REG - Petra Diamonds Ltd - Q3 FY 2023 Operating Update

Petra DiamondsAnnouncement

18/04/2023 07:00

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RNS Number : 4969W  Petra Diamonds Limited  18 April 2023

 

 

 18 April 2023   LSE: PDL

 

 

Petra Diamonds Limited

("Petra" or "the Company")

 

Q3 FY 2023 Operating Update

 

Petra reports improved diamond production in the third quarter of FY 2023

 

Richard Duffy, Chief Executive Officer of Petra, commented:

 

"We are pleased to report higher diamond production following improved ROM
grades and tailings production at Cullinan Mine and increased throughput at
Finsch. We expect to deliver on our revised guidance of 2.75-2.85 Mcts for FY
2023. With Williamson targeted to resume production in Q1 FY 2024, we are well
positioned to increase production by c.1Mct to 3.6-3.9 Mcts in FY 2025.

 

The key mitigating actions initiated over the last 6 months have been
successful and occurred against a backdrop of recently improved diamond
pricing which we largely attribute to a post-COVID 19 recovery in demand from
China. We continue to expect a supportive diamond market in the medium to
longer-term as a result of the structural supply deficit, while noting
potential volatility in the near-term owing to recent geopolitical and
macroeconomic uncertainty."

 

Highlights vs Q2 FY 2023

 

·   LTIs and LTIFR increased to 8 and 0.47, respectively, due largely to a
single incident at the Cullinan Mine in which 4 employees were injured. Petra
has renewed its safety focus directed at addressing the quarter-on-quarter
regression

·    Total diamond production increased 3% to 653,700 carats as production
improved 14% at Finsch following the introduction of new equipment, despite
some ground handling challenges. Production at the Cullinan Mine increased by
7%, supported by higher tailings and ROM grades. Together, this more than
offset the temporary suspension of production at Williamson and the placing of
Koffiefontein on care and maintenance

·    Ore processed decreased 25% to 1.65Mt, largely due to the temporary
suspension of production at Williamson, which is targeted to restart in Q1 FY
2024

·   At Koffiefontein the Section 189(3) labour reduction process was
completed during the quarter, resulting in the retrenchment of 382 employees
at a cost of around ZAR99 million with around 80-90 employees being retained
for care and maintenance activities in the run-up to a responsible closure

·    Support from a weaker Rand and more stable diamond pricing continued
throughout the quarter

·    Revenue amounted to US$67.8 million (Q2 FY 2023: US$107.8 million) as
higher pricing at the Cullinan Mine and Finsch in the quarter was more than
offset by tender cycle timings (one tender in Q3 FY 2023 vs two in Q2 FY
2023); the resultant inventory build is expected to be released in Q4 FY 2023

·    Gross debt increased to US$248.5 million (31 December 2022: US$241.7
million), reflecting the accrued interest charges for the three months to 31
March 2023. Consolidated net debt of US$124.7 million (31 December 2022:
US$90.8 million) increased due to the timing of the Company's diamond sales
tenders, coupled with the previously announced capital expenditure programmes
for the expansion projects at the Cullinan Mine and Finsch

                                                  Three months                         Nine months YTD
                                                  Q3        Q2               Q3

                                                  FY 2023   FY 2023   Var.   FY 2022   FY 2023    FY 2022    Var.
 Safety
 LTIFR                                    -       0.47      0.22      +114%  0.18      0.28       0.18       +56%
 LTIs                                     Number  8         4         +100%  3         15         9          +67%

 Sales
 Diamonds sold                            Carats  465,138   792,889   -41%   735,225   1,778,051  2,331,076  -24%
 Revenue(1)                               US$m    67.8      107.8     -37%   140.6     278.5      405.4      -31%
 Contribution from Exceptional Stones(2)  US$m    7.0       0.0       -      5.5       7.0        83.3       -92%

 Production
 ROM tonnes                               Mt      1.65      2.20      -25%   2.8       6.9        8.2        -16%
 Tailings and other tonnes                Mt      0.11      0.09      +20%   0.1       0.3        0.4        -12%
 Total tonnes treated                     Mt      1.76      2.29      -23%   2.9       7.2        8.6        -16%

 ROM diamonds                             Carats  593,691   604,917   -2%    780,896   1,931,622  2,430,885  -21%
 Tailings and other diamonds              Carats  60,009    31,612    +90%   49,560    121,827    176,995    -31%
 Total diamonds                           Carats  653,700   636,529   +3%    830,456   2,053,449  2,607,880  -21%

(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$5 million or more each

 

Outlook

Ongoing actions taken to strengthen the business and improve cash flow
generation, together with capital discipline, enable Petra to take advantage
of the current supportive diamond market fundamentals. Petra's projects remain
on track to deliver a c.1Mct annual increase in FY 2025, with work commencing
on the C-Cut extension to unlock a further 2.3Mct from FY 2025 through to FY
2033, as the Company develops the long-term potential of its resource base.

 

Petra continues to strive to create a zero harm environment. The Company is
increasing its focus on identifying and mitigating safety risks with
behaviour-focused intervention programmes.

 

 

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
webcast for institutional investors and analysts today at 09:30 BST to discuss
this operating update.

Webcast link for live presentation: https://brrmedia.news/PDL_OU
(https://brrmedia.news/PDL_OU)

Dial in details:

 

United Kingdom                033 0551 0200

South Africa                      0800 980 512

United States (Local)        +1 786 697 3501

 

Password (if prompted): Quote "Petra Diamonds Operating Update"

 

Link for recording (available later in the day):

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

 

Investor Meet Company webcast at 14.30pm BST today

 

Petra 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
(https://www.investormeetcompany.com/petra-diamonds-limited/register-investor)

 

 

FURTHER INFORMATION

 

Please contact

 

Petra Diamonds, London

Patrick Pittaway
 
Telephone: +44 207494 8203

Julia
Stone
investorrelations@petradiamonds.com
(mailto:investorrelations@petradiamonds.com)

 

Camarco (Financial PR)

Gordon
Poole
Telephone: +44 20 3757 4980

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

Elfie Kent

 

 

Notes:

1.     The following definitions have been used in this announcement:

a.     cpht: carats per hundred tonnes

b.     LTIs: lost time injuries

c.     LTIFR: lost time injury frequency rate, calculated as the number of
LTIs multiplied by 200,000 and divided by the number of hours worked

d.     FY: financial year ending 30 June

e.     CY: calendar year ending 31 December

f.      Q: quarter of the financial year

g.     ROM: run-of-mine (i.e. production from the primary orebody)

h.     m: million

i.      Mt: million tonnes

 

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 of closure.

 

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 31 March 2023

 

                                                  Unit     As at 31 March  As at 31 December  As at 30 September  As at 30 June

                                                           2023            2022               2022                2022
 Cash at bank - (including restricted amounts)¹   US$m     96.8            146.6              154.0               288.2
 Diamond debtors                                  US$m     27.0            4.3                4.2                 37.4
 Diamond inventories(2,3)                         US$m     73.9            59.9               76.3                52.7

                                                  Carats   728,765         540,153            692,219             453,380
 2026 US$336.7m loan notes(4)                     US$m     248.5           241.7              235.8               366.2
 Bank loans and borrowings(5)                     US$m     -               -                  -                   -
 Consolidated Net Debt(6)                         US$m     124.7           90.8               77.6                40.6
 Bank facilities undrawn and available(5)         US$m     56.2            58.8               55.1                61.5

Note:  The following exchange rates have been used for this announcement:
average for 9M FY 2023 US$1: ZAR17.46 (9M FY 2022: US$1: ZAR15.10, FY 2022:
US$1:ZAR15.22); closing rate as at 31 March 2023 US$1: ZAR17.78 (31 March
2022: US$1:ZAR14.60), 31 December 2022: US$1: ZAR17.00, 30 September 2022:
ZAR18.15  and 30 June 2022: ZAR16.27.

 

Notes:

1.     The Group's cash balances comprise unrestricted balances of US$80.9
million, and restricted balances of US$15.9 million.

2.     Recorded at the lower of cost and net realisable value.

3.     Diamond inventories includes the Williamson 71,654.45 carat parcel
of diamonds blocked for export during August 2017, with a carrying value of
US$12.5 million. Under the framework agreement reached with the Government of
Tanzania, as announced on 13 December 2021, the proceeds from the sale of this
parcel are required to be allocated to Williamson.

4.     The 2026 US$336.7 million loan notes, originally issued following
the capital restructuring (the "Restructuring") completed during March 2021,
have a carrying value of US$248.5 million which represents the outstanding
principal amount of US$210.2 million (after the early participation phase of
the debt tender offers as announced in September and October 2022) plus
US$49.5 million of accrued interest and net of unamortised transaction costs
capitalised of US$11.2 million.

5.     Bank loans and borrowings represent the Group's ZAR1 billion
revolving credit facility which remains undrawn and available.

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

                                    Three months                            Nine months YTD

                          Unit
                          Q3                   Q2                Q3

                          FY 2023              FY 2023    Var.   FY 2022    FY 2023    FY 2022    Var.
 Sales
 Revenue                  US$m      47.9       45.8       5%     73.7       150.6      241.4      -38%
 Diamonds sold            Carats    310,300    400,999    -23%   409,030    979,027    1,281,334  -24%
 Average price per carat  US$       154        114        35%    180        154        188        -18%

 ROM Production
 Tonnes treated           Tonnes    1,025,056  1,120,282  -9%    1,053,631  3,256,249  3,360,618  -3%
 Diamonds produced        Carats    322,724    328,137    -2%    404,473    1,019,657  1,247,675  -18%
 Grade(1)                 Cpht      31.5       29.3       7%     38.4       31.3       37.1       -16%

 Tailings Production
 Tonnes treated           Tonnes    110,431    62,178     78%    112,414    250,182    350,706    -29%
 Diamonds produced        Carats    60,009     28,211     113%   49,560     115,010    176,995    -35%
 Grade(1)                 Cpht      54.3       45.4       20%    44.1       46.0       50.5       -9%

 Total Production
 Tonnes treated           Tonnes    1,135,487  1,182,460  -4%    1,166,045  3,506,431  3,711,324  -6%
 Diamonds produced        Carats    382,732    356,348    7%     454,033    1,134,667  1,424,670  -20%

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

                                    Three months                        Nine months YTD

                          Unit
                          Q3                 Q2               Q3

                          FY 2023            FY 2023   Var.   FY 2022   FY 2023    FY 2022    Var.
 Sales
 Revenue                  US$m      19.0     32.0      -40%   39.2      74 .4      104.9      -29%
 Diamonds sold            Carats    152,924  283,833   -46%   259,164   614,041    935,459    -34%
 Average price per carat  US$       124      113       10%    151       121        112        8%

 ROM Production
 Tonnes treated           Tonnes    629,211  522,578   20%    656,408   1,724,765  2,079,527  -17%
 Diamonds produced        Carats    270,396  234,150   15%    303,591   764,763    1,005,134  -24%
 Grade(1)                 Cpht      43.0     44.8      -4%    46.3      44.3       48.3       -8%

 Tailings Production
 Tonnes treated           Tonnes    -        30,197    -      -         47,502     -          -
 Diamonds produced        Carats    -        3,402     -      -         6,562      -          -
 Grade(1)                 Cpht      -        11.3      -      -         13.8       -          -

 Total Production
 Tonnes treated           Tonnes    629 211  552,775   14%    656,408   1,772,267  2,079,527  -15%
 Diamonds produced        Carats    270 396  237,552   14%    303,591   771,325    1,005,134  -23%

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

                                    Three months                      Nine months YTD

                          Unit
                          Q3              Q2               Q3

                          FY 2023         FY 2023   Var.   FY 2022    FY 2023    FY 2022    Var.
 Sales
 Revenue                  US$m      -     27.9      -      22.4       49 .1      42.6       15%
 Diamonds sold            Carats    -     103,829   -      60,759     175,124    87,370     100%
 Average price per carat  US$       -     269       -      369        280        488        -43%

 ROM Production
 Tonnes treated           Tonnes    -     520,017   -      1,005,901  1,829,376  2,360,017  -22%
 Diamonds produced        Carats    -     39,766    -      65,003     140,516    147,876    -5%
 Grade(1)                 Cpht      -     7.6       -      6.5        7.7        6.3        23%

 Total Production
 Tonnes treated           Tonnes    -     520,017   -      1,005,901  1,829,376  2,360,017  -22%
 Diamonds produced        Carats    -     39,766    -      65,003     140,516    147,876    -5%

 

 

Koffiefontein - South Africa

                                    Three months                      Nine months YTD

                          Unit
                          Q3               Q2               Q3

                          FY 2023          FY 2023   Var.   FY 2022   FY 2023   FY 2022   Var.
 Sales
 Revenue                  US$m      0.8    2.2       -64%   5.4       4.5       16.5      -73%
 Diamonds sold            Carats    1,927  4,228     -54%   6,269     9,859     26,907    -63%
 Average price per carat  US$       461    508       -9%    856       452       612       -26%

 ROM Production
 Tonnes treated           Tonnes    -      36,099    -      76,453    84,869    393,763   -78%
 Diamonds produced        Carats    -      2,862     -      7,829     6,687     30,200    -78%
 Grade(1)                 Cpht      -      7.9       -      10.2      7.9       7.7       3%

 Tailings Production
 Tonnes treated           Tonnes    -      -         -      -                   -
 Diamonds produced        Carats    -      -         -      -                   -
 Grade(1)                 Cpht      -      -         -      -                   -

 Total Production
 Tonnes treated           Tonnes    -      36,099    -      76,453    84,869    393,763   -78%
 Diamonds produced        Carats    -      2,862     -      7,829     6,687     30,200    -78%

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.

 

 

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