Discussing our governance context

Having observed how boards conducts themselves over time, I believe that Gem Diamonds' approach is distinctive in that the leadership in the Company, across all levels, truly believes in the value of supporting sustainable initiatives.

Q: What is the relationship, in your view, between operational performance and sustainability performance?

A: As the Chairman of the HSSE committee, I have had the opportunity to be both on the ground at our operations and in the boardroom. And I believe that this affords me insight into both the operational intricacies and the big picture, making clear the fact that operational performance and sustainability performance are inextricably linked.

All our sustainability drivers, including safety, job creation, social investments, developing small and medium enterprises (SME), and local procurement, amongst others, are integral to securing and maintaining our social licence to operate. And this is fundamental to operational success.

However, a business must be viable in the first place to make these investments possible. The two aspects go hand in hand and cannot, truthfully, be separated. Which is why strong leadership and robust governance are necessary to successfully navigate the path between commercial success and social responsibility.

A: Having observed how boards conduct themselves over time, I believe that Gem Diamonds’ approach is distinctive in that the leadership in the Company, across all levels, truly believes in the value of supporting sustainable initiatives. This is not a compliance-driven approach, but rather a purpose-driven practice, the truth of which is evidenced in the Group’s track record of delivering value to all its stakeholders, which in turn has assisted the stability of the mining operation.

A: We recorded four lost time injuries (LTIs) at the beginning of the year. This was a concern for me personally and it indicated a need to refocus our efforts. I must, however, compliment management on the swift action plans executed, including a revised focus on safety, driven at senior levels, that included an emphasis on implementing appropriate policies and procedures, and intensifying training – which resulted in no further LTIs for the year.

Apart from the LTIs, however, we recorded a strong sustainability performance. I’m pleased to report that no major environmental incidents occurred – a good achievement for the team.

In the year ahead, the focus will be on upscaling our bioremediation project, which has proved viable in our pilot programme. The next step is to investigate the best way forward through research-informed choices as we look into the viability of modular plants. That is, one plant within each of the catchment areas or a large-scale plant with water piped to it from these areas and then channelled back. We expect the study to be finalised in the first quarter of 2019, and next steps will be determined based on these findings.

From a community perspective, the main focus areas were education, with additional classrooms being built for the community; and infrastructure and SME development, where the major project in 2018 was the Dairy project, which is operational and supplying milk to a number of customers. We also invested in the construction of a footbridge to assist the surrounding community with year-round access to vital services and markets.

In the year ahead, we will focus on initiating our 910 Community Project, which should commence in the first half of the year, as well as conducting a needs analysis that will inform our next flagship project.

In light of the recent tragedy in Brazil, this is a critical focus area for management and the Board. Recognising the risk that our dams could pose to both our communities and the downstream environment, we take a proactive approach to dam safety management, using international best practice as our benchmark. This includes the International Council of Mining and Metals (ICMM) governance framework for tailings storage facilities. During the year, internal and external inspections and audits were carried out and these audits are reviewed and discussed at the HSSE Committee.

Furthermore, in the unlikely event of a failure, we have put strategies in place to protect the downstream communities. These include an early-warning siren and communications system, as well as training and awareness programmes in order to ensure the emergency readiness of the communities that could be affected. These precautions are regularly tested and reported on.

A: During 2018, the Company implemented a number of initiatives aimed at improving efficiencies.

The vast majority of the value delivered to date in the BT process has been derived from initiatives around productivity improvement in the mining and process plants. Both the mining contract and plant processing contract were reviewed throughout the year, and improved productivities have been achieved. The availability of the mining fleet and the All this has resulted in additional carat recovery, and, therefore, grown the revenue for the Company.

In light of all the improvements made, it is pleasing to note that 2018 was a record year for the recovery of +100 carat diamonds, with a total of 15 recovered during the year, including the 910 Lesotho Legend.

It’s important to note that the progress made to date did not happen in isolation – the key to success is getting the buy-in of all parties concerned and working jointly towards our goals. I believe that every member of the team at Letšeng and at a Group-level has had a role to play in these positive strides.

There is still much work to be done, and the Business Transformation process will, therefore, remain a significant focus in 2019. However, with the buy-in of the full team, I am confident the value will be delivered.

A: I would like to extend my appreciation to Johnny Velloza for the work he did as COO and wish him well in his new endeavours. Johnny will, however, be remaining on the Gem Diamonds' Board as a non-Executive Director. I'd like to thank Gavin Beevers, who served as a non-Executive Director of Gem Diamonds for over 10 years, for agreeing to return as Technical Advisor until a suitable replacement for Johnny is found.

Lastly, I would like to express my sincere gratitude to the Group’s employees. They are on the front line, dealing with both operational and sustainability challenges on a daily basis – and yet show an unwavering commitment to excellence on every front. Thank you.

Mike Brown
Chairman of the HSSE Committee