the most effective way of achieving our aim of being a first class sustainable business. By the end of 2011 we were reporting fully against 60%, and partially against 14% of indicators. A full Global Reporting Initiative content index can be found on page 49.

In thIs report

inTRoDucTion ReDucinG ouR ReSouRce conSumpTion 02 Chief Executive Officer’s Review 24 Why it matters 04 About GEM Diamonds 24 Key achievements 06 Highlights and lowlights 24 Key performance 08 Our approach to sustainable development 25 Our approach in action 26 Energy conservation and conversation cReATinG A SAfe AnD heAlThy WoRkinG enviRonmenT 26 GHG emissions 26 Water consumption and conservation 27 Raw materials consumption minimiSinG ouR enviRonmenTAl impAcTS 10 Why it matters 10 Key achievements 10 Key performance 11 Our approach in action 12 Incident reporting 28 Why it matters 13 Health and safety management 28 Key achievements 13 Occupational diseases 28 Key performance 14 Property damage 29 Our approach in action 14 Environmental and serious diseases 30 Rehabilitation and restoration

opTimiSinG communiTy benefiT 36 Why it matters 36 Key achievements 36 Key performance 37 Our approach in action 38 Creating economic value 39 Corporate social investment 40 Overview of health projects 41 Our approach in action 42 Overview of education projects 42 Overview of infrastructure projects 43 Overview Small-Medium Enterprise projects 44 Our approach in action 45 Overview of donations 45 Stakeholder communication and engagement 45 Displacement and resettlement 45 Addressing corruption, bribery and ethics

minimiSinG ouR enviRonmenTAl impAcTS 42 Overview of infrastructure projects 44 Our approach in action 45 Overview of donations 45 Displacement and resettlement 28 Why it matters pRoDucT inTeGRiTy 28 Key achievements 28 Key performance 29 Our approach in action 30 Rehabilitation and restoration 30 Environmental incidents 31 Effluents and pollution 32 Waste management 33 Biodiversity 46 Why it matters 34 Our approach in action 46 Key achievements 46 Key performance 47 Our approach in action 48 Reputation and trust 48 Diamond certification 48 Customer satisfaction 48 Security and theft prevention GRi 49 GRI content index 57 Contact details and advisors

DevelopinG AnD ReTAininG ouR people 16 Why it matters 16 Key achievements 16 Key performance 17 Our approach in action 18 Employment profile 18 Career development 19 Remuneration and benefits 20 Diversity and equal opportunities 20 Labour relations 20 Human rights 21 Indigenous peoples 22 Our approach in action

Gem DiAmonDS Sustainable Development Report 2011 01

chIef executIve offIcer’s revIew

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“ our approach to sustaInable Development Is both a moral oblIgatIon to Do the rIght thIng, as well as a busIness ImperatIve to support our overall busIness strategy. ” clifford elphick Chief Executive Officer

finAnciAl oveRvieW

2011 was another busy year for the Gem Diamonds Group. Financially we achieved excellent results and have recovered from the depressed market conditions following the global financial crisis. At Letšeng, the Gem Diamonds Board approved an expansion project which will significantly increase production by 2014, while at Ellendale, a resource extension drilling project was commenced. Construction of the Ghaghoo mine commenced in May 2011, while the Cempaka operation (under care and maintenance since 2009), was disposed of in late 2011. Our Chiri project also remains under care and maintenance.

SuSTAinAbiliTy conTexT

Gem Diamonds takes its sustainable development responsibilities seriously. Our approach to sustainable development is both a moral obligation to do the right thing, as well as a business imperative to support our overall business strategy. By embedding sustainability in our operations, it secures our licence to operate with all our stakeholders around the world. Throughout the company’s history, we have made significant contributions to the local economies in which we operate, undertaken extensive efforts to minimise environmental impacts and delivered large community benefit by providing employment opportunities to local regions.

ouR AppRoAch

Our approach to sustainable development is to integrate these principles into our existing business processes, which we believe creates optimal opportunity for growth. We focus on the Triple Bottom Line and ensure ongoing benefit is derived for all our stakeholders.

$[For further info: ] http://www.gemdiamonds.com/gem/en/sustainable-development

02 Gem DiAmonDS Sustainable Development Report 2011

hiGhliGhTS AnD chAllenGeS

Gem Diamonds strives to be a preferred employer in the countries where we operate. Our staff remuneration remains well above minimum and standard wages and our performance based incentive and reward schemes ensure that we draw and retain top calibre employees. We continue to foster mutually beneficial and respectful relationships with our employees and support diversity and equal opportunity employment.

Regrettably, we recorded two fatalities at Letšeng during 2011. In response to these tragic incidents, investigations were undertaken to determine the root causes of these incidents. Appropriate corrective actions were developed and implemented to prevent any recurrence of such incidents. For more information, please see page 12. Similarly, thorough investigations were conducted into the additional three Lost Time Injuries that occurred at Letšeng and one that occurred at Ghaghoo during the year, to ensure appropriate corrective actions were implemented. At the remainder of our operations, health and safety standards remain high and have resulted in excellent performance. Ellendale, Cempaka and Chiri all achieved a second Lost Time Injury and fatality free year in a row. This is an achievement of which we are particularly proud.

All of our operations successfully implemented a variety of environmental optimisation projects to ensure that we continually reduce our resource consumption footprint. Some of the more successful and exciting projects are detailed in this report.

We are pleased to report that all our operations have continued to remain free of major environmental incidents in 2011 and continue to remain legally compliant with host country legislation. Both Ellendale and Letšeng progressed well with their integrated environmental rehabilitation plans while progressive environmental management tools such as Landscape Function Analysis, Ecosystem Goods and Services assessments are being introduced throughout our operations.

development of sustainable corporate social investment projects.

We are pleased to report that in 2011, zero major stakeholder incidents were reported for a third year in a row and we continue to foster open, transparent and mutually respectful relationships with our project affected communities.

Gem Diamonds has also extended our operations in the diamond value chain through the formation of the Gem Diamonds Marketing division, our cutting, polishing, sales and marketing operation. Additional profits are generated as a result of the sale of our diamonds through an innovative 'smart' sales and marketing platform, and through the cutting and polishing of selected diamonds. These additional profits are directly benefiting the local economies of the areas where the diamonds originate.

Gem Diamonds continues to adhere to moral and statutory requirements that ensure our diamonds are ethically and responsibly produced. Since the company’s formation, each diamond produced and sold has been Kimberley Process Certified.

fuTuRe GoAlS

We continue to strive towards reaching our goal of zero harm. This is not limited to our employees only, but also extends to the receiving environment in which our operations are located, as well as our project affected communities. We continue to work hard to deliver sustainable returns to our investors, while at the same time optimising benefit to our stakeholders and minimising our impact upon the environment.

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clifford elphick Chief Executive Officer

All operations continue to create a lasting legacy in the areas in which they operate through the contribution to local economies, the maximisation of local employment, local procurement and the

Gem DiAmonDS Sustainable Development Report 2011 03

about gem DIamonDs

what we Do

gem DIamonDs lImIteD Is a global mIner, focusIng on the extractIon of hIgh qualIty DIamonDs.

Gem Diamonds Limited (GDL) is listed on the London Stock Exchange and headquartered in London, with Gem Diamond Technical Services (GDTS) located in Johannesburg, South Africa. Our mining operations are in Lesotho, Australia, Botswana, Indonesia (mine disposed of in October 2011, but included in this report for completeness) and Angola.

The majority of our operations focus on the mining component of the diamond pipeline. However, with the establishment of Gem Diamonds Marketing Services (GDMS) during 2010, we are expanding our activities along the diamond value chain. During 2011,

the Ghaghoo operation located in Botswana commenced construction, while active mining continues at Letšeng diamond mine in Lesotho and Ellendale diamond mine in Australia. Letšeng consistently produces the largest and arguably the finest quality white diamonds, while Ellendale produces intense fancy yellow diamonds. Letšeng has produced four of the twenty largest white gem diamonds ever recovered and continues to produce top colour Type IIa diamonds, achieving the highest dollar per carat in the world. Letšeng also occasionally produces rare blue and pink diamonds. All the highest quality yellow stones produced at Ellendale are sold exclusively to Tiffany & Co.

letšeng has produced four of the largest white gem diamonds ever produced (pictured right):

lesotho promise 603 ct D colour (2006)

letšeng Star 550 ct D colour (2011)

letšeng legacy 493 ct D/E colour (2007)

leseli la letšeng 478 ct D colour (2008)

how we Do It

exploRATion

mininG

SAleS AnD cuTTinG AnD mARkeTinG poliShinG

WhAT iT involveS

• Undertaken to discover economically viable deposits

• In 2011, Gem Diamonds only undertook resource extension drilling at the Ellendale mine

RelevAnce To SuSTAinAbiliTy

• Creating a safe and healthy work environment (page 10)

• Minimising our environmental impacts (page 28)

• Optimising community benefits (page 36)

WhAT iT involveS

• Mining of economically viable Kimberlite and Lamproite deposits on our mining leases

• Mining process sequence comprises: drilling and blasting of ore in the open pits; loading and hauling of ore to the processing plant; crushing, screening and concentration of ore; recovery and separation of diamonds; hand sorting of concentrate

RelevAnce To SuSTAinAbiliTy

• Creating a safe and healthy work environment (page 10)

• Developing and retaining our people (page 16)

• Reducing our resource consumption (page 24)

• Minimising our environmental impacts (page 28)

what it involves

• Diamond cleaning through acidisation

• Grading and selection of diamonds for the compilation of diamond parcels that will be attractive to the market

• Extraction and analysis of exceptional stones for direct sale and/or own or partnered cutting and polishing

• Client inspection and assessment of goods

• Sale of stones through auction, tender, direct sale, own or partnered cutting and polishing

relevance to sustainability

• Product integrity (page 46)

• Optimising community benefits (page 36)

WhAT iT involveS

• Optimisation mapping and analysis of exceptional diamonds

• Undertaking the high risk process of cutting and polishing diamonds, using state of the art technology

• RelevAnce To SuSTAinAbiliTy

• Product integrity (page 46)

• Optimising community benefits (page 36)

04 Gem DiAmonDS Sustainable Development Report 2011

about gem DIamonDs

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where we Do It
uK
belgIum
lonDon
antwerp
angola InDonesIa
chIrI proJect cempaKa
botswana
ghaghoo australIa
south afrIca KImberley
Johannesburg
lesotho
letšeng
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Gem DiAmonDS limiTeD (uk)

facts:

• company headquarters

• established 2006

Gem DiAmonDS TechnicAl SeRviceS (RSA) facts:

• technical and financial support services • established 2006

leTšenG DiAmonDS, leTšenG DiAmonD mine (leSoTho) facts:

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kimbeRley DiAmonD
compAny, ellenDAle
DiAmonD mine
(AuSTRAliA)
facts:
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• ownership: 70% gem Diamonds; 30% the government of the Kingdom of lesotho

• Diamonds; 30% the • ownership: 100% gem government of the Diamonds Kingdom of lesotho • carats produced in 2011:

• • carats produced in 2011: 120 302 112 367 • average us$ per carat:

• • average us$ per carat us$731

• average us$ per carat in 2011: us$2 776

Gem DiAmonDS GhAGhoo DiAmonD mine (boTSWAnA)

facts:

• ownership: 100% gem Diamonds

• operation commenced construction in 2011

pT GAluh, cempAkA DiAmonD mine (inDoneSiA)*

facts:

• ownership: 80% gem Diamonds

• operation remained on care and maintenance in 2011 until its disposal in october

chiRi pRojecT (AnGolA)* Gem DiAmonDS facts: mARkeTinG SeRviceS • ownership: endiama (belGium) 20%; avantis 25%; facts:

• ownership: endiama 20%; avantis 25%; spI 20%; smI 20%; camitongo 15%

• ownership: 100% gem Diamonds

• project remains on care • sales, marketing, cutting and maintenance in 2011 and polishing services

• established 2010

Gem DiAmonDS sustainable Development report 2011 05

hIghlIghts anD lowlIghts

“gem DIamonDs exercIses responsIble care In all of Its busIness processes. we celebrate our successes, whIle applyIng thIs busIness phIlosophy wIth vIgour to aDDress aspects In neeD of Improvement.” alan ashworth, chIef operatIng offIcer

Letšeng mine at sunrise.

hiGhliGhTS

Why iT mATTeRS

cReATinG we are committed to ensuring our • Ellendale, Cempaka and Chiri remain A SAfe AnD employee’s health and safety at all fatality and Lost Time Injury free in heAlThy WoRk times and we strive for zero harm. 2011 (page 12) enviRonmenT our approach to health and safety • 2011 All Injury Frequency Rate of 4.54 is risk-based and systematic. over which is below the targeted ceiling and above host country legislation, value of 5.05 (page 12) all health and safety management • Letšeng commenced the systems are predicated on the implementation of a behaviour based Iso 18000 standard safety system (page 13)

• Ellendale continues to excel in proactive safety management (page 11)

AReAS foR impRovemenT

• Regrettably two fatalities and a further three Lost Time Injuries occurred at Letšeng in 2011. This triggered a reassessment of the Letšeng safety management system, resulting in a detailed action management plan being developed to prevent further harm and reoccurrences (page 12)

• One Lost Time Injury occurred at Ghaghoo in 2011. Appropriate system implementation remains ongoing at the operation (page 12)

DevelopinG gem Diamonds fosters respectful • Local employee salaries increased 22% AnD ReTAininG and mutually beneficial from 2010 to US$37 million (page 19) ouR people relationships with its employees. we • Minimum wage exceeded country continue to offer skilled employees stipulations by between 26% – 64% market-related compensation and for all the lowest graded employees benefits and incentivise employees (page 19) appropriately at each level of the • Letšeng and Ghaghoo met site operation. the lowest graded specific localisation targets (page 21) employees are compensated well in excess of minimum wage levels. • Zero cases of human rights violation were recorded in 2011 (page 21) career growth and development opportunities are determined on an individual basis

• Local employee salaries increased 22% from 2010 to US$37 million (page 19)

• Zero cases of human rights violation were recorded in 2011 (page 21)

• Career and performance reviews have declined from 40% to 16% in 2011 (page 19)

• Average number of hours of vocational training per employee was 6.2, an 18% reduction from 2010 (page 19)

• Absenteeism increased from 0.45 days average per person in 2010, to 1.83 days average per person in 2011 (page 19)

ReDucinG ouR ReSouRce conSumpTion

reducing our resource

consumption is regarded to be both a moral obligation in relation to future generations, as well a business imperative in gem Diamonds’ business processes. our operations continue to research and implement projects that aid us in reducing our consumption patterns

• Letšeng successfully implemented six • Overall energy consumption increased environmental optimisation initiatives by 13% across the Group (page 26) in 2011, with Ellendale and Ghaghoo • Further investigate carbon reduction

• implementing two each (page 24)

• Further investigate carbon reduction programmes at operations for implementation of practicable interventions (page 26)

• Carbon emissions remained comparable to 2010 levels, despite increased energy consumption (page 26)

• 57% less raw water was abstracted in 2011 than in 2010 (page 27)

06 Gem DiAmonDS Sustainable Development Report 2011

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Why iT mATTeRS

minimiSinG ouR managing our environmental enviRonmenTAl impact is a legal responsibility impAcTS and part of our philosophy of responsible care. host country legislation remains a minimum standard of compliance, while International finance corporation environmental, health & safety and other relevant international best practice standards are implemented where practicable

hiGhliGhTS

• All operations remain legally compliant in respect of environmental requirements (page 30)

• Zero major environmental incidents were recorded in 2011 (page 30)

• Immediate and unforeseen closure provision increased by 9.2% from 2010 to a total of US$42.8 in 2011 (page 30)

AReAS foR impRovemenT

• Two significant environmental incidents were recorded at Letšeng, thereby exceeding the ceiling value of one per operation (page 30)

• Hydrocarbon spill incidents increased from 45 to 70 between 2010 and 2011 (page 30)

• Progressive rehabilitation remains ongoing at all operations (page 30)

opTimiSinG communiTy benefiTS

gem Diamonds continually seeks ways to optimise community benefit in our project affected communities. to this effect, we maximise local employment and local procurement as far as possible, while culturally appropriate sustainable projects are developed in the areas affected by our operations

• US$1.09 million spent on corporate social investment projects (page 39)

• 22% increase recorded in local salaries and local procurement in 2011 (page 38)

• Commencement of the community water supply project in the Central Kalahari Game Reserve (page 44)

• Ongoing development of the Wool and Mohair and Livelihoods projects at Letšeng, and a variety of projects at Ellendale (page 37 and 43)

• Employment from project affected communities at Letšeng, Ellendale and Ghaghoo comprised 27% of total workforce (page 38)

• The percentage of local persons in management positions requires improvement where relevant (page 38)

• Training of employees on the United Kingdom Bribery Act requires finalisation (page 45)

pRoDucT inTeGRiTy

product integrity is of the utmost importance to gem Diamonds as this maximises trust in our diamonds, conduct and business practices. we continue to adhere to statutory requirements and obligations that ensure our diamonds are ethically and responsibly produced

• All diamonds produced and sold by • Continual improvement of product Gem Diamonds’ operations have been security and theft prevention practices Kimberley Process certified (page 48) at all operating subsidiaries (page 48)

• Successfully established a cutting and polishing division and upgraded the sales and marketing platform (page 48)

Gem DiAmonDS Sustainable Development Report 2011 07

our approach to sustaInable Development

“our prIncIple sustaInable Development goal Is to maxImIse benefIt for people, planet anD profIt anD our busIness case Is centreD on thIs goal.”

ellendale diamond mine surrounds

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buSineSS cASe

We strongly believe that sustainable development is about doing the right thing. In addition, we recognise that sustainable development practices can benefit our bottom line and further advance our stakeholders’ interests. This is why our principal sustainable development goal is to maximise benefit for people, planet and profit. Our business case is centred on this goal and incorporates various components as outlined below.

licence to operate

To secure community buy-in and to fulfil our licence to operate as a business, each operation implements culturally appropriate policies and procedures to ensure continuous, transparent and informative communication between the company and its stakeholders.

Risk management

All systems related to Health, Safety, Social and Environmental (HSSE) matters are based on the principle of comprehensive risk assessment. Our process takes into account inherent risk, while the ongoing assessment of existing controls effectiveness, ensure continuous improvement. Due to the integrative nature of HSSE risks, we place a strong focus on cumulative risk factors.

cost reduction and profit optimisation Cost reduction and profit optimisation remains an emphasis for all Gem Diamonds’ subsidiaries to maximise shareholder value, ensure the ongoing financial sustainability of our company and benefit the economies of the regions in which we operate. In 2011 we increased our profits by expanding our offering to include a selection of polished diamonds. In-country cutting and polishing in Lesotho and Botswana will be investigated and progressed in 2012.

Reputation, product integrity and our brand

We believe that the exceptional quality of our diamonds can only deliver true shareholder and stakeholder value when supported by an excellent reputation, based on the highest ethical standards of business conduct. As such, relevant policies and systems have been implemented to ensure that the Gem Diamonds name is instinctively associated with quality, trust, transparency, integrity and sustainability.

customer attraction

As a result of our high standards of business conduct and our comprehensive approach to sustainable development, Gem Diamonds continues to attract the most elite diamantaires in the world.

$[For further info: ] http://www.gemdiamonds.com/gem/en/sustainable-development

08 Gem DiAmonDS Sustainable Development Report 2011

pRioRiTiSinG SuSTAinAbiliTy iSSueS

SuSTAinAble DevelopmenT fRAmeWoRk

We identify material sustainability impacts through a variety of legislative, operational and corporate risk assessment processes. We also take global business trends and client requirements into consideration. The Global Reporting Initiative (GRI) guidelines and the supporting Mining and Metals Sector Supplement, underpin our prioritisation process. Operational executive management teams select the Performance Indicators which are most relevant to them and their teams on an annual basis and implement relevant monitoring systems. At Group level, a monthly and quarterly monitoring system ensures standardised recording of data across all operations. The diagram right shows the issues which we prioritise as part of our Sustainable Development strategy.

SuSTAinAble DevelopmenT GoveRnAnce oveRvieW

At Group level the company has implemented several key policies in respect of HSSE management to which all subsidiaries adhere to.

The Company’s HSSE Committee provides assurance to the main Board that all HSSE matters are being appropriately managed. The HSSE Committee comprises four members as is outlined in the table below.

The Committee is supported by the Group Chief Operating Officer, Mr Alan Ashworth and the Group HSSE Manager, Ms Anneli Botha.

HSSE management structures vary at the operational level, but are structured to ensure optimal effectiveness. At Letšeng, the Safety Committee and the Environmental Committee facilitate operational decision making and coordination of Safety, Health and Environmental (SHE) management matters. These Committees furthermore ensures consistent communication across all levels of the operation and report to the SHE Committee at Letšeng Board level on a quarterly basis. A separate Corporate Social Investment and Responsibility Committee at Letšeng Board level, reviews the operation's progress in this regard on a quarterly basis. At Ellendale & Ghaghoo, line management have responsibility for SHE within their departments and are supported by SHE

professionals who provide training and monitor compliance to the relevant systems. Employees provide feedback through designated representatives and departmental SHE meetings. The subsidiary’s Boards reviews progress in these disciplines on a quarterly basis.

Annual external SHE audits are conducted by IRCA Global at the operating subsidiaries in order to provide independent assurance of the effectiveness of the operational management systems. These audits commenced in 2008. In 2011, Letšeng lost one of its four stars, while Ellendale maintained their 4 star rating.

hSSe committee

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membeR numbeR of meeTinGS
commiTTee membeR
ThRouGhouT 2011 ATTenDeD
gavin beevers (chairman) ◊ 4 out of 4
mike salamon ◊ 4 out of 4
glenn turner ◊ 4 out of 4
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Gem DiAmonDS Sustainable Development Report 2011 09

creatIng a safe anD healthy worK envIronment

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Why iT mATTeRS

our employees are fundamental to gem Diamonds’ continuing success. for this reason, the health and safety of our employees is our first priority. we continuously reinforce that every job is to be done in a safe manner and that all accidents are preventable. safe practices are a core business imperative in our organisation and we regard our safety record as a critical indicator of business success. we believe that achieving zero harm is possible, and continuously strive to meet this goal.

Letšeng employee.

key AchievemenTS

• Ellendale, Cempaka and Chiri remained Lost Time Injury free for a second year in a row in 2011, with zero fatal incidents occurring at these operations since Gem Diamonds took control of them

• The Group-wide All Injury Frequency Rate of 4.54 is below the 2011 targeted ceiling value of 5.05 and continues to remain below 2008 and 2009 levels

• Letšeng commenced implementation of a Behaviour Based Safety system, while Ellendale continue to expand proactive safety management practices

key peRfoRmAnce

2

fatalities 2010: Zero

100%

pre-employment medicals at letšeng and ellendale 2010: Not recorded

0.25 lost Time injury frequency Rate 2010: 0.00

1 832 number of near miss incidents & hazard iDs 2010: 1 589

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TARGeT hoW We peRfoRmeD WhAT We plAn
ASpecT / inDicAToR
AchieveD ThiS yeAR To Do nexT yeAR
achieve zero fatalities x 2 achieve zero fatalities
achieve lost time Injury frequency rate
x 0.25 achieve ltIfr of zero
(ltIfr) of zero
achieve a severity rate (sr) of zero x 501 achieve a sr of zero
achieve an all Injury frequency rate (aIfr) ≤ 5.05 ◊ 4.54 achieve aIfr of ≤ 4.2
conduct pre-employment medicals for 100% of 100% – letšeng & ellendale conduct pre-employment medicals for 100%
x
employees 65% – ghaghoo of employees
Develop and implement an improved hIv/aids both letšeng and ghaghoo continue to improve hIv/aids awareness and
awareness, education and vct at affected and ◊ have appropriate hIv/aids vct year on year at affected and relevant
relevant operations programmes in place operations
letšeng achieved 3 star
external hsse audit score: letšeng & ellendale:
existing operations to achieve external hsse audit rating.
x minimum 4 star Irca rating
score of minimum 4 star Irca rating ellendale achieved 4 star
ghaghoo: minimum 3 star Irca rating
rating.
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10 Gem DiAmonDS Sustainable Development Report 2011

EllEndalE’s proactivE safEty managEmEnt practicEs

proactive she management remains an important focus at the ellendale operation. the mine continues to implement improved safety management measures and continues to track these measures against set departmental targets. In order to ensure an increase in the utilisation of these measures, departmental targets were reviewed in the fourth quarter of 2011 and staff were re-trained in the system. performance against target is presented on the right.

apart from consistently over performing in respect of the number of proactive measures taken, performance relating to the close out of corrective actions has been far in excess of the set target of 75%. the operation achieved the following close out performance at year end:

– 100% of hazard IDs reported; – 86% of incident, audit, injury and illness incident actions, and – 92% of actions required in respect of planned task observations. these achievements are testimony to the dedication of the ellendale management team to prioritise safety and health management. the result of their efforts is clearly demonstrated by their overall safety performance.

Percentage beyond target baseline for performance safety measures

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300
250
241
200
150 172
144
125
100 101
50
0
KDC Total Site
% of Hazard % of Safety % of Job Hazard % of Planned % of
IDs Target Meetings Analysis Target Task Observations Departmental
Achieved Target Achieved Achieved Achieved Cross Inspections
%
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Internal Audit process at the Ellendale operation.

creatIng a safe anD healthy worK envIronment contInueD

WhAT ARe We DoinG?

incident reporting

After three years of recording zero fatalities at our operations, we tragically lost two of our colleagues, Letebele Soai and Makalo Mako in 2011. Both incidents occurred at our Letšeng mine. Mr Soai was fatally injured as a result of a vehicle accident that occurred in February and Mr Mako sustained a fatal injury in November whilst repairing a faulty vehicle.

As a leading global mining company, we recognise our responsibility to provide safe working conditions across our entire business. The variability of the mining environment can result in unforeseeable events despite rigorous risk, health and safety management procedures. Ultimately though, our performance in 2011 was unacceptable and the shock of losing two of our colleagues has resonated across the entire business.

Our commitment to zero harm remains an absolute priority. In response to the two fatal incidents at Letšeng and a further three Lost Time Injuries during the same period, as well as the one Lost Time Injury at Ghaghoo, we conducted thorough internal and external investigations, and have revisited our safety management systems. The outcomes of these reviews have allowed us to identify a number of key areas where we must – and we believe have – improved. This has led to the following actions:

• At Letšeng, an international best practice health and safety management firm conducted a thorough assessment of the strengths and weaknesses of our current SHE management system and practices. As a result, we have developed a detailed action plan to address these identified weaknesses in a systematic, comprehensive and effective manner.

• In 2012, a selected team comprising operational executive management, safety professionals, group level managers and executive and nonexecutive directors, will undergo best practice safety management training. The training will be facilitated by a leading safety consultancy and will be augmented by site visits to three world class operations, in order to strengthen our expertise and accelerate our progress to implement world class safety practices across all our operations.

As a result of the aforementioned injuries that occurred in 2011, Gem Diamonds recorded a Lost Time Injury Frequency Rate of 0.25, a significant increase on the previous year.

Ellendale has remained Lost Time Injury free since September 2009. Both Cempaka and Chiri have remained under care and maintenance in 2011 and despite these challenging conditions, have also remained Lost Time Injury free over the last two years. A group-wide Severity Rate – a measure of the number of shifts lost as a result of Lost Time Injuries per 200 000 man-hours worked – of 501 resulted from the two fatalities (6 000 shifts lost per fatal incident) and the remaining four Lost Time Injuries recorded in 2011.

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Gem Diamond Directors' site visit to the Ghaghoo operation.

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Group-wide Lost Time Injuries (LTI) and Lost Time Severity Rate (SR) trend All Injury Frequency Rate (AIFR) trend
Injury Frequency Rate (LTIFR) trend
600 14.00 13.04
1.8 1.80 30 500 501 12.00
1.6 27 25 400 10.00
1.4 20 8.00
1.2 1.06 20 300 6.13
1.00.8 13 15 200 209 154 6.004.00 4.79 4.54
0.60.4 0.42 0.48 10 0.45 0.256 105 100 16 0 2.00
0.2 4 0.00 0 0.00
2007 2008 2009 2010 2011 2008 2009 2010 2011
0.0 0
2005 2006 2007 2008 2009 2010 2011
LTI LTIFR
AIFR
Severity Rate (SR)
Lost Time Injuries (LTI)
Lost Time Injury Frequency Rate (LTIFR)
----- End of picture text -----

• All frequency rates are calculated based on 200 000 man hours worked.

12 Gem DiAmonDS Sustainable Development Report 2011

The total number of injuries recorded in 2011 amounted to 110 across the Group, resulting in an All Injury Frequency Rate of 4.54. Letšeng recorded a total of 41 injuries, while Ellendale and Ghaghoo recorded 52 and 17 total injuries respectively. Zero injuries were recorded at Cempaka and Chiri.

To further strengthen safety and health management practices, our reporting of near miss incidents improved in 2011. As such, 1 832 near miss incidents and at risk behaviour/conditions were observed and recorded, which is a significant improvement in comparison to previous years. All high potential near miss incidents are investigated using a ‘Root Cause Analysis Technique’, in order to address hazards and risks before it results in unnecessary and preventable incidents.

health and safety management

The health and safety management systems at our operations are rooted in the principles and practices of ISO 18000. Gem Diamonds has set out several Group level policies to which the operations adhere, while ensuring that legislative, cultural and operational risk profile aspects are fully catered for. The IRCA Global audit protocol utilised to conduct our annual, external HSSE audits is also rooted in the ISO 18000 and 14000 systems.

During the course of 2011, an emphasis was placed on gaining a full understanding of our operational risk profiles. This commenced with the development of detailed task based risk assessments at each operating site. This identifies the hazards of each task, rates the risk posed by these hazards both with and without controls. Additional controls are then developed where required and rated to determine its efficacy. Based on this data, a comprehensive safety and health risk profile was developed for each operation.

The operational risk registers are regarded as ‘live documents’ and are continually refined using a variety of source information, including daily task focused risk assessments, job safety analysis, planned task observations, near miss incidents, incident investigation reports and more.

During the course of 2012 and where required, each operation will continue investigation into high risk areas, to ensure that all relevant and required risk management and mitigation measures are implemented according to relevant operational requirements.

occupational diseases

Occupational disease exposure minimisation and management remains another priority focus area for all our operations. Between 2007 and 2009, zero instances of occupational health events or occurrences were recorded within the Group. In 2010, four cases of occupational disease were identified, namely chemical burns (2), repetitive strain (1) and temporary noise induced hearing loss (1). Four occupational diseases also occurred in 2011, due to repetitive strain injuries (1), toxic tort (1) and occupational related skin conditions (2). The list of diseases monitored across Gem Diamonds' operations were expanded upon significantly in 2011 based on a comprehensive risk assessment process. This will aid us in the long-term to develop and implement more appropriate management and mitigation measures to counter occupational disease.

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Occupational health monitoring being performed at the Letšeng clinic.

5 657 medical cases recorded 2010: 5 689 9[Further info: See page 14]

ouR AppRoAch in AcTion

changing the minds and hearts of our employees

The implementation of a site specific Behaviour Based Safety system commenced at Letšeng in early 2011 and is expected to be completed by mid 2012. Improvements in employees’ attitude towards safety have already been noticeable. The process commenced at the operation’s Executive Committee level and has gradually been driven down to the operator level.

As part of the Pact formation process, each department identifies and prioritises risk exposure areas and weekly Visible Felt Leadership visits are conducted. Regular follow up visits to previously assessed areas are conducted, to ensure that the required improvements are implemented within an appropriate and specified timeframe. The Visible Felt Leadership visits reinforce management’s commitment to ensuring the safety of our employees, to drive a culture of zero harm.

Gem DiAmonDS Sustainable Development Report 2011 13

creatIng a safe anD healthy worK envIronment contInueD

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Letšeng employees planning an upcoming task.

Gem Diamonds ensures that excellent health care facilities are available at all times at the operations. At Ellendale and Ghaghoo, first aid stations, capable of life support services are staffed by advanced level life support medical staff. The on-site clinic at Letšeng was upgraded during 2011 and is now an eight bed facility, complete with its own X-ray, audiology and life support facilities. This facility is staffed by a medical doctor and several nursing and paramedic staff. These facilities serve our employees in relation to emergency, occupational, as well as primary health care while on site. A total of 5 657 medical cases were recorded at these facilities during 2011, compared to 5 688 cases recorded in 2010. The vast majority of these comprised primary health care service delivery to our employees.

The Ghaghoo operation is located approximately three kilometres from the Gope settlement in the remote southeastern corner of the Central Kalahari Game Reserve. The community residing in this settlement comprises of two families from the San Bushmen community who rely on natural medicines and cultural treatment of ailments. They have been invited to access the on-site medical station in cases of emergency and as such, the site’s medical staff have treated five community members since May 2011.

property damage

Property damage incidents is regarded as another indicator of operational discipline. Only one major property damage case (damage in excess of US$100 000) was reported in 2011, while 11 significant (damage between US$10 000 and US$100 000) property damage incidents were reported. The major damage incident occurred at Letšeng in January when a drill rig toppled over in the main pit. All major and significant property damage incidents e

continue to be investigated to ensure that appropriate corrective action is taken to prevent future occurrences of these incidents.

environmental and serious diseases

Environmental diseases are monitored on an ongoing basis according to the operation specific risk profile. As an example, hypothermia is relevant to the Letšeng operation which is located at approximately 3 200 meters above mean sea level and can record temperatures of -20°C. In contrast, at Ghaghoo and Ellendale, temperatures can reach well in excess of 40°C, which makes the risks of sunstroke and dehydration more prominent.

There has been a significant reduction in the number of occurrences of environmental health diseases from 2010 to 2011. It is also worth noting that with the disposal of the Central African Republic operation in late 2010 has significantly reduced the occurrence of malaria within the Group.

In 2011, the operating sites launched a serious disease awareness programme, specifically developed around the health risk profile of their workforce. At Letšeng, training and awareness around HIV/Aids, diabetes, hypertension, sexually transmitted diseases, respiratory diseases and gastro intestinal diseases was conducted. At Ellendale, a Health and Wellbeing programme was initiated in 2011, including serious disease awareness around hypertension and diabetes, while HIV/Aids awareness was a focus at Ghaghoo in the reporting period. A total of 426 employees across all the operations received education and training, 432 received comprehensive counselling and 1 602 received treatment in relation to serious disease. All treatment cases were recorded at Letšeng and were mostly related to HIV/Aids treatment.

environmental disease occurrences

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----- Start of picture text -----

2010 2011
gastro intestinal 379 234
cholera 0 0
malaria 65 21
typhoid 3 1
Dehydration, including
3 1
heat illnesses
hypothermia not recorded 0
total 450 257
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14 Gem DiAmonDS Sustainable Development Report 2011

Decline tunnel construction at Ghaghoo.

Gem DiAmonDS sustainable Development report 2011 15

DevelopIng anD retaInIng our people

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Why iT mATTeRS

without the right people in the right roles, our business simply cannot create ongoing sustainable benefit. we are a responsible employer and treat our staff fairly and with respect. we strive to be a preferred employer by rewarding our staff well in excess of minimum standards, and by actively developing our staff’s skill sets and career paths. our operations are located in remote areas and therefore, every care is taken to ensure the wellbeing and comfort of our employees during their shift rotations. In addition, our shift rosters are structured to minimise the disruptions to normal social structures in as far as possible.

Mining operators at Letšeng.

key AchievemenTS

• Continued to remunerate our lowest graded employees well in excess of legislated minimum wages

• Continued to remunerate skilled employees in line with market trends

• Met employee localisation target at Letšeng and Ghaghoo

• Achieved another year of zero human rights infringements in relation to our employees and communities

key peRfoRmAnce

2 109 Total workforce 2010: 1 750

16% number of performance and career reviews 2010: 40%

27 – 64% above minimum wage lowest wage in excess of minimum wage 2010: 24 – 63% in excess of minimum wage

US$37 million local employee salaries

2010: US$30 million

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----- Start of picture text -----

TARGeT hoW We peRfoRmeD WhAT We plAn
ASpecT / inDicAToR
AchieveD ThiS yeAR To Do nexT yeAR
letšeng & ghaghoo
meet site specific employee localisation targets x achieved targets, ellendale meet site specific employee locatlisation targets
did not
ensure that 100% of operational staff undergoes
majority of staff completed
ensure that 100% of operational staff undergoes x re-inductions at the annual re-induction and that all employees
annual re-induction undergoes induction prior to commencement of
operations
work
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16 Gem DiAmonDS Sustainable Development Report 2011

our approach In actIon

gEndEr Equality at sEnior managEmEnt lEvEl

letšeng became the first subsidiary in the gem Diamonds group to appoint a female chief executive officer (ceo). mazvi maharasoa, a lesotho citizen, joined letšeng Diamonds in 2007 as the resident Director, charged mainly with corporate governance and stakeholder relations.

mazvi was appointed ceo of letšeng Diamonds in november 2009. she is also the first female lesotho citizen in the history of the country, to be appointed to the helm of a mining company.

“having been involved with letšeng in one form or the other from the negotiation and granting of the mining lease in 1999 to date, becoming ceo was indeed exhilarating“ says mazvi.

“the gem Diamonds group and government of lesotho had shown faith and commitment to the growth of the mineral resource and human resource of the basotho nation. I have seen the mine grow from a single processing plant operation producing around 30 000 carats per annum, to a two plant operation producing over 100 000 carats per annum, whilst moving over 20 million tonnes of waste and ore per annum. to have the opportunity to lead the business through the next growth phase, taking the mine to a 200 000 carats per annum, world class operation as part of a dynamic group, which would directly contribute to growth in the national gDp, is a privileged position indeed.”

under mazvi’s leadership, the operation achieved its best annual financial performance in 2011. mazvi intends her tenure to be one that sees the foundation of culture, systems and processes that develop the mine to process 10 million tonne per annum operation and to ensure the continued leadership role gem Diamonds plays in the national mining economy. In addition, the diversification of the business to optimise the opportunity in going downstream in cutting and polishing in a sustainable manner that brings real added value to the shareholders and stakeholders, will be another area of focus for her in the foreseeable future.

Mazvi Maharasoa

Gem DiAmonDS sustainable Development report 2011 17

DevelopIng anD retaInIng our people contInueD

WhAT ARe We DoinG?

employee profile

During 2011 our number of employees rose as a result of the increased activity levels. This is pleasing given the current global economic environment. Our operations involve a high percentage of contracted activities, with the majority of such employees being permanently employed by the contractors. Our employment trends are depicted to the right.

career development

Gem Diamonds identifies people in the workforce who have the potential to develop, by monitoring the performance of all our employees. Procedures to accelerate career progression are developed with committed employees, and may range from external training, mentoring programmes and internal training programmes.

On average, 6.2 hours of training per employee was conducted in 2011, compared to 7.7 in 2010. At Ellendale, the reduction in training was directly related to the Safety Department (who are responsible for all vocational training) being short staffed for the majority of the year. The number of hours of training per employee category and training per capita, fell slightly due to an increase in employees and a corresponding fall in the training we provided. We are conscious that there is a significant opportunity to improve the provision of training across all employee categories, especially supervisor level training. Training will therefore be an important priority during the course of 2012.

During 2011, two members of Letšeng’s middle management team were selected to participate in an internationally recognised business school’s Programme of Management Development. This was a significant but vital investment which will benefit both these individuals and the company, as our management structure changes and evolves.

We conducted formal performance management processes at regular intervals over the course of the year. The output of these processes directly influences the rewards given to employees and also plays a part in decisions made to invest in training and further development.

During the course of 2011, several industry and discipline expert mentors were appointed at Letšeng to assist in departmental functionality as well as to mentor specific managers. Performance targets have been set for these employees which are appropriately based on their achievements.

At Gem Diamond Technical Services, due to economic realities and the relatively small number of senior employees, we have adopted a system where individuals with potential are coached internally in activities that do not strictly fall into their normal roles. The consequence is cross functional exposure and development, which has benefits for both the individual and the company.

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Employee profile trend – direct and contractors
3500
3000 1 700
2500
2000 1 700
1500 1 200 1 200
1 400
1000
500 500 600 460
0
2008 2009 2010 2011
Own employees Contractor employees
Number of people
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Total number of hours of vocational training (including safety, health and environment) per employee category

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----- Start of picture text -----

12000
9 700
10000 9 192
8000
6000
4000
2000 1 6421 276
464 501 588 659
0
Senior Middle Supervisors Other staff
management management
2010 2011
Hours
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employees by employment type in 2011
Direct permanent Temporary
country mine/project contractors
employees employees employees
uK gDl 4 0 4 0
rsa gDts 21 1 21 1
belgium antwerp 2 2 2 2
lesotho letšeng 177 1 194 1 224 147
australia ellendale 204 289 474 19
Indonesia cempaka 0 0 0 0
botswana ghaghoo 14 147 3 158
angola chiri 33 21 33 21
total 455 1 654 1 761 348
----- End of picture text -----

18 Gem DiAmonDS Sustainable Development Report 2011

At Ellendale, a variety of Certification courses were utilised in 2011 to enable our employees to achieve performance targets. These courses aim to build on skills and increase the qualifications of our employees. This serves our aim of achieving improved production whilst advancing our employees’ career prospects.

Group-wide absenteeism rate is shown in the graph below. The average number of days absent per person across the group is approximately two days per annum, which is regarded to be within acceptable standards. During 2011, Letšeng has seen a 50% increase in the average number of days absent per person as a result of staff being booked off from work by private medical practitioners. At Ellendale, the average number of absent days showed a significant increase from 2010 figures, due to contractor figures not previously being reported to Ellendale. Therefore, the 2011 figure has been corrected to 2.45 average days absent per person.

Remuneration and benefits

As with the majority of companies operating in the natural resources sector, we operate in a market with skills shortages, particularly in respect of employees with technical and managerial skills. In order to attract and retain the right calibre of employees, we pay market related rates.

Gem Diamonds continues to remunerate well above the host country minimum wage at the lowest graded employee level. Ellendale remunerates its lowest graded employees at 64% in excess of the mining industry minimum wage, as prescribed by the Federal Government. At Letšeng, the minimum wage exceeds the national and mining sector minimum wage by 27% for the operations lowest graded employees. This wage applies to 27% of the Letšeng workforce. The lowest graded employees

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----- Start of picture text -----

Training per capita
14 000 7.0
6.3
12 000 11 886 12 1365.3 6.0
10 000 5.0
8 000 375,026 4.0
6 000 3.0
4 000 2.0
2 000 1.0
0 0
2010 2011
Total hours of training Training per capita
Total hours training Training per capita
----- End of picture text -----

at Ghaghoo are remunerated at the mining sector minimum wage.

provision is undertaken via the legislated Superannuation system, with KDC contributing 9%, and employees contributing a variable amount. As this is a mandatory retirement provisioning, 100% of employees partake in this scheme. 100% of Lesotho national employees at Letšeng partake in the operation's retirement provision, with the company contributing 7.5% to each employee’s provision. Employees contribute a further 7.5%. Contractors provide for their employees under their contractual agreements with their employees. The remainder of Gem Diamonds' operations and offices remunerate employees on a cost to company basis and therefore, employees are free to elect their own retirement provisioning schemes and contributions.

We continue to develop country specific staff retention schemes, including performance bonus schemes and share schemes.

Gem Diamonds believes in treating all its employees, whether own or contractor, permanent or temporary, as valued members of our workforce. Therefore, comparable benefits are negotiated with and contractually stipulated in agreements with our major contractors. However, benefits received by employees across the Group vary based on differing legislative and market trend variations. In 2011, a total of US$3.05 million was expended on employee benefits over and above salary costs.

Retirement provision varies between the subsidiaries and is dependent upon host country legislation. At Ellendale, retirement

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Type of benefit by host country
benefit Description
life insurance – – – – – – – –
on site health care (in excess of first – – – 1 p 1 p 1 p – –
aid emergencies)
external health care / medical aid / / – / / / / /
workman’s compensation / similar 1 p 1 p – 1 p 1 p 1 p 1 p 1 p
Disability / invalidity cover under 1 p 1 p – 1 p 1 p 1 p 1 p 1 p
workman’s compensation / similar
maternity / paternity leave 1 p 1 p – 1 p 1 p 1 p – 1 p
retirement provision / / – 1 p / 1 p / / 1 p /
stock ownership / options 1 1 – 1 1 1 1 1
social security – – 1 – – – – –
united kingdom RSA belgium lesotho Australia botswana Angola indonesia
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(1) employees (p ) contractors (–) not provided (/) provision included in cost to company package

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----- Start of picture text -----

Career and performance review completion Absenteeism rate
100 2.5
80 2.0
60 1.5
40 1.0
20 0.5
0 0.0
2010 2011 2010 2011
United KingdomSouth Africa Belgium Lesotho AustraliaIndonesia Botswana Angola United KingdomSouth Africa Belgium Lesotho AustraliaIndonesia Botswana Angola
%
Average number of days per employee per year
----- End of picture text -----

Gem DiAmonDS Sustainable Development Report 2011 19

DevelopIng anD retaInIng our people contInueD

Diversity and equal opportunities

We regard the right to non-discrimination on any grounds as a fundamental human right. Gem Diamonds therefore has policies and systems in place across all of its operations to ensure that site specific targets in respect of diversity is met. Furthermore, at the operational level, every effort is taken to increase the recruitment of indigenous and/ or local employees to satisfy immediate operational requirements as well as long-term requirements. At Letšeng for instance, the Tertiary Scholarship Programme aims to develop a qualified talent pool for utilisation over the operating life of the Letšeng mine.

Gem Diamonds is an equal opportunity employer as demonstrated by our continual commitment to recruiting a diverse workforce – including gender, race, ethnicity and other relevant diversity considerations in specific jurisdictions. Figures related to diversity pertain to Gem Diamonds’ own employees only.

Executive level positions held by female employees include the Chief Executive Officer of Letšeng and the Managing Director of Kimberley Diamond Company.

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Group-wide employee diversity statistics
%
Total minority
employee % % % local % Age < % Age % Age >
no. of group /
level male female citizens 30 31 – 50 50
persons local
persons
board 27 89 11 10 20 0 42 58
senior
29 85 15 7 40 0 72 28
management
middle
53 48 52 1 62 1 90 9
management
remainder of
325 71 29 27 35 25 71 4
workforce
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labour relations

human rights

We regard freedom of association as a fundamental human right. Whilst none of Gem Diamonds’ operations are unionised sites, we do not place any form of restriction on our employees’ right of association and remain open to collaborative relationships with appropriate forms of employee organisations. We have also implemented systems to ensure that open and collaborative communication channels are available for our employees at all times. Whilst these processes are not particularly mature, they remain effective.

All operations are required to implement policies, processes and standards with respect to protecting the human rights of our employees, as well as members of our project affected communities. These systems adhere to host country legislation and applicable international best practice standards. During 2011, each operation completed human rights training in relation to host country legislation, with 32% of all staff having completed this training. This training ensures that employees are fully aware of their expectations in upholding their fellow employees’ and our project affected communities’ human rights, from the moment they become part of our workforce.

We believe that the success of our HSSE management system depends on the level of contribution to and ownership of the system from employees. We are proud to report that in 2011, we achieved an average of 89% employee representation in all SHE forums. These forums facilitate open and transparent discussion where important HSSE aspects are addressed.

Letšeng and Ghaghoo have contracted the services of an external security company and have taken due care in the selection process of these contractors, to ensure that their employees have a comprehensive understanding of human rights issues.

There were no strikes or lock-outs in this year.

ouR AppRoAch in AcTion

indigenous employee Training programme at ellendale

15 Indigenous employees completed the Indigenous employee training programme at ellendale in early 2011. the programme comprises an intensive work readiness training component, including on the job training and formal course work from the certificate 1 in mining resources, and selected courses from certificate 2 in business skills. In addition, strong indigenous mentoring from other indigenous employees assists the trainees in making the leap from a traditional way of life, to the formal employment environment. as at December 2011, three employees who completed the programme earlier in the year were employed at ellendale, while several others found employment at other companies in the area. another three trainees were identified for future employment at the operation.

Indigenous training.

20 Gem DiAmonDS Sustainable Development Report 2011

We continue to assess the risk profile of each operation in relation to child labour, forced labour and compulsory labour. Gem Diamonds strongly opposes these types of practices and have a zero tolerance policy in this regard. Zero such practices have occurred since the formation of Gem Diamonds and we continue to implement policies and practices to prevent the occurrence of such incidents.

Gem Diamonds does not tolerate discrimination in any shape or form and have relevant policies in place in this regard at each level of the Group. No incidents of discrimination were recorded at any of the operations during the course of 2011.

indigenous peoples

Maximising employment opportunities for people from our project affected communities remains a focal area for all operations.

Indigenous employment at Ellendale has been between 8% and 12% of the total workforce, with nine indigenous employees leaving the company during the course of the year.

awareness training was developed in collaboration with several of the Bunuba elders and the training was facilitated by these elders.

Programmes have also been developed for the Ghaghoo project to facilitate the employment of members from our primary project affected communities. Recruitment for casual labour is done on a rotation basis from the Kaudwane village, with the assistance of the Kaudwane Village Development Committee. At year end, 30% of our employees at Ghaghoo were members of our project affected communities. Several individuals have been identified who are showing potential to become permanently employed at the operation. The system will undergo ongoing refinement throughout 2012 to ensure an effective and sustainable process to identify, train, employ and retain employees from the project affected communities.

At the Letšeng operation, a total of 94% of all employees comprised of Lesotho nationals. This falls within the operation's localisation target.

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Heritage area inspection at Ellendale.

“maxImIsIng employment opportunItIes for people from our proJect affecteD communItIes remaIns a focal area for all operatIons.”

We have conducted cultural awareness training at Ellendale in order to improve understanding of cultural differences between indigenous and non-indigenous employees. The course served to increase an understanding amongst our workforce of the cultural values of the traditional owners, The Bunuba people, attached to the land on which our operation is located. The cultural

ouR AppRoAch in AcTion

Reduced turnover and improved morale at kimberley

In may 2011 the Kimberley Diamonds company board approved a change to the roster regime in place at the ellendale operation. rosters were brought in line with market practice and employee preference in as far as was possible for the operation.

the benefits to the company of this roster change have included increased morale and staff retention. prior to the process Department changing roster (in august 2011), our staff turnover for 2011 was at an average of 9% per month. since the changeover, the turnover has decreased to 7% and is continuing to show improvement.

Gem DiAmonDS Sustainable Development Report 2011 21

indigEnous EmploymEnt in focus

the ellendale mine site is located in the heart of the west Kimberley region of western australia. the area has a high proportion of indigenous people, including a great number os remote aboriginal communities. 8% of ellendale’s workforce identify as Indigenous australians and have been recruited from the many communities and towns which encompass the Kimberley region and elsewhere in australia.

formal employment is not regarded as part of Indigenous culture and therefore presents a variety of unique challenges to our Indigenous employees. one such employee joined

ellendale in may 2011, as a result of successfully completing the operation’s pre-employment training programme.

During his initial training, scott (which is not his real name) completed a certificate 2 in resource and Infrastructure over a ten week period and then participated in rotational work experience, exposing him to the operational aspects of the mining operations. During the three month probation period, he was provided with financial assistance and received advice on how to balance work life responsibilities with family commitments.

scott is proof that, with the right support, it is possible to assist Indigenous people enter the mining workforce, whilst being sensitive to the complex social issues that are in evident in many towns and communities throughout the Kimberley region. the success of any future pre-employment programs to be conducted is largely linked to its relationship with service providers, community mentors and ultimately the ‘off-site’ personal lives and events within the Kimberley community.

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Gem DiAmonDS sustainable Development report 2011 23
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reDucIng our resource consumptIon

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Why iT mATTeRS

our mining operations are located in remote rural areas. as mining traditionally relies on large quantities of natural resources, we understand that we have a responsibility to reduce our levels of resource consumption. In doing so, we can avoid putting a strain on the local communities that surround our operations.

reducing our natural resource footprint is a business imperative for gem Diamonds, as it allows us to reduce our operating costs and improve efficiency. lowering our overall impact also helps us maintain strong relations with stakeholders who take an active interest in our environmental footprint.

Ellendale Slimes dam.

key AchievemenTS

• Both Ellendale and Ghaghoo have implemented two environmental optimisation projects during the course of 2011, with Letšeng implementing a total of six

• Reduced total raw water consumption by 57% from 2010

• Letšeng achieved a 13.5% fuel related energy consumption reduction per tonne of material moved, through improved mining methods and energy efficiency technologies

• Energy efficient and renewable energy supplies were implemented at Ghaghoo during the construction of the mine, in order to reduce the overall resource footprint over the expected 40 years life of mine

key peRfoRmAnce

87 541 tonnes 12 528 917m[3] Group-wide GhG Group-wide water emissions consumption 2010: 90 501 tonnes 2010: 14 598 528m[3]

1 444 546 GJ 2 347 475m[3] Group-wide energy volume of raw / make-up consumption water used 2010: 1 251 848 GJ 2010: 5 453 717 m[3]

hoW We peRfoRmeD TARGeT AcTuAl WhAT We plAn ThiS yeAR AchieveD peRfoRmAnce To Do nexT yeAR 6 – letšeng Develop and implement at least one Develop and implement at least one ◊ 2 – ellendale environmental optimisation initiative environmental optimisation initiative per annum 2 – ghaghoo per annum

24 Gem DiAmonDS Sustainable Development Report 2011

our approach In actIon

rEducing our EnErgy footprint

the load and haul process employed at the exploration and extraction phases our operations, utilises large volumes of diesel in the movement of ore and waste. having identified this in 2010, our letšeng operation has been investigating innovative ways in which to reduce the volume of diesel required per tonne of material moved. the process began by testing several fuel additives which claimed to reduce diesel consumption, whilst also reducing harmful exhaust emissions. this was done in tandem with implementation of more efficient hauling units.

During the first phase of the project, baseline data was gathered over a three month period using a us epa monitoring protocol system.

we began by manually dosing selected vehicles across our fleet using three different fuel enhancement products. after the trial period, only one product showed an average fuel consumption reduction of 9.9% and a carbon saving of approximately 3 000 tonnes over the period.

based on the favourable outcome of these results, a further six month fleet wide trial was conducted at our letšeng operation. During this second phase, in combination with the improved efficiencies of the hauling units, we recorded an average 13.5% fuel consumption reduction across our fleet, resulting in a substantial resource and cost saving per tonne of material moved. emissions from our mobile fleet was also significantly reduced which is shown right.

reductions of other harmful emissions are shown below:

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Fuel savings and emissions reduction
measured against baseline values
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----- Start of picture text -----

10
6.13
0
-10 –13.54
–17.61
-20 –21.30 –24.64
–28.95
-30
-40 –41.63
-50
% Fuel Saving HC CO CO2
O2 NOX Opacity
%
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During 2011, the bulk diesel supplier at ellendale constructed a new depot in broome in order to provide us with an energy efficient fuel that will reduce our fuel consumption by 3 - 4%. this makes ellendale the first user of this particular energy efficient fuel in the western Kimberleys.

Gem DiAmonDS sustainable Development report 2011 25

reDucIng our resource consumptIon contInueD

WhAT ARe We DoinG?

energy consumption and conservation

We focused extensively on the implementation of energy efficient technologies during 2011.

The actions taken at our Letšeng operation in particular display our commitment to reducing our resource consumption as a business. A detailed energy audit was conducted at the operation in 2010 and an energy efficiency action plan was implemented in 2011. As an outcome of the initial audit, a power correction factor system was implemented, which continues to deliver substantial energy reductions across the operation.

Due to the high heating demands for the 1 371 employees residing in accommodation units at Letšeng, we also replaced oil heaters with energy efficient under floor heating and replaced over 1 000 traditional light bulbs, with micro-chipped LED lighting. These lights use 6% of traditional light source’s energy on average and have have a guaranteed lifetime of between 25 000 – 36 000 hours (depending on the light type). At 96% recyclable, the use of these lights also reduces operation’s total waste footprint. Overall, Letšeng reduced total indirect energy consumption by 9 391 GJ from the 2009 baseline through its initiatives.

Despite these actions however, total energy consumption for the operation increased in 2011. This was predominantly due to increased operational activities. Research into reducing our energy footprint at Letšeng will continue into 2012 and beyond, and substantial attention is being paid to incorporating energy efficient technologies into the design of the Letšeng expansion project.

Our Ellendale operation has been participating in the Energy Efficiency Opportunity (EEO) initiatives, an Australian government programme, since 2009. Several initiatives to reduce energy consumption were identified in 2010 and three were selected for implementation in 2011. Although no initial energy savings have resulted from these initiatives, energy savings are expected over the long-term. These projects include lighting efficiency optimisation, implementation of automatic switches on lighting towers and reduced airconditioning related energy consumption. Extensive attention was placed on reducing resource consumption in 2011 for our Ghaghoo operation. Solar geysers were installed for all ablution facilities at the operation, while the micro-chipped LED lights were installed across the operation where practicable.

A total of 7 420 kilo-litres of other nonrenewable fuels, including Jetfuel and Liquid Petroleum Gas was used across our operations in 2011.

GhG emissions

The total carbon footprint for the Gem Diamonds Group in 2011, is 87 541 tonnes of carbon equivalent. This is a 3.3% reduction from 2010, which totalled 90 501 tonnes. Our total energy consumption increased by 15%, which is unsurprising given the growing scale of our operations. This reduction in carbon footprint mainly stems from a more detailed calculation methodology being applied at Letšeng, and therefore does not represent an actual lower carbon footprint .

Water consumption and conservation

A total volume of 12 528 917 m[3] water was used across Gem Diamonds' operations in 2011, which is 14% less water consumed than in 2010. 2011 also saw a reduction of 57% of raw water consumed from natural resources across the Group.

A major water recycling project was undertaken at Letšeng in 2010, with the construction of a purpose built water purification plant that treats return water from an existing dam for reuse in the plant. This has led to a 17% reduction of raw water at Letšeng in 2011.

At Letšeng, make up water (the water feed needed to replace that which is lost in processed material by evaporation or leakage) is drawn from an on-site raw water dam which collects storm water from the site. As this is not a natural water body, our impact upon this dam is not regarded as being a significant impact on the natural environment. Letšeng is currently planning to undertake a major expansion project, resulting in the need for the construction of a new dam. Environmental considerations will be taken into account to ensure that the new dam increases the amount of raw water we can use within our operations.

For the expansion project of our Letšeng operation, external specialists were appointed to undertake a detailed site selection process to identify a site that would have as minimal an impact upon the environment as possible whilst catering for optimised environmental management systems. Ecological and human reserve determination was also carried out to ensure that adequate water would remain available for ecosystems and communities downstream who may be affected by the expansion of our operations. Detailed

2 The GDL (London) and GDMS (Antwerp) offices are not included, while GDTS is represented in 2011 only. All operating sites are included 2009 - 2011

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Total energy consumption (GJ) Energy intensity (GJ/tonnes carats recovered) trend Total GHG emissions (tonnes) trend
700 000 2.5 60000
600 000 2.0 2.1 50000
224 855
500 000400 000 151 315 1.5 1.7 1.6 40000
300 000 108 643 375 026 362 711 1.0 1.2 1.1 1.3 30000
291 964 20000
200 000
100 000 0.5 10000
0 0.0 0
2009 2010 2011 2009 2010 2011 Letšeng Ellendale Ghaghoo All other
Letšeng Ellendale 2009 2010 2011 operations
Diesel Energy Indirect Energy
Consumed (GJ) Consumed (GJ)
Energy Consumed (GJ) GJ per carats recovered
Tonnes of carbon equivalent (tCO2e)
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Total energy consumption (GJ)

26 Gem DiAmonDS Sustainable Development Report 2011

designs of these structures will incorporate the mitigation measures recommended by the specialist hydrological team in order to minimise our impact on downstream users, while collaboration between the environmental and engineering teams will work towards reducing our overall resource consumption.

In 2011, a 14% reduction in water consumption was recorded at Ellendale. Our Ellendale operation continues to proactively manage water consumption and holds regular aquifer reviews, water balance studies, operating strategies and monitoring, including stygofauna monitoring.

Ellendale mainly draws water from the Grant Aquifer – a vast regional aquifer stretching over 300 000 km². The aquifer underlies Ellendale at between approximately 50 – 350 meters below ground level, while it extends to as deep as 2 400 meters below ground level elsewhere. Based on the operation’s detailed hydrogeological model and ongoing Annual Aquifer Reviews, the Grant Aquifer does not constitute a water source that is significantly affected by the withdrawal.

The Ghaghoo operation is located in a remote corner of the Central Kalahari Game Reserve where no surface water bodies occur and no existing community water supply boreholes exist. The Ghaghoo operation will obtain all its raw water from the Ntane aquifer which underlies the area. Detailed hydrogeological modelling for the life of the mine has proven that the impact of the mine on the aquifer will be minimal. No other groundwater users or ecological reserve impacts will result from the operation’s extraction from this aquifer. Therefore, the Ntane aquifer is not regarded as a water source significantly affected.

Water consumption at Ghaghoo was minimal in 2011 and water was only utilised for potable and construction uses. As the operation expands, water consumption will increase during 2012 and onwards.

Due to the high natural salt level of groundwater found at Ghaghoo, all water abstracted from the Ntane aquifer is treated using an on-site reverse osmosis plant for potable water purposes, as well as for water used in the construction processes. The small San Bushmen community residing in the nearby Gope village have survived for millennia on alternative water sources, such as ‘Gemsbok’ melons. However, since construction started, Ghaghoo has been providing treated water to the Gope village community on an ongoing basis.

Raw material consumption

The diamond mining process is regarded as a relatively clean and chemical free form of mining as it comprises the mechanical crushing of ore, followed by a screening process. Following this process, the ore is processed using a Dense Media Separator (DMS) to concentrate the ore before the recovery and hand sorting processes occur. Input materials into these processes comprise ore, water and ferro-silicon (FeSi), the latter being used as part of the DMS process. In 2011, a total of 1 247 tonnes of FeSi was used at Letšeng and Ellendale, which is similar to the 1 156 tonnes used in 2010.

In addition to diesel being consumed in the load and haul operations to move ore and mineralogical waste, a total of 522 476 litres of oils and lubricants were used in 2011 at the operating sites in the Group. This is a slight increase from 2010 due to the expansion of our operations.

Apart from recycled process water, no recycled input materials are utilised in our production process at any of the operations.

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Water consumption by source (million litres)
2009 – 2011
10 000
102
9 000 4 258
8 000 1 872
7 000
6 000 3 500 6 335
5 000 1 112 1 091
4 000 438 5 068
4 118 4 073 3 844
3 000 3 379
2 000
1 000
0
2009 2010 2011 2009 2010 2011
Letšeng Ellendale
Natural surface water Groundwater Operational
Million litres
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Water intensity (m3/carat recovered) trend

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100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Letseng Ellendale
2009 2010 2011
86,189
68,218
57,550 56,788 56,788
Volume (m3) / carat recovered 34,601
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ouR AppRoAch in AcTion

Setting the standard in reporting

Due to the highly advanced nature of the regulatory system in Australia, statutory reporting is a major duty for our environmental team at Ellendale. One such report that is submitted annually to the competent authorities is the Groundwater Licence Operating Strategy (GLOS). During 2011, the Department of Water (DoW), referred another mining company to our environmental team to seek advice on the compilation of their reports. As a result of these conversations, the Department regarded the Ellendale GLOS, as being the best example of a Best Practice Standard report. Our team is congratulated for the consistent quality of their reporting and we hope to use this approach to improve reporting across our operations.

Ellendale operation Annual governmental authority visit.

Gem DiAmonDS Sustainable Development Report 2011 27

mInImIsIng our envIronmental Impacts

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Why iT mATTeRS

we have extensive mining operations across the globe and recognise our responsibility in operating these mines in an efficient, safe and clean manner that reduces our overall environmental impacts. although our operations are remote there are still communities who depend on the land surrounding our mines for food, water and their livelihoods. our operations are also in, or adjacent to, important ecosystems rich in biodiversity. It is therefore imperative that we manage our environmental impacts with sensitivity throughout the lifecycle of the mining operations, and especially at the end of a mine’s life to ensure we return the land as close to its original state as is practicable.

Water monitoring at Letšeng.

key AchievemenTS

• Each operation continued to refine its comprehensive environmental rehabilitation programme, but full integration of these plans with mine planning is still required for all operations

• Ellendale continued to apply the Landscape Function Analysis technique to monitor and improve biodiversity and ecosystem functionality on rehabilitated areas

• Letšeng conducted a first phase rapid assessment in Ecosystems Goods & Services as part of the expansion site selection process. This technique will be applied in future environmental impact assessments and management plans

• Ghaghoo continued with the implementation of the approved Social and Environmental Impact Assessment and Management Plan as construction at this operation advances

key peRfoRmAnce

Zero major environmental incidents 2010: Zero

70

hydrocarbon spills 2010: 45

Three Significant environmental incidents

2010: Three

US$42.9 million environmental rehabilitation provision 2010: US$39.2 million

• All operations maintained compliance with external and/or internal land clearance authorisations

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TARGeT hoW We peRfoRmeD WhAT We plAn
ASpecT / inDicAToR
AchieveD ThiS yeAR To Do nexT yeAR
achieve zero major environmental incidents ◊ Zero record zero major environmental incidents
achieve no more than one significant x 2 – letšeng record no more than one significant
environmental incident per operation 1 – ellendale environmental incident per operation
maintain compliance with permitted land clearance maintain compliance with permitted land
◊ 100%
authorisations at all times clearance authorisations at all times
full integration not yet
ensure at full integration of rehabilitation and mine ensure at least 90% adherence to integrated
x achieved, but closure plans
plan rehabilitation plan
are much improved
both letšeng and ellendale
achieve a 10% year on year reduction in exceeded target, but achieve a 10% year on year reduction in
x
hydrocarbon pollution incidents recorded improved hydrocarbon pollution incidents
reporting
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28 Gem DiAmonDS Sustainable Development Report 2011

our approach In actIon

WEtlands for WatEr managEmEnt at lEtšEng

water is lesotho’s most abundant resource. It is also the country’s largest single source of foreign exchange earnings since the implementation of the lesotho highlands water project (lhwp).

letšeng is located in the extreme upper catchment of the senqu and malibamatso rivers which form the backbone of the lhwp. consequently, a key element of the mine’s environmental programme is the delivery of a clean and constant supply of water to the downstream environment. the unique system of sponge areas and wetlands which characterise the lesotho highlands, are fundamental in fulfilling this function.

as part of our ongoing water quality monitoring programme, high nitrate levels were detected in the seepage from the waste rock dump and tailings storage facilities. an investigation was undertaken in 2011 to determine the exact source of nitrates and revealed

mining explosives residue as the cause. as a result, we have been exploring different blasting techniques that remove the potential for nitrate leakage. a further study will be undertaken in 2012 to determine the rate of attrition of nitrates as a result of leaching.

In 2011, a planning process to construct engineered wetland systems within the mining concession commenced at letšeng to ensure appropriate water quality of any effluent emanating from the mine, as well as to off-set historical wetland losses. the first wetland will be constructed in the qaqa valley in the first quarter of 2012 under the guidance of expert wetland ecologists and engineers, and will be located immediately below the waste rock dump.

the second phase to this project will involve the construction of a series of smaller wetland systems, combined with a return water dam in the valley below the patiseng valley tailings storage facility.

not only will these wetlands serve as a sustainable and natural water quality treatment ecosystem in perpetuity, they will also contribute to the offsetting of unique biodiversity systems and fulfil services such as flood attenuation and water retention.

sustainable grazing practices education remains an ongoing theme as part of our wool and mohair community investment project. letšeng approached the lesotho water resources management Department in 2011 to assist in rehabilitation and restoration of existing, degraded wetland systems outside the mine lease area, as a further off set measure. members of the project affected community will be employed in these projects – not only to create employment opportunities, but also to serve as an educational experience for the people who heavily rely on these resources.

snow covered wetland in vicinity of letšeng.

Gem DiAmonDS sustainable Development report 2011 29

mInImIsIng our envIronmental Impacts contInueD

WhAT ARe We DoinG?

We are committed to environmental protection. A total of US$1.5 million was spent on environmental protection, research & development, consultancy fees and other costs in 2011 across the Gem Diamonds Group. Furthermore, all of our operations have the appropriate licences, permits, plans and procedures in place to meet all host country environmental compliance requirements. Gem Diamonds regards host country legislation as a minimum compliance requirement, and sites are continually expanding their practices to comply to relevant international best practice standards, including the International Finance Corporation (IFC) Environmental, Health and Safety (EH&S) standards.

environmental incidents

For a third consecutive year, zero major³ environmental incidents were recorded across the Group in 2011. Unfortunately however, three significant⁴ incidents were recorded, two of which occurred at Letšeng and one at Ellendale.

The first significant environmental incident at Letšeng occurred when an estimated 150 litres of oil leaked into soils adjacent to the main workshop area. Upon discovery, all the affected soils were excavated and bio-remediated.

Another hydrocarbon spill occurred at Letšeng when an unknown volume of waste oil spilled from an overflowing oil separator at the washbay. In order to mitigate any negative environmental impacts, the separator was drained and the oils drummed for recycling. The area was also bio-remediated.

At Ellendale, an unauthorised discharge of approximately 35 m[3] of tailings occurred as a result of a blocked tailings pipeline. The incident was immediately reported to the Department of Environment and Conservation and the Department of Minerals and Petroleum and clean up actions implemented.

In 2010, a rising trend in hydrocarbon spillages was identified across the Group. As a result, a corporate directive was issued for the operations to review and improve their hydrocarbon management plans and a target was set for each operation to achieve a 10% year on year reduction in hydrocarbon spillages. With this renewed focus, it became apparent during the course of 2011 that these incidents were under reported in previous years.

Letšeng recorded a total of 25 hydrocarbon spills, while Ellendale recorded 45 hydrocarbon spills during 2011, resulting in a 55% increase in spillages from 2010. It should be noted that any spill above 1 litre should now be reported at both Letšeng and Ellendale. Although this increase in the number of incidents have resulted in a non-achievement of our target, we regard the improved reporting and increased volume of materials being treated at the operational bio-remediation areas as a positive step to reduce our overall impact upon the receiving environment.

We are pleased to report that for a second year, no fines in respect of environmental transgressions or non-compliances have been received, nor have any sanctions been received from the regulatory authorities.

Rehabilitation and restoration

Ensuring we leave a positive legacy for future generations is of great importance to Gem Diamonds. Extensive attention has been paid to developing comprehensive rehabilitation plans for all our mining operations. Full integration of these plans with the mining plans will remain ongoing into 2012. These plans will ensure that our operations are restored to meet the closure objectives agreed to with our stakeholders in due course, while it also enables us to more accurately quantify our environmental rehabilitation liability.

Sudden and unforeseen closure quantification is undertaken on an annual basis. There has been a significant improvement to the level of confidence of these liabilities. The immediate and unforeseen closure liability as of 31 December 2011 for the various operations is summarised in the table below.

Ongoing rehabilitation continued at Cempaka throughout 2011 up until the sale of the operation, focusing on the restoration of both the Danau Suran and the Cempaka channels. Ongoing restoration of finalised areas at Ellendale also continued during 2011.

In 2011, an additional 125 hectares of land on our existing mine leases were disturbed as part of our mining processes and planned infrastructure requirements. However due to the disposal of assets in 2010 and 2011, the total land under Gem Diamonds’ management reduced from 162 804 hectares (2009) to 77 201 hectares (2011), resulting in an increase from 1.07% to 2.47% of total land owned or leased, being disturbed.

³Incident which results in long term, high severity environmental impact.

⁴Short to mid-term, medium severity environmental impact.

Total investment in rehabilitation and restoration

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2009 2010 2011
operating entity
Site Total (uS$) Site Total (uS$) Site Total (uS$)
angola $240 121 $240 121 $240 121
australia $15 465 005 $19 762 164 $24 092 186
botswana $329 261 $39 642 $1 866 514
lesotho $15 997 334 $17 708 868 $16 742 077
other operations $917 839 $1 483 917 $0.00
GRAnD ToTAl $32 949 561 $39 234 714 $42 940 898
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30 Gem DiAmonDS Sustainable Development Report 2011

location and size of land owned or leased in hectares which has been disturbed and the associated biomes

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2009 2010 2011
Total land percentage of Total land percentage of Total land Additional percentage
Total area
operation biome owned / total land owned / total land owned / area of total land
disturbed
leased disturbed leased disturbed leased disturbed disturbed
letšeng alpine 1 674 12.13% 1 674 14.24% 1 674 41.59 279.89 16.72%
tropical
ellendale 70 280 1.73% 70 280 1.74% 70 280 71.46 1 297.16 1.85%
savannah
cempaka marsh land 747 42.03% 747 42.03% 747 0.00 314.00 42.03%
chiri savannah 103 2.91% 103 2.91% 0 0.00 0.00 0.00%
ghaghoo Desert 4 500 0.04% 4 500 0.04% 4 500 12.35 14.35 0.32%
riverine
and
mambéré 85 500 0.00% 85 500 0.00% 0 0.00 0.00 0.00%
tropical
rainforest
ToTAl 162 804 1.07% 162 804 1.10% 77 201 125.40 1 905.40 2.47%
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effluents & pollution

The combination of the benign nature of host rock geochemistry of the Kimberlite and Lamproite being mined at Letšeng and Ellendale respectively, and the mechanical nature of mineral processing with the addition of ferro-silicon, a benign chemical, results in relatively clean water at these sites. Contaminants at all operations are generally limited to suspended solids. At Letšeng however, ongoing water analysis has indicated an increase in nitrates in our water due to mining explosives residue. Although water largely remains in a closed loop system, some water emanating from the site as a result of storm water runoff is affected.

All Gem Diamonds operations are designed to be zero discharge operations. This is done to minimise resource consumption and to ensure that water recycling practices are optimised. However, from time to time, water discharge is required. As such during late 2010 to early 2011, a total of 1 159 647 m³ of rain and groundwater seepage water collected in the Main Pit at Letšeng, was released into the Khubelu stream. In 2011, 303 384 m³ of groundwater seepage and rain water that had collected in the Ellendale 4 open pits, was discharged under license into the ambient environment, in preparation for re-commencement of mining activities in these pits.

No water is discharged from our operations without prior treatment in relation to the settling of suspended solids to ensure adherence to the relevant standards and regulations. In addition, water quality and riverine health monitoring is conducted at both operations during and following discharges.

Due to the excellent water quality in both the raw water dam at Letšeng and the Grant aquifer at Ellendale, water treatment is limited to treatment for potable and recovery processes at these two operations. At Ghaghoo, full reverse osmosis is required for all raw and potable water.

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Ellendale slimes dam at sunset

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Letšeng raw water dam.

Gem DiAmonDS Sustainable Development Report 2011 31

mInImIsIng our envIronmental Impacts contInueD

Waste management

Gem Diamonds operations are located in remote and pristine locations. As a result, significant attention is paid to ensure responsible waste management practices. Each operation has completed a waste inventory and classification, from which a comprehensive waste management plan has been generated. Strict enforcement of these plans remains ongoing. Waste separation is conducted at all operations and where possible, we recycle as much waste as we can. In 2011, we recycled a total of 154 tonnes of waste, representing 30% of total waste produced (excluding mineral waste). At Letšeng, the remaining domestic waste is incinerated, while at Ellendale, waste is landfilled in licensed areas on site. All domestic waste generated at the Ghaghoo operation is transported to Lephepe for disposal.

Medical waste is generated at each of our operations by our on-site clinics and medical stations. Its appropriate disposal is important for the continuing health and safety of our employees, communities and the environment. At Letšeng, 178 kg of medical waste was generated in 2011, while at Ghaghoo 6 kg was generated. All medical waste generated at Ellendale is transported with patients to the Derby hospital for licensed disposal. Medical waste from Letšeng is transported under license to the Seboche hospital in Butha-Buthe for incineration. All medical waste generated at Ghaghoo is disposed of under license by the operation’s medical service provider in Gaborone.

No radioactive waste was generated at any of the operations during 2011. The small volumes of hazardous waste generated at Letšeng and Ellendale were treated and/or disposed of in-country and therefore, no transboundary movement of hazardous waste took place in 2011 from any of our operations. No hazardous waste disposal facility exists in Botswana. Therefore, before the mine starts generating hazardous waste, investigations were undertaken in 2011 to find the most responsible way to transport such waste to neighbouring South Africa. This will ensure that any hazardous waste can be handled and disposed of in a safe manner, once such wastes are generated at the operation.

An independent firm conducted a contaminant transport model over a 500 year duration, to assess the impact of the disposal of reverse osmosis brine onto the Ghaghoo operation’s slimes dam. The conclusion was drawn that the disposal of brine would have no material impact on the receiving environment. In addition, should a borehole be successfully drilled for use by the residents of the Gope village, no impact is expected upon their water (this was also modelled over a 500 year duration).

Mineral waste was generated only at Letšeng, Ellendale and Ghaghoo during 2011, figures of which are presented below. All mineral waste structures are designed, constructed and maintained to international best practices standards, while ongoing monitoring is undertaken in compliance to host country legislative standards.

We are also aware of the impact our operations can have on productive soils. Topsoils and subsoils of the affected footprint areas at Ghaghoo were stripped prior to commencement of construction. All soils have been stockpiled according to recommendations of a specialist pedologist and will be utilised for rehabilitation as soon as suitable areas are finalised. This aims to optimise the utilisation of the existing and viable seed banks available in the soils and also to minimise any impacts on soil structure.

“ In orDer to mItIgate our overall envIronmental Impact, great care Is taKen to mInImIse our footprInt by clearIng only those areas that are of absolute necessIty to the operatIon of the mInes.”

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Hazardous and non-hazardous waste
generated by type
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----- Start of picture text -----

300
250
200
150
100
50
0
2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011
Letšeng Ellendale Ghaghoo Other operations
General/domestic Hazardous Industrial
waste waste waste
Tonnes
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Solid waste generated by disposal routes Mineral waste generated
400 50
350 45
40 22.7
300
35
250 30 17.1
200 25
150 20 16.9
100 15 11.6 8.8 9.3
10
500 50 3.6 3.8 4.72.4 6.21.7 0.5
2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2010 2011 2010 2011 2010 2011
Letšeng Ellendale Ghaghoo Other operations Letšeng Ellendale Ghaghoo
Waste Waste Domestic waste Total waste Total tailings Total slimes
recycled incinerated (including landfill) rock disposed (coarse) disposed (fine) disposed
Tonnes
Million tonnes
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32

Gem DiAmonDS Sustainable Development Report 2011

biodiversity

Gem Diamonds’ operations are located in remote, pristine and rugged locations with a wide diversity of biomes. We have a total of 77 201 hectares of land under our management as part of the various mine lease agreements. In order to mitigate our overall environmental impact, great care is taken to minimise our footprint by clearing only those areas that are of absolute necessity to the operation of the mines. Refer to page 31.

Our operations are located in close proximity to areas of high biodiversity value:

• Letšeng is located 14 km from the Ukhahlamba-Drakensburg World Heritage Site (inscribed in 2000). The mine concession borders the Maluti Drakensberg Transfrontier Conservation Area – specifically the Oxbow / Senqu Sources Conservation Priority Area. This area has have not been allocated statutory protection as yet, Letšeng remains abreast of developments in this regard and continues to conduct environmental management in an appropriate manner.

• Ellendale is located adjacent to the Devonian Reef Conservation Park, with 750 hectares of the mining lease overlapping the park. Access to this section of the mining lease is limited to a small number of employees for monitoring purposes only.

• The Ghaghoo operation is located in the Central Kalahari Game Reserve. The reserve stretches over 52 800 km² and the final mining footprint will affect only 0.0085% of the Game Reserve. In addition, the Social and Environmental Impact Assessment and associated Social and Environmental Management Plan, was carried out with due regard to the IFC EH&S standard, to ensure

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Rehabilitation being undertaken at Cempaka.

of the expansion project during the course of 2012. At Ghaghoo, a comprehensive and integrative biodiversity assessment also formed part of the Environmental Impact Assessment process. At Letšeng, an Ecosystems Goods and Services rapid assessment was undertaken in 2011 (see case study on page 35), while at Ellendale, the Landscape Function Analysis technique is being applied to ensure appropriate system wide management focusing particularly on improving rehabilitation practices.

that best practice environmental and social management practices are implemented from the construction phase.

Several species on the International Union for the Conservation of Nature and Natural Resources (IUCN) red data list have been confirmed to exist at Letšeng, Ellendale and Ghaghoo (see table).

A detailed list of these species is available on the Gem Diamonds website.

Each operation has a comprehensive Environmental Impact Assessment and corresponding Environmental Management Plan in place. Relevant specialist studies were undertaken in compiling these plans, including detailed fauna and flora baseline studies. At Letšeng, an update of these baseline studies will be undertaken as part

Ongoing adherence to the provisions of the Environmental Managment Plans is rigorously enforced and monitored at each operating site in order to minimise our impact upon the environment.

Species on the iucn ReD DATA list

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conSeRvATion level leTšenG ellenDAle GhAGhoo
endangered 6 1 0
vulnerable 4 3 5
species of least concern 129 175 162
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Gem DiAmonDS Sustainable Development Report 2011 33

our approach In actIon

34 Gem DiAmonDS sustainable Development report 2011

quantifying EcosystEm goods and sErvicEs valuE

ecosystem services can be described as the benefits derived from biodiversity and other components that add to an areas’ natural capital. all businesses are directly or indirectly affected by the functioning of natural ecosystems in how a business uses these ecosystem services, how business activities affect the provision of ecosystem services and how ecosystem services may potentially influence corporate performance.

the assessment of ecosystem goods and services is increasingly being used to assess impacts and to identify effective mitigation measures. It facilitates corporate decision makingthrough scenario planning and comparison of alternatives.

an ecosystem goods and services rapid assessment of terrestrial and aquatic biodiversity was undertaken at letšeng in 2011 to identify key assets, linkages and inter-dependencies of the users of these resources. the outcomes of the assessment informed planning options for the expansion project at letšeng and formed part of the site selection process.

Key services identified include:

• water quality management – pollution, assimilation and dilution (important to all users)

• natural heritage / biodiversity conservation and benchmarks for a changing environment (particularly important to local

herders and to national and international users)

• soil stability (particularly important to users downstream of the mine)

• education – geological features and mining, protected natural assets

the results of this study highlighted a number of other key aspects around the mine that were previously underestimated. these include opportunities to leverage changing external biodiversity and grazing assets as well as educational opportunities for local project affected communities.

Gem DiAmonDS sustainable Development report 2011 35

optImIsIng communIty benefIt

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Why iT mATTeRS

we take our responsibilities to ensure good relations with project affected communities seriously, during and subsequent to the life of our mines. gem Diamonds strives to achieve the creation of a positive legacy that will remain long after the mineral resources have been depleted. we regard it as our duty to ensure the sustainable development of the communities in which we operate and whom we directly impact through our operations. we facilitate this through the payment of all relevant taxes and royalties, development and implementation of appropriate and long term sustainable corporate social investment projects, optimisation of local employment and purchasing and procurement.

Farmer from Cempaka CSI projects.

key AchievemenTS

• Community water supply project commenced at Ghaghoo in 2011 with the Mothomelo borehole being successfully completed and equipped

• Ghaghoo successfully implemented a system for the sourcing of labour from the Central Kalahari Game Reserve project affected communities

key peRfoRmAnce

US$ 1.09 million Group-wide corporate Social investment 2010: US$ 704 000

US$ 263 million local wages and local supplier spend 2010: US$ 214 million

• Implementation of the Wool and Mohair project, as well as the Livelihoods project, remains ongoing at Letšeng

• Ellendale continues to support the Healthy Lifestyles and education initiatives in the Fitzroy valley

• Corporate social investment projects undertaken at Cempaka, achieved excellent levels of independent sustainability. Where applicable, projects were handed over to relevant institutions to ensure continuity

94%

lesotho nationals employed at letšeng 2010: 93%

27% employees from project affected communities 2010: not recorded

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TARGeT hoW We peRfoRmeD WhAT We plAn
ASpecT / inDicAToR
AchieveD ThiS yeAR To Do nexT yeAR
achieve zero major stakeholder
achieve zero major stakeholder complaints ◊ Zero
complaints
achieve no more than one significant stakeholder ◊ ghaghoo, one achieve no more than one significant
complaint per operation letšeng and ellendale, zero stakeholder complaint per operation
meet site specific employee localisation targets ◊ all targets met meet site specific employee
localisation targets
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36 Gem DiAmonDS Sustainable Development Report 2011

our approach In actIon

improving livEliHoods in lEsotHo

“I am grateful to letšeng for this project, because now we are able to farm properly and as a result improve our livelihoods drastically. we are able to feed our families adequately, while we have leftovers to sell for income generation purposes. I wish this project could be extended to all the areas of mokhotlong because is it such a wonderful and much needed intervention” says mrs manchela lehora.

mrs manchela lehora, aged 61, has six direct dependents and resides in a small rural village downstream of letšeng diamond mine. mrs lehora completed training as part of the livelihoods and food security project in late 2010. the aim of the project is to build the capacity of local individual households to improve subsistence agricultural and general business skills and techniques, in order to facilitate sustainable improvements in their quality of life. the project also teaches participants how to increase their crop yield and quality at minimal cost. the project is facilitated by letšeng diamond mine and implemented by a local non-governmental organisation called grow.

mrs lehora has been practicing subsistence farming since 1980 and has only ever been able to produce enough food for her family’s

consumption. In addition, chicken farming became increasingly challenging as a result of ongoing and sustained cross breeding of the limited livestock availability in the area.

During late 2010 and early 2011, mrs lehora partook in training for the development and management of hotbeds (an informal greenhouse system constructed from local rock and plastic sheeting that enables the project affected community members to continue food crop production despite sub-zero winter temperatures), sustainable seed multiplication, presowing techniques and maintenance of vegetable and fruit tree production. grow also supports participants by the provision of affordable, but high quality agricultural inputs.

since she started applying the techniques learned, she has been able to comfortably feed her family and in addition, is now able to generate an additional income of ~us$ 20 per week through the sale of the excess crops to the surrounding communities. she proudly reported that she had independently purchased cabbage seedlings with some of her profit. her improved chicken breeding techniques have been so successful that she is now educating and supporting other local farmers to achieve the same results.

hotbed in Khubelu valley as part of the livelihoods project.

Gem DiAmonDS sustainable Development report 2011 37

optImIsIng communIty benefIt contInueD

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Maloroaneng eco-tourism lodge Khubelv community construction team.

“we also worK harD to IDentIfy, Develop anD Implement long-term sustaInable corporate socIal Investment (csI) proJects for our proJect affecteD communItIes.”

WhAT ARe We DoinG?

creating economic value

Gem Diamonds believe in being a positive contributor to the economies in which we operate. We are listed on the London Stock Exchange and have therefore voluntarily subscribed ourselves to adhere to the most rigorous and widely recognised international best practice standards in respect of financial, corporate governance and corporate social responsibility objectives.

All of our operations duly pay all statutory taxes and royalties in the jurisdictions in which we operate.

We also continue to research and implement ways of capturing margins down-stream in the diamond pipeline.

The Government of Lesotho is a 30% shareholder in the Letšeng diamond mine and as such is appropriately represented on the Letšeng Board and its supporting Committees. Under applicable legislation in Lesotho, all capital expenditure is written off for tax purposes in the year in which it is incurred.

No financial assistance is received from the governments in any of the remaining host countries in which we operate and no in kind or pro-bono donations or contributions were made to any political parties, politicians or related institutions during the Company’s history.

We also continue to search for opportunities to expand the skills resource base of our local communities to ensure the employment of local people, as well as to utilise local services and product suppliers. Ellendale recorded a 4% growth in procurement from its project affected communities in 2011, while Letšeng recorded a 0.3% increase in this category. Local recruitment is a priority focus area for all our operations, as this is a primary area for contribution to the economies in which we operate.

No artisanal or informal mining takes place in the vicinity of any of our operations.

We also work hard to identify, develop and implement long-term sustainable Corporate Social Investment (CSI) projects for our project affected communities. Ideally, these projects are developed to function independently of the mining operations, in order to avoid the boom and bust cycle that is often associated with the mining industry.

Gem Diamonds do not make any payments in respect of land use agreements other than those outlined in relevant mine lease and land use agreements.

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Salary spend Procurement spend
16 140
14 120
12 100
10
80
8
60
6
4 40
2 20
0 0
2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011
Letšeng Ellendale Ghaghoo All other Letšeng Ellendale Ghaghoo All other
operations operations
Total in country Regionally based PAC based local Total in country Regional PAC local
based local local employee employee costs purchasing / purchasing / purchasing /
employee costs costs procurement procurement procurement
US Dollars (millions) US Dollar (millions)
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38 Gem DiAmonDS Sustainable Development Report 2011

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Ghaghoo SEIA public participation Kaudwane.

corporate social investment

Gem Diamonds has developed a comprehensive CSI policy and guideline which is implemented at the operational level. In order to ensure the development of culturally appropriate CSI projects that will be self sustainable over the long term, each operation undertakes a detailed community needs analysis from which potential projects are identified. These projects are subject to a comprehensive feasibility and business planning phase before being approved by the subsidiary's Board. All projects are also aligned with Gem Diamonds’ philosophies and project categories.

All operations have identified three tiers of affected communities – project affected communities (or potentially directly affected), regional and national communities. See the table below.

Based on the findings of a detailed community needs analysis, our Letšeng

operation compiled a three year CSI plan in 2010 and has made significant progress in the implementation of all identified projects during 2011. Ellendale completed a Community Investment Review and Audit in mid 2011 and commenced with a community needs analysis during late 2011 in order to improve the appropriateness and sustainability of its CSI investments. Due to the short remaining life of mine, Ellendale will integrate the majority of their CSI plan into the operation’s closure plan. A detailed socio-economic impact assessment was undertaken in 2008/2009 for our Ghaghoo operation and although the project is under construction and not generating an income, the operation did commence a significant community water supply project in 2011.

Prior to Gem Diamonds’ disposal of the Cempaka operation, CSI projects undertaken in these project affected communities were successfully closed out and where practicable, handed over to appropriate Non-governmental organisations and/or community organisations, to ensure their ongoing sustainability. CSI expenditure in 2011, amounted to US$ 1 098 167. This marks, a 36% increase on 2010 expenditure. CSI expenditure per operation and per category is outlined above. Gem Diamonds prioritises undertaking CSI projects in the fields of health, education, infrastructure, Small & Medium Enterprise development and regional environmental initiatives. A limited amount of general donations are made to worthy causes by each operation.

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vAlue ADDeD
vAlue (uS $)
STATemenT
Wealth created 298 139 978
turnover 395 573 825
cost of materials and
- 104 904 076
services
other income 7 470 230
Wealth distributed 158 889 562
employees salaries, wages
and related benefits 40 963 636
providers of capital: interest
paid on borrowings / 35 897
finance charges
governments 117 890 029
company tax 52 946 413
Dividends to gol 36 653 705
royalties 28 289 912
Wealth retained for
replacements of assets 139 250 417
and future growth
amortisation and
69 989 957
depreciation
retained income 69 260 460
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community categorisations
pRojecT AffecTeD
opeRATion ReGionAl nATionAl
communiTieS
gDl n/a london united Kingdom
gDts n/a Johannesburg south africa
letšeng District of mokhotlong butha buthe lesotho
west Kimberley region incl.
ellendale western australia australia
fitzroy, Derby & broome
gope, Kaudwane, lephepe &
ghaghoo ghanzi District botswana
new xade
lunda sul district &
chiri saurimo angola
luanda
cempaka banjarbaru & banjarmarsin south Kalimantan Indonesia
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Gem DiAmonDS Sustainable Development Report 2011 39

optImIsIng communIty benefIt contInueD

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The culmination of the Healthy Lifestyles project, the Kimberly Cup football final held in Fitzroy Valley.

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corporate social investment 2011 (uS Dollars)
infRA- oTheR
opeRATion heAlTh eDucATion Sme DonATionS
STRucTuRe expenSeS
letšeng 0 149 640 294 638 189 971 35 364 47 786
ellendale 65 470 71 357 0 0 69 674 38 962
ghaghoo 0 7 958 84 211 0 0 15 445
cempaka 2 967 11 104 0 2 213 7 267 0
chiri 3 100 0 0 1 050 0 0
Total 2011 71 537 240 059 378 849 193 234 112 305 102 193
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overview of health projects

event was held in Mokhotlong in late 2011 and educates adolescents through a combination of confidential HIV/Aids counselling and testing, an education session and a football match. Local schools and youth groups were invited to enter teams in the fun day. The winning team visited the Lesotho Football for Hope Centre in Maseru for a one week camp where peer educator training was undertaken in exchange for exposure to state of the art football training. Letšeng will continue to increase its involvement in the Kick for Life programme in the Mokhotlong district and will continue to support the peer educators in their fight against the spread of this disease.

During the course of 2011, health related projects were undertaken at Ellendale and Cempaka.

No health related CSI projects had been planned to be undertaken by Letšeng as part of its three year strategy however, the operation was approached by an international Non-governmental organisation in 2011 to support the Kick for Life HIV/Aids awareness and Test Your Team project in the Mokhotlong district. Due to the high percentage of the Lesotho population being affected by HIV/Aids, this is a priority focus area for the Letšeng management team. The Test Your Team

ouR AppRoAch in AcTion

variety WA & the Diamond Dinner

Kimberley Diamond Company supports Variety Western Australia, by hosting the annual Diamond Dinner. This raises much needed funds for this charity that focuses on Western Australian children who are in ill health, disadvantaged or have special needs.

The Variety Freedom Programme provides funding for mobility equipment for individual children such as wheelchairs, walking frames and customised tricycles. The programme also donates Liberty Swings to communities, enabling children with physical impairment to partake in playground activities and in addition, puts many Sunshine Coaches on the road every year to transport these children to a range of special programs and activities.

The Variety Caring for Kids Programme assists parents in the care of seriously ill children at home. Variety also join forces with regional hospitals and other children’s organisations to fund major projects like the establishment of the Variety Children’s Rehabilitation Centre at Princess Margaret Hospital which treats more than 1 000 special needs kids a year.

The Variety Future Kids Programme provides special needs children with access to computers to positively transform their classroom experience and academic performance – in many cases, enabling children to speak their first words, or writing down their own thoughts independently.

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40 Gem DiAmonDS Sustainable Development Report 2011

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our approach
In actIon
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fitzroy crossing entrants to the Kimberley girl pageant.

KimbErlEy girl

Kimberley girl was introduced to the Kimberley community in 2004 and is a valuable initiative targeting young indigenous women between the ages of 16 and 25. through the involvement of Kimberley Diamonds and other government and corporate sponsors, the Kimberley girl programme continues to grow and improve. structured workshops and showcase events address contemporary issues, helping participants to overcome the impact of social, economic and isolation disadvantages and bringing the community together in a celebratory capacity. the programme aims to cultivate female leaders through the development of personal and positive identity of the participants, while passing on life skills designed to give this ‘at risk group’ the tools to grow in the modern world and fills a need in the community for a contemporary cultural activity.

ellendale’s contributions are

particularly focused on young women of the fitzroy valley – the operation’s project affected community.

workshops focusing on professional development and leadership were delivered by recently trained Kimberley girl cadets. each participant emerges with a renewed sense of confidence on which they can continue to build. through this increased positive self awareness and exposure to new opportunities, the young women can become positive role models in their communities.

the main objectives of Kimberley girl are to:

• Instigate irrevocable change in the personal and professional development of young indigenous women;

• provide young indigenous women with valuable educational activities and opportunities which directly address their needs in the areas of:

• contemporary Indigenous culture;

• mental and physical health and well-being;

• Development of social and professional skills;

• positive lifestyles; and

• leadership values.

• promote understanding and respect for Indigenous culture from the wider community by representing Indigenous people in a positive and contemporary environment.

• the final event was attended by over 700 people from the region.

Gem DiAmonDS sustainable Development report 2011 41

optImIsIng communIty benefIt contInueD

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Letšeng‘s 2011 Tertiary Study bursars.

overview of education projects

Letšeng places a strong emphasis on supporting education projects and have provided 35 full scholarships to 31 Lesotho students to undertake tertiary studies at some of the most prestigious universities in Southern Africa. All the students successfully completed their respective year’s education in 2011, while four students successfully graduated this year.

Ellendale awarded a full bursary to a student from Fitzroy Crossing to become part of the Yirramaly/Wesley college student exchange programme. This programme provides children from rural communities in the Kimberleys with the opportunity to augment their studies by attending the prestigious Wesley College in Melbourne, but also allows city based children to experience indigenous cultures thereby expanding the horizons and future opportunities for families and children.

In the Fitzroy Valley, Ellendale continues to sponsor the Kimberley Girl and the Healthy Lifestyles projects. The Healthy Lifestyles project focuses on encouraging young indigenous boys at secondary school level to remain in school until year 12. The programme uses participation in sport - Aussie Rules Football specifically – to encourage boys to also remain drug and alcohol free and to alleviate poverty rates within the Bunuba community.

overview of infrastructure projects

The Letšeng operation has completed a number of infrastructure projects during previous years, including the construction of an eco-tourism lodge called Maloraneng Lodge (www.chaletsinthesky.co.ls), the Mapoka camp site, pedestrian foot bridge and the restoration of 28 km of the A1 highway which connects the estimated 98 000 residents of the Mokhotlong district to the remainder of Lesotho. A major upgrade and continued maintenance of this road has been ongoing since 2010. This route also serves as the main access route to the mine. Due to an expansion of the mine’s footprint, the only access route to the Khubelu valley in which the lodge and camp site are located, needed to be moved. Therefore, the mine constructed a new and improved 18 km access road to this valley, open to both the mining staff and general public, in 2011.

As part of the operation’s three year CSI strategy, the formalisation of infrastructure in the Khaphamali/Phuthalichaba village was planned. The village is located on the mine’s boundary in the QaQa valley and was formally recognised as a settlement by the Government of Lesotho in 2010. Since that time, Letšeng facilitated the formation of a working committee comprising the relevant central level Ministries, Local Government, Department of Health and Rural Water Supply and other governmental role players and developed a cooperative strategy to provide ablution facilities and water supply to the estimated 290 residents of the village. At the end of 2011, 30 pit latrines had been constructed and a community water supply system was developed.

42 Gem DiAmonDS Sustainable Development Report 2011

overview of Small-medium enterprise projects

The flagship CSI project for the Letšeng operation is the Wool and Mohair project, which aims to upgrade the existing infrastructure of the subsistence wool and mohair industry in the Mokhotlong district. Over the full three year lifetime of the project, a total of 5 300 people could be directly benefitted by this project, resulting in a cumulative potential benefit to approximately 26 500 people. The extensive body of work that was planned for 2011 was successfully completed by year end. This entailed the delivery of the following training programmes:

• General farmers training was delivered to 16 trainers (based on the ‘train the trainer’ basis) who rolled the training out to a further 1 118 farmers;

• 26 Animal Health Workers were successfully trained, including technical training as well as entrepreneurial and business management skills;

• Wool Recorders and Classers from each of the 16 woolsheds in Mokhotlong were successfully trained in cooperation with the Ministry of Agriculture and Food Security, and

• 16 Wool Shearers (one from each of the Mokhotlong woolsheds) successfully completed skills training in the best wool shearing techniques, thereby improving the value of the wool. This theoretical and practical experience training was presented by the Wool and Mohair Brokers of South Africa.

The construction of the new Thabang woolshed outside Mokhotlong, was completed in mid 2011 and the first shearing commenced in September 2011. The construction of the Mapholaneng woolshed was completed in late 2011. The two remaining woolsheds identified in the project planning process will be completed in 2012 and 2013 respectively.

GROW (Non-governmental organisation partner) and Letšeng held meetings with

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First community inspection of the Molaroneng woolshed near Mokhotlong

Pae-la-Ithlatsoa community council earlier in 2011 to outline the methodology and selection criteria of the beneficiaries of the Livelihoods and Food Security project, where after public consultation took place.

2011 to teach the children the correct ways of designing and constructing hotbeds. Crops such as kale, swiss-chard and mustard were sown in the hotbeds as part of the demonstrations.

In early 2011, a two day vegetable production workshop was held which was attended by 50 farmers from four villages within Pae-Lae-Ithlatsoa community council. The purpose of the workshop was to teach farmers to design and construct informal greenhouse type structures using local materials, known as hotbeds, as well as teaching the correct sowing methods of crops into the hotbeds. The implementation of these skills and the construction of the hotbeds has resulted in ~180 children from 60 households having access to fresh vegetables. At the end of 2011, 80% (48 households) were already consuming vegetables from their hotbeds.

A pre-sowing workshop was held in August 2011 for 48 farmers identified from Khubelu area – six farmers from each of the eight villages within the valley. The farmers received training on spring sowing and about the value of and methods to conduct on-farm research trials.

Further training was held for 58 households, including 7 OVC households, where kwekwe (dual purpose) chicken production skill and techniques were imparted to the community members.

During late 2011, GROW assisted the Pae-la-Itlhatsoa community to establish six associations, comprising 41 participants, to enable vegetable and potato production for purposes of income generation.

Twelve households of Orphaned and Vulnerable Children (OVCs) were visited in

Gem DiAmonDS Sustainable Development Report 2011 43

dElivEring on our commitmEnts – WatEr in tHE cEntral KalaHari gamE rEsErvE

for the first time in nine years, water is being pumped from a borehole in mothomelo for the san bushmen people of the central Kalahari game reserve (cKgr). gem Diamonds, in collaboration with the nongovernmental organisation vox united, completed the drilling of boreholes in the villages of mothomelo, molapo and metsiamanong. Due to the extremely high salinity of groundwater in these areas, only one borehole in mothomelo is fit for human consumption and as such, this borehole was equipped with a solar pump and a storage tank in 2011. Desalination technologies are currently being investigated to enable a sustainable water supply in other villages in the cKgr. once the

boreholes and desalination units are operational, gem Diamonds botswana will assist the cKgr residents with the implementation of a sustainable maintenance programme and the infrastructure will be transferred to the respective villages’ community trusts.

we are pleased to have been able to further strengthen our trust relationship with our project affected communities through delivery of this project in collaboration with vox united. the project however, also has strategic value to decentralise the availability of water, thereby mitigating the potential for product induced in-migration to the gope area – which would have far reaching consequences

for these villagers. the mine continues to supply community members of the gope village with water from the operation itself. the borehole drilling programme is a part of gem Diamonds botswana’s ongoing corporate social responsibility and sustainability programme, which is aimed at the development of a lasting, positive legacy through regular, sustained and participative communication and collaboration. the programme will also benefit the local ecosystem as it will provide multiple sources of water at the various settlements in the cKgr.

Equipping the Mothomelo borehole and storage system.

overview of donations

The contribution of donations to worthy causes continues to be carefully considered at all Gem Diamonds’ operations, in order to ensure that funds reach the intended beneficiaries and that the causes align with our corporate philosophies.

After several years of being the sole sponsor of the Lesotho High Altitude Summer Marathon, Letšeng commenced a process to transfer the marathon to the Mokhotlong community, in order to ensure the sustainability of this annual event. This transfer of skills is scheduled to take place over three years, with continued, albeit reducing support from Letšeng during that period. The 2011 event proved to be another great success, with ~950 participants in the marathon.

Letšeng also contributed to the inaugural Kings Cup golf tournament held in Maseru. All profits from the event are donated to His and Her Majesties Educational Trust.

Ellendale continues to focus donations on educational and cultural causes within the project affected communities of the Western Kimberleys.

Stakeholder communication and engagement

In Lesotho, all land in the country is regarded to be communal land. At Ellendale, our operation is located on traditional land of the Bunuba People, while at Ghaghoo the mine is located on the ancestral land of the San Bushmen people. We continue to forge a strong relationship with the indigenous and tribal communities on whose ancestral land our operations are located. We ensure that we manage our operations in a manner that respects local cultures.

Each of our operations have structures in place to facilitate open, transparent and ongoing consultation and interaction with relevant stakeholders.

In 2011, Letšeng established a quarterly Community Forum that takes place in Mokhotlong. The community is represented at different levels, ranging from community councils, village and tribal chiefs, members of the business community, the office of the District Administration and representatives from relevant government departments. A variety of topics are addressed at the meetings, followed by an open question and answer session.

Ellendale continues to regularly engage with stakeholders via a number of mechanisms.

Of significance in 2011, was the extensive stakeholder participation in the operation’s mine closure planning process, the Community Investment audit and development of the operational CSI plan. In addition, several of the community elected Bunuba Elders assisted Ellendale in the development of the Cultural Awareness training material that was presented by the Elders at the operation. This training proved invaluable to our employees in bettering their understanding of the unique environment, spiritual importance, history and culture of the area in which the mine is located. This training will continue on an annual basis for all Ellendale employees.

Ghaghoo continue to utilise the traditional Kgotla system for general consultation processes, while the Community Liaison Officer continually engages with relevant community members and forums on specific matters.

Each operation continues to assess the effectiveness of its engagement plans and will continue to expand and improve these forums.

No incidents of violation of the rights of our Indigenous neighbours were recorded in 2011. We continue to foster good relationships with our project affected communities, and continually communicate with community representatives on material aspects of our operations.

Only one significant stakeholder incident occurred in 2011, when members of the extended family of the traditional residents of the Gope settlement wanted unlimited access to the mine site. They submitted a written complaint to the Site Manager. It was explained to the community members that this would lead to compromised safety of themselves and members of our workforce.

Displacement and resettlement

Since the formation of Gem Diamonds in 2006, there has never been a requirement to relocate and/or resettle any of our project affected communities. We believe that no such actions will be required at any of our current operations.

Our closest communities comprises two San-Bushmen families who reside approximately 3 kilometres from the mine fence of the Ghaghoo mine. We continue to maintain excellent relationships with the Gope community and remain in continuous contact regarding material matters such

as expansion of the mine’s footprint, medical assistance and water provision. Until a permanent community water supply borehole is finalised for this community, the mine continues to provide potable water to the members of these two families. Apart from the significant benefit of having a constant source of potable water available, there are currently no material impacts that the Ghaghoo operation has on these two families.

During the completion of the Social and Environmental Impact Assessment (2008), it was determined that the finite carrying capacity of the land surrounding the Ghaghoo project would result in negative impacts on the traditional residents of the Gope settlement, should significant project induced in-migration occur during the construction and operation of the mine. A draft agreement regarding the procedures to be followed in case of the arrival of non-traditional occupiers of this land was completed in 2011. This agreement between the residents of the Gope settlement and Gem Diamonds Botswana is expected to be concluded in early 2012 in order to protect their traditional way of life and livelihood resources.

Addressing corruption, bribery and ethics

We have had zero cases brought against us in respect of bribery, corruption, anticompetitive behaviour, anti-trust and/or monopoly practices. Risk levels in this regard are regularly reviewed as part of the Group’s corporate risk register and managed collectively across the operations. Gem Diamonds has a zero tolerance policy pertaining to these matters and as such have implemented relevant procedures to deal with any such incidents should they occur. An anonymous whistle blowing line is in place and all employees are made aware of this facility upon commencement of employment.

In preparation for the implementation of the United Kingdom Bribery Act, all Gem Diamonds operations have been analysed in respect of its risk exposure to these aforementioned elements. During 2011, a total of 234 employees have undergone training in respect to host country legislation and operational policies and procedures related to these aspects. An external international consultancy has been contracted by Gem Diamonds Limited, to ensure the full implementation of the United Kingdom Bribery Act at each operating subsidiary during the course of 2012.

Gem DiAmonDS Sustainable Development Report 2011 45

proDuct IntegrIty

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Why iT mATTeRS

In 2010, gem Diamonds expanded its product offering beyond production of rough diamonds through the strategic formation of the gem Diamonds marketing division and the implementation of the ’smart’ sale methodology. this has resulted in an improved rough sales and marketing offering to our clients, where we now also cut and polish a select number of large, high value natural diamonds to attract margins beyond mine gate.

product integrity in all its components is of extreme importance in order to maximise trust in our conduct and practices.

Diamond hand sorting - Letšeng recovery plant.

key AchievemenTS

• 100% of our diamonds produced and sold by us since our company’s inception, have been Kimberley Process certified

• Zero cases brought against us in respect of bribery, corruption, anti-competitive behaviour, anti-trust and/or monopoly practices

key peRfoRmAnce

Zero bribery, corruption, anti-competitive behaviour cases 2010: Zero

100% Diamonds produced and sold are certified under kimberley process 2010: 100%

• Continue to record zero cases of non-compliance with government regulations and voluntary codes concerning product and service information and labelling

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----- Start of picture text -----

TARGeT hoW We peRfoRmeD
ASpecT / inDicAToR WhAT We plAn To Do nexT yeAR
AchieveD ThiS yeAR
continue to improve our product security and
operations successfully
continue to improve our product security and theft prevention practices and successfully
◊ completed relevant
theft prevention practices. complete all capital projects in this respect
projects
scheduled for 2012.
100% of diamonds
continue to achieve full Kimberley process continue to achieve full Kimberley process
◊ produced were Kimberley
certification of 100% of our products globally. certification of 100% of our products globally.
process certified
continue to achieve zero incidents of non- continue to achieve zero incidents of non-
compliance in respect of product and service compliance in respect of product and service
◊ Zero incidents recorded
information and labelling, anti-competitive information and labelling, anti-competitive
behaviour, and anti-trust & monopoly practices. behaviour, and anti-trust & monopoly practices.
continue the development of the gem
Diamonds participation downstream in the
continue the development of the gem Diamonds diamond pipeline, moving us closer to the
participation downstream in the diamond ◊ achieved relevant targets private buyer and retail client pool, thereby
pipeline. deriving maximum return on investment –
economically, socially and environmentally –
for all stakeholders.
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46 Gem DiAmonDS Sustainable Development Report 2011

our approach In actIon

crEating valuE by Expanding our marKEt footprint and prEsEncE

In order to capture additional margins beyond the extraction phase, gem Diamonds established the gem Diamonds marketing division in 2010. this has enabled us to enter the cutting and polishing market sector as well as exercise more control over the sale of our rough diamonds through our own ’smart’ marketing platform.

The Gope tree at Ghaghoo.

this sales and marketing platform allows us to uplift prices on our rough product through the use of tenders and auctions, while we are able to extract exceptional goods for own or partnered cutting and polishing. although we set fair market reserves for our products, prices are driven by market demand and sentiment and a long and consistent history of client satisfaction. In order to ensure fair trade and competition, our clients know that their bids are confidential, our

platforms are transparent and the highest bidder wins. this level of confidence and buyer illusion is rare in the diamond industry and further enhances our good standing.

In keeping with our business process and exceptional products, gem Diamonds focuses on the optimisation of benefits to all stakeholders. 100% of the sale price (net of marketing costs) of all tender and auction goods goes directly back to the mines themselves.

Gem DiAmonDS sustainable Development report 2011 47

proDuct IntegrIty contInueD

WhAT ARe We DoinG?

Reputation and trust

Maintaining product and reputational integrity has a range of commercial and ethical benefits to our business. We are listed on the London Stock Exchange, which requires that internationally recognised standards are strictly adhered to in all aspects of our operations.

Our diamonds are sold to the best diamantaires in the world, on an invitation basis only. This is done primarily to ensure that our stones reach the market only through the most reputable jewellers in the world. Each client is vetted, ensuring our client base consists of only companies with a strong reputation in adhering to all the standards and requirements of our internal anti-money laundering protocol. For example, the agreement between our Ellendale operation and the world renowned Tiffany & Co. has a contractual obligation which binds both parties to ensuring adherence to the highest corporate governance and ethical standards.

Trust is primarily built with our clients through continuous and transparent communication. Although the diamond industry traditionally has a reputation for low levels of transparency, our client base utilises our sales and marketing platform because of our reputation and high level of security and confidentiality offered by this platform.

Diamond certification

Gem Diamonds rigorously enforces all provisions of the Kimberley Process (www. kimberleyprocess.com) across all operations. The Kimberley Process certification scheme is a diamond industry specific standard and certification process that aims to eliminate the entry of non-certified goods into the diamond pipeline, thereby eliminating the possibility of trading in diamonds that fund conflict against legitimate governments. It is a joint effort between governments, industry and civil society.

All our operations undergo the independent annual audit by the Kimberly Process team. Since the formation of Gem Diamonds Limited, all diamonds produced, irrespective of the host country in which we operate and or operated, have been Kimberley Process certified. All our diamonds, rough or polished, are exported with original Kimberley Process certificates.

The Kimberley Process has experienced challenges during 2011 which have been well documented in the international media. Despite these challenges, Gem Diamonds remains fully committed and compliant to the Kimberley Process. In keeping with our inherent business philosophy of continuous improvement, Gem Diamonds is currently assessing the internal and external value from undergoing registration with the Responsible Jewellery Council (www. responsiblejewellery.com). Initial assessments have shown that Gem Diamonds already adhere to the vast majority of standards contained in the Council’s Code of Practice and therefore, this registration and implementation of the Code is regarded as a natural and logical step for the Group. The process is expected to be completed during the course of early 2012.

Throughout the Gem Diamonds history, we have had zero cases of non-compliance with regulations and voluntary codes concerning product labelling.

Furthermore, during the course of 2011, zero financial contributions were made to any political parties, politicians and/or related institutions at any of the Gem Diamonds operations. Maintaining political impartiality remains a key priority for Gem Diamonds.

customer satisfaction

Gem Diamonds only produces and markets natural diamonds to its clients – either in rough or as polished stones. Although the quality of our diamonds are exceptional, natural flaws and inclusions are part and parcel of the makeup of natural stones. Gem Diamonds provide no warranties in respect of its products, but all goods in each parcel are available for detailed inspection by the clients prior to the tender, auction and/or direct sale processes. We are renowned in the industry for the high level of integrity and transparency of our sales and marketing process.

As a result of the Gem Diamonds marketing division having being recently formed, no formal customer satisfaction surveys have yet been undertaken. However, consistent and continuous interaction with our clients provides us with personalised feedback which subsequently allows us to respond to their requirements, suggestions and recommendations. A survey will be conducted towards the end of 2012.

A major part of customer satisfaction in the diamond industry, is client confidentiality. Our client list is known only by a handful of our sales and marketing team members and the winning bidders of tenders and auctions are regarded as highly confidential. This data is not divulged to any external party under any circumstances.

Security and theft prevention

Given the extremely high value of our diamonds, product security remains imperative for the Gem Diamonds Group. Specialists and insurers are regularly engaged to assess the ongoing status of our best practice systems and solutions.

Each operation assesses its own risk profile with regard to product security and theft prevention. In order to ensure ongoing product security, several changes have been implemented during the course of 2011, while refinement remains ongoing.

Transportation of our diamonds is undertaken by leading experts. Any exchange of diamonds is overseen by highly experienced assessors to ensure that the shipments contain the product that was included in the cases at the mine. This also ensures that we adhere to the provisions of the Kimberley Process.

Detailed diamond handling procedures are strictly adhered to, while international best practice and state of the art security and surveillance systems ensures the ongoing security of the products, our employees and clients.

All our diamonds are appropriately insured.

48 Gem DiAmonDS Sustainable Development Report 2011

grI content InDex

Gem Diamonds has made a long-term commitment to full (i.e. application Level A) GRI disclosure by the end 2014, including the Mining and Metals Sector Supplement (MMS). As at 31st December 2011 we fully reported against 60% and partially against 14% of GRI G3 performance indicators. We have chosen not to report against G3.1 requirements this year since we did not have sufficient time to update our data collection systems for the current reporting cycle. A full GRI content index is presented below.

performance indicators

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grI Indicator grI Indicator
assessment reference assessment reference
reference description reference description
economic environment
Direct economic value value added raw material
ec1 generated and full statement en1 materials used by full consumption
distributed (page 39) weight or volume (page 27)
financial implications water
and other risks and consumption and
ec2 opportunities for the organisation’s not reported en2 percentage of materials used that are full conservation (page 26)
activities due to recycled input raw material
materials
climate change consumption
(page 27)
coverage of the remuneration
ec3 organisation’s defined benefit plan full and benefits en3 Direct energy consumption by full total energy consumption
(page 19)
obligations primary energy source (page 26)
significant financial creating Indirect energy total energy
ec4 assistance received full economic value en4 consumption by full consumption
from government (page 38) primary source (page 26)
range of ratios of energy saved due to energy
standard entry level en5 conservation and full consumption and
wage by gender remuneration efficiency conservation
ec5 compared to local full and benefits improvements (page 26)
minimum wage at (page 19)
significant locations of Initiatives to provide
operation energy-efficient or
renewable energy
energy
policy, practices, and based products and
proportion of creating en6 services, and full consumption and conservation
ec6 spending on full economic value reductions in energy (page 26)
locally-based requirements as a
suppliers at significant (page 38) result of these
locations of operation initiatives
procedures for local energy
hiring and proportion consumption and
of senior conservation
creating Initiatives to reduce
ec7 management hired from the local partial economic value en7 indirect energy full (page 26)
(page 38) consumption and
community at reductions achieved reducing our
locations of significant energy footprint
operation (page 25)
Development and
impact of total water KpI: water
infrastructure en8 full consumption by
investments and overview of withdrawal by source source (page 27)
ec8 services provided primarily for public full infrastructure water sources water
benefit through projects (page 42) en9 significantly affected full consumption and
commercial, in-kind, by withdrawal of conservation
or pro bono water (page 26)
engagement water
percentage and total
understanding and en10 volume of water partial consumption and
describing significant recycled and reused conservation
ec9 indirect economic not reported (page 26)
impacts, including the location and size of
extent of impacts land owned, leased,
managed in, or
en11 adjacent to, protected full biodiversity
areas and areas of (page 31)
high biodiversity
value outside
protected areas
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Gem DiAmonDS Sustainable Development Report 2011 49

performance indicators

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----- Start of picture text -----

grI Indicator grI Indicator
assessment reference assessment reference
reference description reference description
environment continued environment continued
Description of total water discharge effluents and
significant impacts of en21 by quality and full pollution
activities, products, and services on effluents and destination (page 31)
en12 biodiversity in protected areas and areas of high biodiversity value full (page 33)(page 31)biodiversity pollution en22 total weight of waste by type and disposal method full solid waste generation by disposal routes (page 32)
outside protected total amounts of
areas overburden, rock, mineral waste
location and size mm3 tailings and sludges full generated
amount of land of land owned or and their associated (page 32)
(owned or leased, and leased which has risks
managed for been disturbed
mm1 production activities full total number and environmental
or extractive use) (page 31) en23 volume of significant full incidents
rehabilitation and
disturbed or spills (page 30)
restoration
rehabilitated
(page 30) weight of transported,
location and size imported, exported, waste
or treated waste
of land owned or en24 deemed hazardous full management
leased which has under the terms of the (page 32)
en13 habitats protected or partial been disturbed basel convention
restored (page 31)
rehabilitation and Identity, size,
restoration protected status, and
(page 30) biodiversity value of
strategies, current water bodies and related habitats effluents and
en14 actions, and future plans for managing full biodiversity en25 significantly affected full pollution (page 31)
(page 33) by the reporting
impacts on organisation’s
biodiversity
discharges of water
the number and and runoff
percentage of total raw material
sites identified as consumption
requiring biodiversity Initiatives to mitigate
mm2 management plans according to stated full (page 33)biodiversity en26 environmental impacts of products full (page 27)water consumption and
criteria, and the and services, and conversation
number (percentage) extent of impact
(page 26)
of those sites with mitigation ghg emissions
plans in place
(page 26)
number of Iucn red
percentage of
list species and
products sold and
national conservation
species on the en27 their packaging not reported
en15 list species with partial Iucn red Data list materials that are
habitats in areas
affected by (page 33) reclaimed by category
operations, by level of monetary value of
extinction risk significant fines and
total number of
total direct and environmental
en16 indirect greenhouse gas emissions by full emissions (page 26)total ghg en28 non-monetary sanctions for noncompliance with full incidents (page 30)
weight environmental laws
other relevant indirect and regulations
en17 greenhouse gas not reported significant
emissions by weight environmental
Initiatives to reduce impacts of
en18 greenhouse gas emissions and full (page 26)ghg emissions transporting products and other goods and
reductions achieved en29 materials used for the not reported
organisation’s
emissions of operations, and
en19 ozone-depleting not reported transporting
substances by weight members of the
workforce
no, so, and other
en20 significant air not reported total environmental minimising our
emissions by type and environmental
weight en30 protection partial impacts: what we
expenditures and
are doing?
investments by type
(page 30)
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50 Gem DiAmonDS Sustainable Development Report 2011

performance indicators

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----- Start of picture text -----

grI Indicator grI Indicator
assessment reference assessment reference
reference description reference description
labour practices and decent work labour practices and decent work continued
total workforce by programmes for skills
employees by
la1 employment type, full employment type management and
employment contract lifelong learning that
(page 18)
and region la11 support the continued not reported
employability of
total number and rate employees and assist
of new employee hires them in managing
la2 and employee not reported career endings
turnover by age
group, gender, and percentage of career and
region employees receiving performance
la12 regular performance full review
benefits provided to and career completion
full-time employees development reviews (page 19)
that are not provided type of benefit by
la3 to temporary or full host country composition of
part-time employees, (page 19) governance bodies
by significant and breakdown of
group-wide
locations of operation employees per
la13 category according to full employee
percentage of gender, age group, diversity statistics
la4 employees covered by full labour relations minority group (page 20)
collective bargaining (page 20) members, and other
agreements indicators of diversity
minimum notice human rights
period(s) regarding
la5 operational changes, partial labour relations percentage and total
including whether it is (page 20) number of significant
specified in collective investment
agreements agreements and
contracts that include
number of strikes and hr1 clauses incorporating not reported
mm4 lock-outs exceeding full labour relations human rights
one week’s duration, (page 20) concerns, or that have
by country undergone human
percentage of total rights screening
workforce percentage of
represented in formal significant suppliers,
joint management– contractors and other
la6 worker health and safety committees partial labour relations (page 20) hr2 business partners that have undergone not reported
that help monitor and human rights
advise on screening, and actions
occupational health taken
and safety
programmes total hours of
employee training on
rates of injury, policies and
occupational diseases, Incident reporting procedures
la7 lost days and absenteeism, and partial (page 12)occupational hr3 concerning aspects of human rights that are full human rights (page 20)
number of work diseases (page 13) relevant to operations,
related fatalities by including the
region percentage of
education, training, employees trained
counselling, total number of
prevention, and incidents of
risk-control hr4 discrimination and full human rights
programmes in place environmental corrective actions (page 20)
la8 to assist workforce partial and serious taken
members, their diseases (page 14)
families, or
community members
regarding serious
diseases
health and safety
la9 topics covered in not reported
formal agreements (not applicable)
with trade unions
average hours of career
la10 training per year per full development
employee by
(page 18)
employee category
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Gem DiAmonDS Sustainable Development Report 2011 51

performance indicators

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----- Start of picture text -----

grI Indicator grI Indicator
assessment reference assessment reference
reference description reference description
human rights continued Society continued
operations identified the extent to which
in which the right to grievance
exercise freedom of mechanisms were
association and used to resolve stakeholder
hr5 collective bargaining may be violated or at full labour relations (page 20) mm7 disputes relating to land use, customary full communication and engagement
significant risk, and rights of local communities and (page 45)
actions taken to
Indigenous peoples,
support these rights and the outcomes
total number of
number (and
operations taking percentage) of
place in or adjacent to Indigenous company operating
Indigenous peoples’ peoples (page 21) sites where artisanal
territories, and stakeholder and small-scale creating
mm5 number and partial communication mm8 mining takes place on, full economic value
percentage of operations or sites and engagement or adjacent to the site; the associated risks (page 40)
where there are (page 45) and the actions taken
formal agreements to manage and
with Indigenous mitigate these risks
peoples’ communities sites where
operations and resettlement took
significant suppliers place, the number of Displacement and
identified as having mm9 households resettled full resettlement
hr6 significant risk for incidents of child full human rights (page 20) in each, and how their livelihoods were affected in the process (page 45)
labour, and measures
taken to contribute to number or
the effective abolition of child labour mm10 percentage of operations with full rehabilitation and restoration (page
30)
closure plans
operations and
significant suppliers percentage and total corruption,
identified as having so2 number of business full bribery and ethics
significant risk for units analysed for risks (page 45)
incidents of forced or related to corruption
hr7 compulsory labour, full human rights
and measures to (page 20) percentage of employees trained in
contribute to the elimination of all so3 organisation’s anti-corruption partial corruption, bribery and ethics
forms of forced or policies and (page 45)
compulsory labour procedures
percentage of security actions taken in corruption,
personnel trained in so4 response to incidents full bribery and ethics
the organisation’s of corruption (page 45)
hr8 policies or procedures partial human rights
concerning aspects of (page 20) public policy positions
human rights that are and participation in
relevant to operations so5 public policy not reported
development and
total number of lobbying
stakeholder
incidents of violations
hr9 involving rights of indigenous people and actions taken full communication and engagement (page 45) so6 total value of financial and in-kind contributions to full Diamond certification
political parties,
(page 38)
politicians, and related
Society
institutions by country
nature, scope and
effectiveness of any Indigenous peoples (page 21) total number of legal actions for
programmes and minimising our anticompetitive corruption,
practices that assess environmental so7 behaviour, anti-trust, full bribery and ethics
so1 and manage the partial impacts (page 28) and monopoly (page 45)
impacts of operations optimising practices and their
on communities, outcomes
community
including entering, operating and exiting benefit (page 36) monetary value of
significant fines and
number and total number of environmental
mm6 description of significant disputes relating to land use, full stakeholder communication so8 non-monetary sanctions for noncompliance with full (page 30)incidents
customary rights of and engagement laws and regulations
local communities and (page 45)
programmes and
Indigenous peoples mm11 progress relating to not reported
materials stewardship
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52 Gem DiAmonDS Sustainable Development Report 2011

performance indicators

profile disclosures

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----- Start of picture text -----

grI Indicator profile
assessment reference
reference description grI reference disclosure assessment reference
description
product responsibility
Strategy and Analysis
life cycle stages in
which health and statement from
chief executive
safety impacts of products and services 1.1 the most senior decision maker of full officer’s review
are assessed for the organisation (page 2)
pr1 improvement, and not reported
percentage of sustainable
significant products and services 1.2 Description of key impacts, risks, and full Development framework
categories subject to opportunities (page 9)
such procedures
total number of organisational profile
incidents of name of the
non-compliance with 2.1 full front cover
organisation
regulations and
pr2 voluntary codes concerning health and not reported 2.2 primary brands, products, and/or full what we do
safety impacts of services. (page 4)
products and services
during their life cycle, how we do it
by type of outcomes operational
2.3 structure of the full (page 4)
type of product and organisation where we do it
service information (page 5)
required by
procedures, and location of where we do it
pr3 percentage of not reported 2.4 organisation’s full (page 5)
significant products headquarters.
and services subject to
such information number of what we do
requirements 2.5 countries where full (page 4)
the organisation where we do it
total number of operates (page 5)
incidents of
non-compliance with nature of
pr4 regulations and voluntary codes full Diamond certification 2.6 ownership and legal form full what we do (page 4)
concerning product
and service (page 48) where we do it
information and 2.7 markets served full (page 5)
labelling, by type of
outcomes about gem
Diamonds
practices related to
customer satisfaction, customer scale of the (page 4 & 5)
pr5 including results of full satisfaction 2.8 reporting full Developing and
surveys measuring (page 48) organisation retaining our
customer satisfaction people (page 16)
2011 annual
programmes for report
adherence to laws,
standards, and significant
voluntary codes changes during
pr6 related to marketing communications, not reported 2.9 the reporting period regarding full where we do it (page 5)
including advertising, size, structure, or
promotion, and
ownership
sponsorship
awards received in
total number of no rewards
incidents of 2.10 the reporting not relevant received
non-compliance with period
regulations and
voluntary codes Report parameters
pr7 concerning marketing not reported
communications, 3.1 reporting period full about this report
including advertising, (inside front cover)
promotion, and Date of most
sponsorship by type of outcomes 3.2 recent previous full about this report (inside front cover)
report
total number of
substantiated 3.3 reporting cycle full about this report
pr8 complaints regarding breaches of customer not reported (inside front cover)
privacy and losses of contact point for
customer data questions
3.4 regarding the full back cover
monetary value of report or its
significant fines for contents
noncompliance with
pr9 laws and regulations not reported
concerning the
provision and use of
products and services
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Gem DiAmonDS Sustainable Development Report 2011 53

profile disclosures

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----- Start of picture text -----

profile profile
grI reference disclosure assessment reference grI reference disclosure assessment reference
description description
process for process for significant
3.5 defining report partial prioritising changes from about this report
content sustainability previous reporting (inside front cover)
issues (page 9) 3.11 periods in the full what we do
scope, boundary, (page 4 & 5)
about this report or measurement
3.6 boundary of the full (inside front cover) methods
report what we do
(page 4 & 5) table identifying
the location of the
limitations on the about this report 3.12 standard full grI content index
3.7 scope or boundary full (inside front cover)what we do Disclosures in the
of the report report
(page 4 & 5)
policy and current
Report parameters continued practice with
3.13 regard to seeking not reported
basis for reporting external assurance
on joint ventures,
for the report
subsidiaries,
3.8 leased facilities, full about this report (inside front cover) Governance, commitments, and engagement
outsourced
operations, and governance 2011 annual
other entities 4.1 structure of the full
report
organisation
Data
measurement Indicate whether
3.9 techniques and not reported the chair of the
the bases of 4.2 highest full 2011 annual
calculations governance body report
is also an executive
explanation of the officer
effect of any
re-statements of number and
3.10 information not reported gender of
provided in earlier members of the
reports highest 2011 annual
4.3 governance body full
that are report
independent and/
or non-executive
members
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54 Gem DiAmonDS Sustainable Development Report 2011

profile disclosures

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----- Start of picture text -----

profile profile
grI reference disclosure assessment reference grI reference disclosure assessment reference
description description
Governance, commitments, and engagement continued Governance, commitments, and engagement continued
mechanisms for explanation of
shareholders and whether and how
employees to the precautionary
4.4 provide full 2011 annual 4.11 approach or not reported
recommendations report principle is
or direction to the addressed by the
highest organisation
governance body
externally Data quality
linkage between developed (inside front cover)
compensation for economic, minimising our
members of the environmental, environmental
2011 annual
4.5 highest full report 4.12 and social charters, full impacts: what are
governance body, principles, or other we doing?
senior managers, initiatives to which (page 30)
and executives the organisation Diamond
subscribes or certification
processes in place endorses (page 48)
for the highest
4.6 governance body full 2011 annual memberships in
to ensure conflicts report associations (such
of interest are as industry
avoided associations) and/ labour relations
4.13 full
or national/ (page 20)
process for international
determining the advocacy
composition, organisations
qualifications, and 2011 annual
4.7 expertise of the full list of stakeholder stakeholder
members of the report 4.14 groups engaged partial communication
highest by the and engagement
governance body organisation (page 45)
and its committees
basis for
Internally identification and
developed 4.15 selection of not reported
statements of stakeholders with
mission or values, whom to engage
codes of conduct,
4.8 and principles full 2011 annual approaches to
relevant to report stakeholder
economic, engagement, stakeholder
environmental, 4.16 including partial communication
and social frequency of and engagement
performance engagement by (page 45)
type and by
procedures of the stakeholder group.
highest
governance body Key topics and
for overseeing the concerns that have stakeholder
4.9 organisation’s identification and full 2011 annual 4.17 been raised through partial communication and engagement
management of report stakeholder (page 45)
economic, engagement
environmental,
and social
performance
processes for
evaluating the
highest
governance body’s
own performance, 2011 annual
4.10 particularly with full
report
respect to
economic,
environmental,
and social
performance
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Gem DiAmonDS Sustainable Development Report 2011 55

hSSe Scorecard

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performance 2011
objectives & targets 2012 objectives &
aspect
2011 target achieved actual comparative trend targets
Safety achieve zero fatalities x 2 i achieve zero fatalities
achieve lost time Injury
frequency rate (ltIfr) of x 0.25 i achieve ltIfr of zero
zero
achieve a severity rate x 501 i achieve a sr of zero
(sr) of zero
achieve an all Injury
frequency rate (aIfr) ≤ ◊ 4.54 s achieve aIfr of ≤ 4.2
5.05
conduct pre-employment conduct pre-employment
medicals for 100% of x 100% - letšeng & ellendale i medicals for 100% of
65% - ghaghoo
employees employees
Develop and implement
both letšeng and continue to improve hIv/
an improved hIv/aids awareness, education and ◊ ghaghoo have i aids awareness and vct
appropriate hIv/aids year on year at affected
vct at affected and
programmes in place and relevant operations
relevant operations
achieve an external hsse
audit score of:
achieve an external hsse minimum 4 star Irca
ellendale achieved 4 star
audit score of 4 star Irca x rating (letseng &
letšeng achieved 3 star
rating ellendale) and
minimum 3 star rating
(ghaghoo).
environmental achieve zero major ◊ Zero p achieve zero major
environmental incidents environmental incidents
achieve no more than one achieve no more than one
significant environmental x 1 – ellendale 2 – letšeng i significant environmental
incident per operation incident per operation
Develop and implement at Develop and implement at
least one environmental ◊ 2 – ellendale6 – letšeng i least one environmental
optimisation initiative per optimisation initiative per
annum 2 – ghaghoo annum
maintain compliance with maintain compliance with
permitted land clearance ◊ 100% i permitted land clearance
authorisations at all times authorisations at all times
ensure full integration of full integration not yet ensure at least 90%
the rehabilitation and x achieved, but closure i adherence to integrated
mine plan plans are much improved rehabilitation plan
achieve a 10% year on year both ellendale and achieve a 10% year on year
reduction in hydrocarbon x letšeng exceed target, but i reduction in hydrocarbon
pollution incidents improved reporting pollution incidents
community achieve zero major ◊ Zero p achieve zero major
stakeholder complaints stakeholder complaints
achieve no more than one 1 – ghaghoo. achieve no more than one
significant stakeholder ◊ letšeng and ellendale, i significant stakeholder
complaint per operation zero complaint per operation
meet site specific meet site specific
employee localisation ◊ all targets met i employee localisation
targets. targets.
corporate Social x letšeng s external hsse audit score:
Responsibility / General existing operations to achieve external hsse minimum 4 star Irca letšeng & ellendale:
audit score of minimum 4 ◊ ellendale i ratingghaghoo: minimum 3 star
star Irca rating.
Irca rating
ensure that 100% of
ensure that 100% of operational staff
majority of staff undergoes annual
operational staff x completed re-inductions re-induction and that all
undergoes annual
re-induction at the operations operational employees
undergoes induction prior
to commencement of work
Develop full integration Develop full integration
global reporting Initiative global reporting Initiative
performance Indicators performance Indicators
and existing business x some shortfalls are still to be resolved i and existing business
processes, including processes, including
reporting in respect reporting in respect
thereof, by year end thereof, by year end
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56 Gem DiAmonDS Sustainable Development Report 2011

contact DetaIls anD aDvIsors

Gem Diamonds Limited Registered Office Coastal Building, 2nd Floor Wickham’s Cay II Road Town Tortola British Virgin Islands

Anneli Botha Group HSSE Manager

Gem Diamonds Technical Services Illovo Corner 24 Fricker Road Illovo Boulevard Johannesburg 2024 South Africa T:+27 11 560 9600 F:+27 11 560 9602

Gem DiAmonDS Sustainable Development Report 2011 57