REG-Petra Diamonds Ltd: Q3 FY 2024 Operating Update and Final Sales Results for Tender 5 FY 2024
16/04/2024 07:15
16 April 2024 LSE: PDL
Petra Diamonds Limited
(Petra or the Company)
Q3 FY 2024 Operating Update and Final Sales Results for Tender 5 FY 2024
Richard Duffy, Chief Executive Officer of Petra, commented:
“Production for the quarter is consistent with the preceding quarter and
in-line with expectations. At Finsch, the first of the 78-Level Phase II
production tunnels was successfully commissioned in March 2024, with
commissioning of the remaining six tunnels expected to be completed by June
2024. We confirm our FY 2024 production guidance of 2.75 – 2.85 Mcts.
Our fifth tender cycle yielded US$49 million from the sale of 362kcts. Average
prices per carat received were 22% higher than Tender 4, supported by the sale
of a 14.76ct exceptional colour and clarity blue diamond for US$8.2 million.
Like-for-like1 prices were relatively flat through this seasonally weaker
period, being 0.8% lower than Tender 4.
We continue to update our life of mine plans to support our transition to a
smoother capex profile. This includes a replanned ramp-up of the deferred
capital projects from Q1 FY 2025.
On 8 April 2024, we announced the signing of a definitive transaction
agreement for the sale of Koffiefontein which is expected to result in Petra
avoiding closure-related costs of US$15-18 million included in the
Company’s 31 December 2023 balance sheet provisions. We also announced an
increased cost savings target of more than US$30 million per annum that will
sustainably lower our cost base. Around half of these savings are expected to
come through a rebasing of fixed and variable costs in-line with reduced
throughput at Finsch, with the remaining half as savings across operating
costs and overheads at the Group level and Cullinan Mine.
During the quarter we repaid US$23m of our RCF to reduce interest costs and
had available liquidity of US$104 million at the end of Q3 FY 2024. While net
debt had increased at the end of Q3 FY 2024, proceeds from the recently-closed
Tender 5 have more than offset this increase. Together with the actions taken
to sustainably reduce costs, this further enhances our business resilience.”
1 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
Highlights vs Q2 FY 2024
* LTIFR and LTIs are 0.20 and 3 respectively (Q2 FY 2024: 0.18 and 3
respectively)
* Ore processed reduced marginally to 2.9Mt from 3.0Mt with the continued
ramp-up of production at Williamson and a steady quarter at Cullinan Mine
offset by lower volumes at Finsch due to the previously announced winder
issues, which have since been resolved * The 18% improvement in grades at
Finsch is largely ascribed to first production tonnes from 78-Level Phase II
* Lower diamond production at Cullinan Mine is due to reduced tailings volume
and grade variations, in-line with expectations
* Revenue amounted to US$66 million (Q2 FY 2024: US$90 million) with the
decrease due to the lower production and the timing of receipts from Tender 5
* Support from South African Rand weakness continued throughout the period,
with the Rand averaging ZAR18.95:US$1 (Q2 FY 2024: ZAR18.99:US$1)
* Capital expenditure for Q3 FY 2024 totalled US$15 million, in-line with
updated guidance announced earlier following the decision to defer certain
capital project expenditure
* Partial settlement of the withdrawn amounts under the ZAR1.75 billion (US$93
million) Revolving Credit Facility with Absa Bank, leaving an outstanding
balance of ZAR450 million (US$24 million) at 31 March 2024, down from ZAR850
million (US$47 million) at 31 December 2023
* Consolidated net debt increased to US$232 million as at 31 March 2024 (31
December 2023: US$212 million) due to the timing of closing Tender 5, noting
the balance of sales receipts yielded US$32 million shortly after period-end
which exceeded the increase in net debt
Final sales results for Tender 5 FY 2024
The sales of the fifth tender cycle of FY 2024 closed this week with 362kcts
sold yielding US$49 million, with average prices increasing 22% over Tender 4,
noting a marginal 0.8% decrease in like-for-like prices. Around 48kcts of
Tender 5 goods were sold in Q3 FY 2024 yielding some US$17 million.
These results include a 14.76ct exceptional colour and clarity blue gemstone
recovered from the Cullinan Mine which the Company sold into a partnership
agreement with sale proceeds of US$8.2 million.
Rough diamond sales results for the respective periods are set out below:
Tender 5 FY 2024 Apr-24 Tender 4 FY 2024 Feb-24 Variance Tender 5 FY 2023 May-24 YTD FY 2024 Tenders 1–5 YTD FY 2023 Tenders 1-5
Diamonds sold (carats) 362,132 428,860 -16% 468,817 2,450,613 2,237,010
Sales (US$ million) 49 48 3% 42 285 316
Average price (US$/ct) 136 112 22% 90 116 141
Revenue from Exceptional Stones 1 (US$ million) 0 0 0% 0 0 0
Note 1: Exceptional Stones are defined as rough diamonds for US$15 million or
more each.
Sales
Total revenue YTD FY 2024 from rough diamond sales is US$285 million, compared
to US$316 million in the first five tenders of FY 2023, excluding
Koffiefontein. Year-on-year volume variances were affected by the deferral of
certain FY 2023 sale parcels sold as part of Tender 1 of FY 2024.
Mine by mine average prices for the respective periods are set out in the
table below:
US$/carat Tender 5 FY 2024 Apr-24 Tender 4 FY 2024 Feb-24 YTD FY 2024 Tenders 1-5 YTD FY 2023 Tenders 1-5 FY 2023
Cullinan Mine 157 98 115 143 139
Finsch 95 101 99 110 110
Williamson 177 220 200 280 280
Like-for-like prices
Like-for-like rough diamond prices decreased marginally by 0.8% on Tender 4 FY
2024. Prices for plus 2ct goods remained solid, while prices for smaller goods
showed some seasonal weakness contributing to the overall decline. Average
like-for-like prices for the first five tenders of FY 2024 were down 8.5%
year-to-date compared to the equivalent five tenders of FY 2023. Pricing
assumptions for the remainder of the year remain unchanged.
US$ per carat FY 2024
Cullinan Mine 105 – 125
Finsch 95 – 110
Williamson 200 – 225
Future diamond prices are influenced by a range of factors outside of
Petra’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 as appropriate.
Product Mix
The balance of price movements is attributable to product mix, with Cullinan
Mine benefiting from the 14.76ct blue stone which sold for US$8.2 million in
this cycle. Williamson’s average price was impacted by reduced prevalence of
higher-valued single stones, ascribed to the mining areas currently accessed
and expected to be temporary in nature.
Operating Summary
Three months Nine months YTD
Q3 FY 2024 Q2 FY 2024 Var. Q3 FY 2023 Restated 3 FY 2024 FY 2023 Restated 3 Var.
Safety
LTIFR - 0.20 0.18 +11% 0.47 0.16 0.26 -39%
LTIs Number 3 3 - 8 8 14 -43%
Sales
Diamonds sold Carats 476,730 727,189 -34% 463,224 2,136,350 1,768,179 +21%
Revenue 1 US$m 66 90 -27% 67 253 274 -8%
Contribution from Exceptional Stones 2 US$m - - - - - - -
Production
ROM tonnes Mt 2,851,469 2,875,410 -1% 1,654,267 8,444,365 6,810,390 +24%
Tailings and other tonnes Mt 75,100 96,235 -22% 110,431 262,343 297,684 -12%
Total tonnes treated Mt 2,926,569 2,971,645 -2% 1,764,698 8,706,708 7,108,074 +22%
ROM diamonds Carats 643,350 694,884 -7% 593,120 1,990,255 1,924,936 +3%
Tailings and other diamonds Carats 22,227 36,018 -38% 60,009 102,863 121,572 -15%
Total diamonds Carats 665,577 730,902 -9% 653,128 2,093,118 2,046,508 +2%
1 Revenue reflects proceeds from the sale of rough diamonds and excludes
revenue from profit share arrangements
2 Petra classifies “Exceptional Stones” as rough diamonds which sell for
US$15 million or more each
3 Re-presented to exclude Koffiefontein which is classified as a discontinued
operation
INVESTOR WEBCASTS
Webcast presentation for institutional investors and analysts at 09:30am BST
today
Petra’s CEO, Richard Duffy, and CFO, Jacques Breytenbach, will host a live
virtual presentation including Q&A for institutional investors and analysts at
09:30 BST today to discuss this operating update.
To join:
https://events.teams.microsoft.com/event/cfe4e98b-bdfa-4060-847a-2549a20f9fbe@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, Jacques Breytenbach, 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
Please contact
Investor Relations, London
Patrick Pittaway Telephone: +44 20 7494 8203
Julia Stone investorrelations@petradiamonds.com
Kelsey Traynor
Notes:
The following definitions have been used in this announcement:
1. cpht: carats per hundred tonnes
2. LTIs: lost time injuries
3. LTIFR: lost time injury frequency rate, calculated as the number of LTIs
multiplied by 200,000 and divided by the number of hours worked
4. FY: financial year ending 30 June
5. CY: calendar year ending 31 December
6. Q: quarter of the financial year
7. ROM: run-of-mine (i.e. production from the primary orebody)
8. m: million
9. Mt: million tonnes
10. period: the third quarter of FY 2024
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.
Corporate and financial summary as at 31 March 2024
Unit As at 31 March 2024 As at 31 December 2023 As at 30 September 2023 As at 30
June 2023
Cash at bank – (including restricted amounts)¹ * Petra Group (excl. Williamson) US$m US$m US$m 37 42 (5) 75 85 (10) 74 73 1 62 61 1
* Williamson
Diamond debtors US$m 11 8 33 9
Diamond inventories 2,3 US$m Carats 71 671,989 54 483,142 52 479,430 66
715,222
2026 Loan Notes 4 US$m 256 249 255 248
Bank loans and borrowings 5 US$m 24 47 45 -
Consolidated Net Debt 6 US$m 232 212 192 177
Bank facilities undrawn and available 5 US$m 69 8 8 53
Note: The following exchange rates have been used for this announcement:
average for 9M FY 2024 US$1: ZAR18.75 (H1 FY2024: US$1: ZAR18.69; FY 2023:
US$1: ZAR17.77; 3M FY 2024: US$1: ZAR18.65); closing rate as at 31 March 2024
US$1: ZAR18.92 (31 December 2023: US$1: ZAR18.28; 30 June 2023: US$1: ZAR18.83
and 30 September 2023: US$1: ZAR18.92).
Notes:
1. The Group’s cash balances excluding Williamson comprise unrestricted
balances of US$24 million (31 December 2023: US$67 million), and restricted
balances of US$18 million (31 December 2023: US$19 million).
2. Recorded at the lower of cost and net realisable value.
3. Post period-end, the Company completed the balance of Tender 5 with the
sale of 314,439 carats from Cullinan Mine and Finsch, yielding US$32 million
which will be recorded in Q4 FY 2024.
4. The 2026 Loan Notes, originally issued following the capital restructuring
(the “Restructuring”) completed during March 2021, have a carrying value
of US$256 million which represents the outstanding principal amount of US$210
million (after the debt tender offers as announced in September and October
2022) plus US$54 million of accrued interest and is stated net of unamortised
transaction costs capitalised of US$8 million.
5. Bank loans and borrowings represent the Group’s upsized ZAR1.75 billion
(US$93 million) revolving credit facility. In December 2023, the Group
announced that Absa Bank had approved an increase in the commitments under the
Group’s revolving credit facility by ZAR750 million, bringing the total
commitments under the facility to ZAR1.75 billion (US$93 million). This
increase in the facility is now fully available following execution and
completion of the associated amendment agreement on 15 February 2024. The
amended facility’s existing covenants, margin, fees, and maturity date
remain unchanged. A total of ZAR450 million (US$24 million) is currently drawn
leaving a further balance of ZAR1.3 billion (US$69 million) available for
drawdown under the upsized facility.
6. Consolidated Net Debt is bank loans and borrowings plus loan notes, less
cash and diamond debtors.
Mine-by-mine tables:
Cullinan Mine – South Africa
Unit Three months Nine months YTD
Q3 FY 2024 Q2 FY 2024 Var. Q3 FY 2023 FY 2024 FY 2023 Var.
Sales
Revenue US$m 32 46 -30% 48 129 151 -15%
Diamonds sold Carats 233,460 345,867 -33% 310,300 1,098,689 979,027 +12%
Average price per carat US$ 137 131 +4% 154 117 154 -24%
ROM Production
Tonnes treated Tonnes 1,164,009 1,078,409 +8% 1,025,056 3,379,853 3,256,249 +4%
Diamonds produced Carats 319,490 331,349 -4% 322,724 969,100 1,019,657 -5%
Grade 1 Cpht 27.4 30.7 -11% 31.5 28.7 31.3 -8%
Tailings Production
Tonnes treated Tonnes 75,100 96,235 -22% 110,431 262,343 250,182 +5%
Diamonds produced Carats 22,227 36,018 -38% 60,009 102,863 115,010 -11%
Grade 1 Cpht 29.6 37.4 -21% 54.3 39.2 46.0 -15%
Total Production
Tonnes treated Tonnes 1,239,109 1,174,644 +5% 1,134,487 3,642,196 3,506,431 +4%
Diamonds produced Carats 341,717 367,367 -7% 382,732 1,071,963 1,134,667 -6%
Note 1: Petra is not able to precisely measure the ROM / tailings grade split
because ore from both sources is processed through the same plant; the Company
therefore back-calculates the grade with reference to resource grades.
Finsch – South Africa
Unit Three months Nine months YTD
Q3 FY 2024 Q2 FY 2024 Var. Q3 FY 2023 FY 2024 FY 2023 Var.
Sales
Revenue US$m 16 28 -44% 19 83 74 +11%
Diamonds sold Carats 152,984 298,889 -49% 152,924 827,088 614,041 +35%
Average price per carat US$ 104 94 +10% 124 100 121 -17%
ROM Production
Tonnes treated Tonnes 470,706 635,872 -26% 629,211 1,650,718 1,724,765 -4%
Diamonds produced Carats 242,543 276,842 -12% 270,396 779,249 764,763 +2%
Grade 1 Cpht 51.5 43.5 +18% 43.0 47.2 44.3 +6%
Tailings Production
Tonnes treated Tonnes - - - - - 47,502 -
Diamonds produced Carats - - - - - 9,562 -
Grade 1 Cpht - - - - - 13.8 -
Total Production
Tonnes treated Tonnes 470,706 635,872 -26% 629,211 1,650,718 1,772,267 -7%
Diamonds produced Carats 242,543 276,842 -12% 270,396 779,249 771,325 +1%
Note 1: Petra is not able to precisely measure the ROM / tailings grade split
because ore from both sources is processed through the same plant; the Company
therefore back-calculates the grade with reference to resource grades.
Williamson – Tanzania
Unit Three months Nine months YTD
Q3 FY 2024 Q2 FY 2024 Var. Q3 FY 2023 FY 2024 FY 2023 Var.
Sales
Revenue US$m 18 17 +8% - 42 49 -14%
Diamonds sold Carats 90,285 82,432 +10% - 210,574 175,124 +20%
Average price per carat US$ 198 201 -1% 200 280 -29%
ROM Production
Tonnes treated Tonnes 1,216,754 1,161,129 +5% - 3,413,794 1,829,376 +87%
Diamonds produced Carats 81,317 86,693 -6% - 2241,905 140,516 +72%
Grade 1 Cpht 6.7 7.5 -10% - 7.1 7.7 -8%
Total Production
Tonnes treated Tonnes 1,216,754 1,161,129 +5% - 3,413,794 1,829,376 +87%
Diamonds produced Carats 81,317 86,693 -6% - 241,905 140,516 +72%
FY 2024 Capital expenditure breakdown
US$m Q3 FY 2024 YTD Q3 FY 2024 FY 2023
Extension Stay-in-Business Total Extension Stay-in-Business Total Total
Cullinan Mine 6 3 9 28 8 36 53
Finsch 3 1 4 14 5 19 43
Williamson — 2 2 — 9 9 19
Total 9 6 15 42 22 64 115
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