REG-Petra Diamonds Ltd: Audited Full Year 2024 results

Petra DiamondsAnnouncement

24/09/2024 07:15

24 September 2024   LSE: PDL   

Petra Diamonds Limited

(“Petra or “the Company”)

Audited Full Year 2024 results

Enhancing resilience

Petra announces its audited Full Year 2024 results for the twelve months ended
30 June 2024 (FY 2024 or Year).

Richard Duffy, Chief Executive Officer of Petra, commented:

“In FY 2024, Petra demonstrated its agility in responding to a weaker
pricing environment by building greater business resilience. Actions taken
during the Year reduced planned cash expenditure by US$75 million through
deferring capital expansion programmes and sustainably reducing our cost base.

We have transitioned Finsch from a 2.8Mtpa to a 2.2Mtpa operation with greater
emphasis on planning and maintenance. With our two South African mines
starting to access fresh ore from newly developed project areas and Willamson
at full production, we remain confident in meeting our FY 2025 guidance. With
a smoothed capital profile and US$44 million 1  (#_ftn1) reduction in annual
operating costs going forward (US$30 million at our SA operations and US$14
million at Williamson), we are targeting free cashflow generation from FY
2025.

We acknowledge the difficult market conditions through FY 2024 and believe
that prices will stabilise through to the end of CY 2024 with some improvement
expected in CY 2025. Ongoing discipline by producers is expected to assist in
rebalancing inventory across the pipeline. We continue to see supportive
market fundamentals in the medium and longer term.

We are rolling out traceability technology for our South African operations
which will enable the tracing of our +0.5ct gem-quality diamonds from
mine-to-finger. This will provide consumers with assurance and verification
around provenance and origin along with information on our sustainability
credentials (including social and community projects) which are supported
through purchases of our diamonds. We believe traceability technologies will
further differentiate natural diamonds through highlighting their rarity,
uniqueness and benefits to stakeholders.

As part of the focus on addressing our capital structure, we initiated the
repurchase of a portion of our 2026 2L Notes through an Open Market Repurchase
(OMR) programme. To date, we have repurchased and cancelled US$12 million 2L
Notes at a cost of US$9million, resulting in future interest savings of some
US$1.2 million annually.”
* FY 2024 revenue amounted to US$367 million (FY 2023: US$325 million)
including revenue from profit share agreements of US$1 million (FY 2023: US$1
million)
* The average realised price in FY 2024 was US$116/ct, down 17% from US$139/ct
in FY 2023, largely due to a 12.4% decline in like-for-like prices, with the
balance attributed to product mix movements
* Total on-mine cash costs in FY 2024 increased 11% compared to FY 2023
largely due to the ramp-up at Williamson and cost inflation. A build-up of
diamond inventory in FY 2023 of US$34 million and a subsequent release in FY
2024 of US$37 million contributed to adjusted mining and processing costs
increasing from US$202 million in FY 2023 to US$296 million
* Adjusted EBITDA, being profit from mining activities less adjusted corporate
overhead, reduced to US$66 million (FY 2023: US$113 million), representing an
adjusted EBITDA margin of 18% (FY 2023: 35%) driven by reduced rough diamond
prices
* Adjusted net loss of US$46 million compared to US$2million for FY 2023
* Adjusted loss per share of USc21compared to a USc3 loss per share for FY
2023
* Operational free cash outflow for the Year improved from US$65 million in FY
2023 to US$17 million in FY 2024, reflecting an increase in cash from
operations of US$19 million and a reduction of US$33 million in total capital
expenditure following the deferral of certain capital projects during FY 2024
in response to the depressed diamond market
* Consolidated net debt decreased from US$212 million at 31 December 2023 to
US$201 million (30 June 2023: US$177 million)
* As previously announced, during the Year the Group increased its commitments
under the ZAR1 billion (c. US$54 million) revolving credit facility (RCF) with
Absa Bank to ZAR1.75 billion (c. US$96 million), providing an additional c.
US$41 million of liquidity headroom 
* In August and September 2024, the Group drew down ZAR855 million (c. US$47
million) from the RCF as a result of the deferral of South African goods from
Tender 1 FY 2025. We expect to repay these amounts following the closing of
the upcoming tender in October 2024
* During the Year, the Group repurchased US$5 million of 2026 2L Notes in an
OMR programme for cash consideration of US$4 million. Post period-end, a
further US$7 million were repurchased for a cash consideration of US$5 million
This announcement contains selected information from the Company’s full set
of Financial Statements for FY 2024.  For the Company’s full set of
Financial Statements for FY 2024, please refer to pages 115 to 166 of the
Company’s Annual Report and Financial Statements for FY 2024.  The
Company’s Annual Report and Financial Statements for FY 2024 is available
here: https://www.petradiamonds.com/investors/results-reports-presentations/

 US$m unless stated otherwise                  FY 2024      FY 2023    Variance  
 Rough diamonds sold (carats)                  3,158,780    2,329,817  +36%      
 Revenue                                       367          325        +13%      
 Average realised price per carat (US$/carat)  116          139        -17%      
 Adjusted mining and processing costs          296          202        +47%      
 Adjusted EBITDA(1)                            66           113        -42%      
 Adjusted EBITDA margin (%)(1)                 18%          35%        -49%      
 Adjusted (loss) / profit before tax(1)        (59)         8          -838%     
 Adjusted loss after tax(1)                    (46)         (2)        -2200%    
 Net loss after tax                            (107)        (102)      -5%       
 Basic loss per share (USc)                    (43)         (38)       -13%      
 Adjusted loss per share(1) (USc)              (21)         (3)        -600%     
 Capital expenditure                           84           117        -28%      
 Operational free cashflow(1)                  (17)         (65)       +74%      
 Consolidated net debt(1)                      201          177        +14%      
 Unrestricted cash                             20           44         -55%      
 Consolidated net debt : Adjusted EBITDA(1)    3.0x         1.6x       +88%      

Note 1: For all non-GAAP measures refer to the Summary of Results table within
the Financial Results section of the FY 2024 Annual Report

Note 2: During FY 2023, Koffiefontein was placed on care and maintenance
activities in the run-up to a responsible closure. Koffiefontein is still
classified as a discontinued operation in terms of IFRS 5.

Adjusted profit contribution per mine

 US$ millions                             FY 2024                                     FY 2023                                     
                                          Cullinan Mine  Finsch    Williamson  Total  Cullinan Mine  Finsch    Williamson  Total  
 Revenue                                  190            120       57          367    183            93        49          325    
 Adjusted mining and processing costs(2)  (123)          (109)     (64)        (296)  (82)           (65)      (55)        (202)  
 Other direct income                      1              1         —           2      —              —         —           —      
 Adjusted profit from mining activities   68             12        (7)         73     101            28        (6)         123    
 Adjusted profit margin                   36%            10%       (12%)       20%    55%            30%       (12%)       38%    
 Adjusted Group G&A                       Not allocated per mine               (7)    Not allocated per mine               (10)   
 Adjusted EBITDA(1)                                      66        113         

Note 1: For all non-GAAP measures refer to the Summary of Results table within
the Financial Results section of the FY 2024 Annual Report

Note 2: Adjusted mining and processing costs include certain technical and
support activities which are conducted on a centralised basis; these include
sales & marketing, human resources, finance & supply chain, technical, and
other functions. For purposes of above, these costs have been allocated 60% to
Cullinan Mine and 40% to Finsch. For more information, refer to operational
cost reconciliation available on the analyst guidance pages on our website.

Adjusted profit from mining activities decreased to US$73 million (FY 2023:
US$123 million), impacted by the increase in adjusted mining and processing
costs (primarily diamond inventory movements) and partly offset by higher
revenues. Cullinan Mine and Finsch contributed positively to adjusted profit
from mining activities. Williamson posted a gross loss for FY 2024 due to the
ramp-up to full production during the Year.

Capital expenditure breakdown

 US$ millions      FY 2024                                           FY 2023                                           
                   CullinanMine  Finsch  Williamson  Central  Total  CullinanMine  Finsch  Williamson  Central  Total  
 Extension         36            19      —           —        55     41            31      —           —        72     
 Stay in Business  12            6       10          1        29     12            12      19          2        45     
 Total             48            25      10          1        84     53            43      19          2        117    

Total capital expenditure reduced to US$84 million from US$117 million in the
prior year following the planned deferral of capital projects and a
sustainable rebase of future capital expenditure of c. US$100m per annum for
our South African operations. Through these actions, the Group expects to be
able to generate free cashflow should a weaker-for-longer diamond market
scenario persist.

Dividends

In line with our dividend policy, no dividends are proposed for FY 2024 and
the Board will review this again in FY 2025.

Market outlook

Some stabilisation in diamond prices is expected in the last quarter of CY
2024 on the back of seasonally higher demand. We expect diamond prices to show
a modest recovery in the new year with market fundamentals providing pricing
support in the medium and longer-term.

Set out below are the Group’s current diamond pricing assumptions for each
of its mines for FY 2025.

 US$ per carat  FY 2025  
 Cullinan Mine  125-135  
 Finsch         98-105   
 Williamson     200-225  

Future diamond prices are influenced by a range of factors outside of the
Group’s control and so these assumptions are internal estimates only and no
reliance should be placed on them. The Company’s pricing assumptions will be
considered on an ongoing basis and may be updated by the Company from time to
time.

Key operational guidance maintained and is available on Petra’s website at:
https://www.petradiamonds.com/investors/analysts/analyst-guidance/ 

PRESENTATION DETAILS

Webcast presentation for institutional investors and analysts at 09:30am BST
today

Petra’s CEO, Richard Duffy, and CFO designate, Johan Snyman, will host a
live virtual presentation including Q&A for institutional investors and
analysts at 09:30 BST today to discuss this operating update.

Participants are advised to join the call at least 15 minutes ahead of the
start. Link for live presentation via Teams:
https://events.teams.microsoft.com/event/874d33d6-6144-4cc1-98f1-a49331f66132@3c08cd12-de9b-4814-9ea3-392066758217

Link for recording (available later in the day): 

https://www.petradiamonds.com/investors/results-reports/

Investor Meet Company webcast at 14.30pm BST today

Petra’s CEO, Richard Duffy, and CFO designate, Johan Snyman, will also
present these results live on the Investor Meet Company platform,
predominantly aimed at retail investors. To join:
https://www.investormeetcompany.com/petra-diamonds-limited/register-investor

FURTHER INFORMATION

Petra Diamonds, London                    +44 (0)784 192
0021

Patrick
Pittaway                                 
investorrelations@petradiamonds.com

Kelsey Traynor

ABOUT PETRA DIAMONDS

Petra Diamonds is a leading independent diamond mining group and a supplier of
gem quality rough diamonds to the international market. The Company’s
portfolio incorporates interests in three underground mines in South Africa
(Cullinan Mine, Finsch and Koffiefontein) and one open pit mine in Tanzania
(Williamson). The Koffiefontein mine is currently on care and maintenance in
preparation for a possible sale following the execution of a definitive sales
agreement as announced on 8 April 2024.

Petra's strategy is to focus on value rather than volume production by
optimising recoveries from its high-quality asset base in order to maximise
their efficiency and profitability. The Group has a significant resource base
which supports the potential for long-life operations.

Petra strives to conduct all operations according to the highest ethical
standards and only operates in countries which are members of the Kimberley
Process. The Company aims to generate tangible value for each of its
stakeholders, thereby contributing to the socio-economic development of its
host countries and supporting long-term sustainable operations to the benefit
of its employees, partners and communities.

Petra is quoted with a premium listing on the Main Market of the London Stock
Exchange under the ticker 'PDL'. The Company’s loan notes due in 2026 are
listed on the Irish Stock Exchange and admitted to trading on the Global
Exchange Market. For more information, visit www.petradiamonds.com.


 1  (#_ftnref1) Compared to previous guidance issued for FY 2025 in July 2023
as part of the Company’s FY 2024 – 2026 guidance

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