REG - Petra Diamonds Ltd - First tender of FY 2024 yields US$79.3m in sales

Petra DiamondsAnnouncement

25/08/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230825:nRSY4115Ka&default-theme=true

RNS Number : 4115K  Petra Diamonds Limited  25 August 2023

FOR IMMEDIATE RELEASE

 25 August 2023  LSE: PDL

 

Sales results for Tender 1 FY 2024

 

First tender of FY 2024 yields US$79.3 million in sales

 

Richard Duffy, Chief Executive Officer of Petra Diamonds (Petra), said:

 

"Petra's first tender of FY 2024 yielded US$79.3 million from 696.2kcts sold.
We saw very strong attendance at the Tender although demand was more muted
than we had expected in exiting the summer holiday period. Average prices for
both Cullinan Mine and Finsch benefited from an improved product mix, while
like-for-like 1  (#_ftn1) prices declined by 4.3% compared to our most recent
tender, Tender 5 of FY 2023, which closed in May 2023.

The expected seasonal improvement in demand was evident for higher quality
+10.8ct stones with solid prices realised, including US$82,630 per carat for a
20.9 ct yellow diamond from Cullinan Mine that sold for US$1.7m. This was
offset by slower demand for 2-10 carat size ranges with like-for-like prices
down by c. 14% compared to Tender 5. Demand in smaller categories remains
resilient, with like-for-like prices increasing between 1-2%.

Macro-economic uncertainties around prevailing high interest and inflation
rates have resulted in a more cautious approach from the mid-stream towards
holding inventory. Indications are that these rates have now peaked and will
start to decline, providing support to our view of improved demand in the
medium-term as a result of the structural supply deficit. Although demand for
lab grown goods increased, this was coupled with further price depreciation
that continues to substantially differentiate this market segment from our
unique and rare natural diamonds that provide enduring benefit in celebrating
life's most significant moments.

 

As we enter a seasonally stronger period which includes Diwali, Thanksgiving,
Christmas and the Chinese New Year, we remain optimistic that jewellery demand
will improve and provide some support to prices over the balance of the
calendar year."

 

Sales

Overall, 696,194 carats were sold for a total of US$79.3 million from Petra's
South African operations during Tender 1 of FY 2024. No Exceptional Stones(2)
were sold as part of Tender 1. This cycle included goods deferred for sale
following an earlier decision to defer the majority of Tender 6 in June 2023,
as well as the 75.9kcts of goods withdrawn from our May tender (Tender 5),
with prices for these goods remaining largely flat compared to the bids
received in May 2023.

 

No sales for either Koffiefontein or Williamson were recorded in this cycle.
Following the restart of operations at Williamson in July 2023, Petra is
planning a first sale of Williamson goods during September 2023.

 

Rough diamond sales results for the respective periods are set out below:

                                                Tender 1 FY24  Tender 5 FY23  Variance  Tender 1 FY23  FY 2023

                                                Aug-23         May-23         T1 FY24   Sep-22         12 months to

                                                                              vs                       30 June 2023

                                                                              T5 FY23
 Diamonds sold (carats)                         696,194        468,817        49%       520 011        2,339,675
 Sales (US$ million)                            79.3           42.1           88%       102.9          328.4
 Average price (US$/ct)                         114            90(1)          27%       198            140
 Revenue from Exceptional Stones (US$ million)  0.0            5.6            -100%     0.0            12.6

Note 1: As announced in May 2023, Petra estimated the overall realised price
for Tender 5 FY 2023 to be between US$105 and US$115 per carat including
withdrawn parcels, based on bids received and reserve prices for the withheld
parcels.

 

Mine by mine average prices for the respective periods are set out in the
table below:

 US$/carat                                                                                                                                         Tender 1  Tender 5 FY23(1)  Tender 1  FY 2023

                                                                                                                                                   FY24      May-23            FY23      12 months to

                                                                                                                                                   Aug-23                      Sep-22    30 June 2023
 Cullinan Mine(1)                                                                                                                                  113       99                212       139
 Finsch(                                                                    )                                                                      116       81                132       110
 Williamson(1)                                                                                                                                     n/a       n/a               383       452
 Koffiefontein                                                                                                                                     n/a       n/a               297       280

Note 1: Where applicable, prices for both Cullinan Mine and Williamson include
proceeds from the sale of Exceptional Stones.

Note 2: As announced in May 2023, Petra estimated the overall realised price
for Tender 5 FY2023, including withdrawn parcels, to be between US$110 and
US$115 per carat for Cullinan Mine, and between US$105 and US$110 per carat
for Finsch.

 

Like-for-like prices

Like-for-like rough diamond prices declined by 4.3% on Tender 5 FY 2023,
resulting from a 14% decrease in prices of 2 to 10.8 carat diamonds and a 1-2%
increase in diamonds smaller than 2ct.

 

Product mix

The balance of price movements is attributable to product mix, with both
Cullinan Mine and Finsch benefiting from improved overall quality compared to
Tender 5 FY2023, after normalising for the withdrawn parcels, partly offset by
the lack of Exceptional Stones in this period compared to US$5.6 million sold
as part of Tender 5 FY 2023. Tender 1 FY 2023, which closed in September 2022,
included an unusually high contribution of high-value stones at Cullinan Mine,
resulting in the average price of US$212 per carat for that tender, with the
overall average price of US$139 per carat for FY 2023.

 

 

For further information, please contact:

 

Petra Diamonds, London                 Telephone: +44 20 7494
8203

Patrick
Pittaway
investorrelations@petradiamonds.com
(mailto:investorrelations@petradiamonds.com)

Julia Stone

 

Camarco (Financial PR)

Gordon
Poole
Telephone: +44 20 3757 4980

Owen
Roberts
petradiamonds@camarco.co.uk (mailto:petradiamonds@camarco.co.uk)

Elfie Kent

 

 

About Petra Diamonds Limited

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
(Finsch, Cullinan Mine and Koffiefontein) and one open pit mine in Tanzania
(Williamson).

 

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) Like-for-like refers to the change in realised prices between
tenders and excludes revenue from all single stones and Exceptional Stones,
while normalising for the product mix impact

(2) Petra classifies "Exceptional Stones" as rough diamonds which sell for
US$5 million or more each

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCDXGDIGDDDGXS