REG - Petra Diamonds Ltd - Q4 and FY 2023 Operating Update
18/07/2023 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:20230718:nRSR2937Ga&default-theme=true
RNS Number : 2937G Petra Diamonds Limited 18 July 2023
18 July 2023 LSE: PDL
Petra Diamonds Limited
("Petra" or "the Company")
Q4 and FY 2023 Operating Update and Guidance for FY 2024 to FY 2026
Petra remains on track to deliver strong production growth supported by the
restart of Williamson ahead of plan
Richard Duffy, Chief Executive Officer of Petra, commented:
"With an operational turnaround underway at Finsch, the restart of Williamson
ahead of schedule and our capital projects on-track to deliver incremental
growth, we are reiterating guidance for annual group production to increase by
up to one million carats in FY 2025 and issuing further guidance of up to an
additional 300kct increase for FY 2026. Operations at both Cullinan Mine and
Finsch are now largely stabilised, enabling us to focus on reducing waste
dilution and improving grades. These advancements have been supported by a
much improved safety performance in Q4 FY 2023.
Mitigating steps have been successfully implemented to address grade issues
experienced at Cullinan Mine and Finsch in the final quarter that resulted in
FY 2023 production coming in marginally below guidance. Grades at both
operations have now reverted to planned levels.
As previously announced, our strong balance sheet and flexible sales process
enabled us to postpone the majority of our Tender 6 rough diamond sales into
FY 2024 on the back of what we believe to be a temporary slowdown in demand
for rough diamonds. We continue to expect a supportive diamond market in the
medium to longer term as a result of the structural supply deficit, which will
benefit our strong growth profile."
Highlights
· LTIs and the LTIFR in Q4 FY 2023 reduced to 2 and 0.12, respectively,
following our renewed safety focus directed at addressing the regression seen
in previous quarters
· Total diamond production decreased 5% to 620,018 carats from the
previous quarter due to lower grades at Cullinan Mine and Finsch, with
remediation steps now implemented at both mines. As a result, FY 2023
production of 2.67 Mcts (FY 2022: 3.35 Mcts) was marginally below previous
guidance of 2.75 - 2.85 Mcts
· In June, US$7.8 million of sales were concluded to meet regulatory
requirements to sell to South African cutters & polishers, bringing total
rough diamond sales for Q4 FY 2023 to US$49.9 million (Q4 FY 2022: US$179.8
million) and FY 2023 sales to US$328.4 million (FY 2022: US$584.1 million).
Like-for-like prices(( 1 )) increased by around 2% year-on-year and revenue
from profit share agreements increased to US$1.4 million (FY 2022: US$1.1
million). The year-on-year reduction in revenues mainly relates to:
o a lower contribution from Exceptional Stones 2 with US$12.6 million in FY
2023 (FY 2022: US$89.1 million); and
o a 34% reduction in rough diamonds sold due to a 20% reduction in diamonds
recovered plus the deferral of Tender 6 sales and 75.9 kcts of predominantly
higher value stones from Tender 5 from FY 2023 to FY 2024
· Due to the deferred sales, diamond inventory increased to 715.2 kcts
(valued at US$65.9 million) at period end, compared to 381.7 kcts (US$40.2
million) at 30 June 2022 (both exclude the 71.6 kcts from Williamson's blocked
parcel)
· Post period-end, Williamson received final regulatory approvals and
consents to commission the newly constructed Tailings Storage Facility (TSF).
Commissioning of the TSF and treatment plant commenced in July with the
resumption of production occurring ahead of schedule
· At Koffiefontein, care and maintenance activities are ongoing as we
prepare for a responsible closure
· Support from a weaker Rand continued throughout the quarter, with the
USD:ZAR closing at 18.83 on 30 June 2023 (30 June 2022: 16.27) and averaging
17.77 for FY 2023 (FY 2022: 15.22)
· Gross debt decreased to US$247.3 million (30 June 2022: US$366.2
million), reflecting the repurchase of a portion of the 2026 Loan Notes.
Consolidated net debt increased to US$176.7 million (30 June 2022: US$40.6
million) due to the deferral of diamond sales to FY 2024 coupled with planned
higher capital expenditure associated with the mine plan extension projects
Three months 12 months
Q4 Q3 Q4
FY 2023 FY 2023 Var. FY 2022 FY 2023 FY 2022 Var.
Safety
LTIFR - 0.12 0.47 +74% 0.34 0.24 0.22 -9%
LTIs Number 2 8 +75% 6 17 15 -13%
Sales
Diamonds sold Carats 561,624 465,138 +21% 1,205,240 2,339,662 3,536,316 -34%
Revenue(1) US$m 49.9 67.8 -26% 179.8 328.4 584.1 -44%
Contribution from Exceptional Stones US$m 5.6 7.0 -20% 5.7 12.6 89.1 -86%
Production
ROM tonnes Tonnes 1,826,843 1,654,267 10% 3,045,843 8,722,101 11,239,768 -22%
Tailings and other tonnes Tonnes 102,193 110,431 -7% 65,628 410,714 416,335 -1%
Total tonnes treated Tonnes 1,929,036 1,764,698 9% 3,111,471 9,132,816 11,656,103 -22%
ROM diamonds Carats 592,374 593,691 0% 717,373 2,523,996 3,148,258 -20%
Tailings and other diamonds Carats 27,644 60,009 -54% 28,417 149,471 205,412 -27%
Total diamonds Carats 620,018 653,700 -5% 745,790 2,673,467 3,353,670 -20%
(1) Revenue reflects proceeds from the sale of rough diamonds and excludes
revenue from profit share arrangements
Outlook and guidance
Actions taken in recent years to strengthen the business and improve cash flow
generation alongside capital discipline initiatives have left Petra well
positioned to take advantage of the supportive diamond market fundamentals
expected in the medium to longer term. Petra's current capital projects remain
on track to deliver a substantial production increase over the next three
years as work continues on the CC1-E and C-Cut extension projects at Cullinan
Mine as well as the Lower Block 5 3-level 90L sub level cave extension project
at Finsch. A slower ramp-up than originally anticipated resulted in a modest
downward adjustment to carats recovered in FY 2024 and FY 2025 compared to
previous guidance, largely attributable to project re-scheduling which has
deferred some production from FY 2025 to FY 2026.
· Projects at both Cullinan Mine and Finsch remain on-track to deliver
incremental production growth over the next three years, with a portion of
unspent FY 2023 capex deferred to FY 2024
· These projects will support delivery of the approved mine plans to
2032 at Cullinan Mine, 2031 at Finsch and 2030 at Williamson, with significant
further extension opportunities thereafter which Petra continues to explore as
part of its value-led growth strategy
· Grades at Cullinan Mine and Finsch have largely stabilised, with an
increase expected at both operations, and particularly at Cullinan Mine, once
the mine plan extension projects commence production in FY 2025
· Williamson's start-up commenced in July 2023 ahead of schedule, with
a steady ramp-up anticipated to achieve FY 2024 production guidance
· Recent inflationary pressures are being mitigated through robust cost
control and the benefit of a weaker Rand
· Detailed closure planning for Koffiefontein is currently underway.
Future costs will be provisioned in the FY 2023 accounts and, as a result,
cost guidance excludes costs associated with Koffiefontein. Further detail
will be shared in Petra's preliminary results in September 2023
· Discussions with organised labour concerning a new wage agreement for
the South African operations are planned to commence in the coming months
given the current agreement ends in June 2024
· Petra plans to host a capital markets day early in CY 2024 to provide
further information on the potential of Petra's assets beyond the currently
approved mine plans
FY 2024 - 2026 Group guidance summary(1)
FY 2024E FY 2025E FY 2026E
Total carats recovered (Mcts) 2.9 - 3.2 3.4 - 3.7 3.7 - 4.0
Cash on-mine costs and G&A (US$m)(2) 270 - 290 270 - 290 280 - 300
Extension capex (US$m)(2) 124 - 135 109 - 125 85 - 92
Sustaining capex (US$m)(2) 31 - 36 24 - 28 24 - 28
Note 1: More detailed guidance may be found on Petra's website at:
https://www.petradiamonds.com/investors/analysts/analyst-guidance/
(https://www.petradiamonds.com/investors/analysts/analyst-guidance/)
Note 2: Real amounts stated in FY 2024 money terms using 6% SA CPI & 2.5%
US CPI. US$ equivalent for SA operations converted at USD:ZAR exchange rate of
18.36
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_Q423
(https://brrmedia.news/PDL_Q423)
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
j. kcts: thousand carats
k. Mcts: million carats
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
Unit As at 30 June As at 31 March As at 31 December As at 30 September As at 30 June
2023 2023 2022 2022 2022
Cash at bank - (including restricted amounts)¹ US$m 61.8 96.8 146.6 154.0
288.2
Diamond debtors US$m 8.9 27.0 4.3 4.2 37.4
Diamond inventories(2,3) US$m 65.9 73.9 59.9 76.3 52.7
Carats 715,222 728,765 540,153 692,219 453,380
2026 US$336.7m loan notes(4) US$m 247.3 248.5 241.7 235.8
366.2
Bank loans and borrowings(5) US$m - - - - -
Consolidated Net Debt(6) US$m 176.7 124.7 90.8 77.6
40.6
Bank facilities undrawn and available(5) US$m 53.1 56.2 58.8 55.1
61.5
Note: The following USD:ZAR exchange rates have been used for this
announcement: average for FY 2023 of 17.77 (FY 2022: 15.22); closing rate on
30 June 2023: 18.83 (31 March 2023: 17.78, 31 December 2022: 17.00, 30
September 2022: 18.15 and 30 June 2022: 16.27.
Notes:
1. The Group's cash balances comprise unrestricted balances of US$44.1
million, and restricted balances of US$17.7 million.
2. Recorded at the lower of cost and net realisable value. As at 30
June 2023, inventories comprised c.400kcts of Cullinan Mine goods with the
balance from Finsch.
3. Diamond inventories for periods prior to 30 June 2023 include the
71,654.45 carat Williamson parcel of diamonds blocked for export during August
2017, with a carrying value of US$12.5 million. Under the Framework Agreement
entered into with the Government of Tanzania (GoT) in December 2021, it is
stated that the proceeds from the sale of this parcel are to be applied to the
Williamson mine to assist with the restart of operations and that in the event
such proceeds are not received by Williamson, Williamson is not required to
pay a US$20 million liability relating to the settlement of past tax disputes.
During recent discussions, the GoT confirmed that the blocked parcel was
partially sold during the period and so this parcel has been excluded from
diamond inventories as at 30 June 2023. During these recent discussions, the
parties also confirmed their intent to resolve how to treat the blocked parcel
sale proceeds and the related US$20 million settlement liability. The final
position reached will determine the accounting treatment of the blocked parcel
and related US$20 million settlement liability and may impact the final FY
2023 disclosure.
4. The 2026 US$336.7 million loan notes, originally issued following
the capital restructuring (the "Restructuring") that completed during March
2021, have a carrying value of US$247.3 million which represents the
outstanding principal amount of US$209.7 million (after completion of the debt
tender offers as announced in September and October 2022) plus US$48.1 million
of accrued interest, and is stated net of unamortised transaction costs
capitalised of US$10.5 million.
5. Bank loans and borrowings represent the Group's ZAR1 billion
revolving credit facility which remains undrawn and available.
6. Consolidated Net Debt is bank loans and borrowings plus loan notes,
less cash and diamond debtors.
Mine-by-mine tables:
Cullinan Mine - South Africa
Three months Twelve months
Unit
Q4 Q3 Q4
FY 2023 FY 2023 Var. FY 2022 FY 2023 FY 2022 Var.
Sales
Revenue US$m 30.9 47.9 -35% 81.0 181.5 322,4 -44%
Diamonds sold Carats 327,429 310,300 +6% 617,677 1,306,457 1,899,011 -31%
Average price per carat US$ 94 154 -39% 131 139 170 -18%
ROM Production
Tonnes treated Tonnes 1,120,346 1,025,056 +9% 1,090,897 4,376,595 4,451,515 -2%
Diamonds produced Carats 323,535 322,724 0% 362,249 1,343,191 1,609,925 -17%
Grade(1) Cpht 28.9 31.5 -8% 33.2 30.7 36.2 -15%
Tailings Production
Tonnes treated Tonnes 102,193 110,431 -7% 62,844 352,375 413,550 -15%
Diamonds produced Carats 27,644 60,009 -54% 28,056 142,654 205,050 -30%
Grade(1) Cpht 27.1 54.3 -50% 44.6 40.5 49.6 -18%
Total Production
Tonnes treated Tonnes 1,222,539 1,135,487 +8% 1,153,741 4,728,970 4,865,065 -3%
Diamonds produced Carats 351,179 382,732 -8% 390,305 1,485,846 1,814,975 -18%
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 Twelve months
Unit
Q4 Q3 Q4
FY 2023 FY 2023 Var. FY 2022 FY 2023 FY 2022 Var.
Sales
Revenue US$m 19.0 19.0 0% 60.9 93.4 165.7 -44%
Diamonds sold Carats 234,195 152,924 +53% 467,195 848,236 1,402,654 -40%
Average price per carat US$ 81 124 -35% 130 110 118 -7%
ROM Production
Tonnes treated Tonnes 706,497 629,211 +12% 650,670 2,431,262 2,730,197 -11%
Diamonds produced Carats 268,839 270,396 -1% 269,828 1,033,602 1,274,961 -19%
Grade(1) Cpht 38.1 43.0 -11% 41.5 42.5 46.7 -9%
Tailings Production
Tonnes treated Tonnes - - - 2,784 47,502 2,785 +1606%
Diamonds produced Carats - - - 362 6,562 362 +1711%
Grade(1) Cpht - - - 13.0 13.8 13.0 +6%
Total Production
Tonnes treated Tonnes 706,497 629,211 +12% 653,454 2,478,764 2,732,982 -9%
Diamonds produced Carats 268,839 270,396 -1% 270,190 1,040,164 1,275,323 -18%
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 Twelve months
Unit
Q4 Q3 Q4
FY 2023 FY 2023 Var. FY 2022 FY 2023 FY 2022 Var.
Sales
Revenue US$m - - - 33.3 49.1 75.9 -35%
Diamonds sold Carats - - - 110,386 175,124 197,756 -11%
Average price per carat US$ - - - 301 280 384 -27%
ROM Production
Tonnes treated Tonnes - - - 1,231,082 1,829,376 3,591,099 -49%
Diamonds produced Carats - - - 80,194 140,516 228,070 -38%
Grade(1) Cpht - - - 6.5 7.7 6.4 +21+
Total Production
Tonnes treated Tonnes - - - 1,231,082 1,829,376 3,591,099 -49%
Diamonds produced Carats - - - 80,194 140,516 228,070 -38%
Koffiefontein - South Africa
Three months Twelve months
Unit
Q4 Q3 Q4
FY 2023 FY 2023 Var. FY 2022 FY 2023 FY 2022 Var.
Sales
Revenue US$m - 0.8 -100% 5.0 4.5 21.5 -79%
Diamonds sold Carats - 1,927 -100% 10,043 9 859 36 950 -73%
Average price per carat US$ - 461 -100% 500 452 581 -22%
ROM Production
Tonnes treated Tonnes - - - 73,194 84,869 466,957 -82%
Diamonds produced Carats - - - 5,102 6,687 35,302 -81%
Grade(1) Cpht - - - 7.0 7.9 7.6 +4%
Tailings Production
Tonnes treated Tonnes - - - - 10,837 - +100%
Diamonds produced Carats - - - - 255 - +100%
Grade(1) Cpht - - - - 2.4 - +100%
Total Production
Tonnes treated Tonnes - - - 73,194 95,706 466,957 -80%
Diamonds produced Carats - - - 5,102 6,942 35,302 -80%
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.
(( 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
(( 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 UPDRRMLTMTABBTJRecent news on Petra Diamonds
See all newsREG-Petra Diamonds Ltd: Partial Tender 5 sale results for Finsch and Williamson; Cullinan sales postponement
AnnouncementREG-Petra Diamonds Ltd: TR-1: Standard form for notification of major holdings
AnnouncementREG-Petra Diamonds Ltd: Director/PDMR Shareholding
AnnouncementREG-Petra Diamonds Ltd: H1 FY 2025 Interim Results (correction to title)
AnnouncementREG-Petra Diamonds Ltd: Director Change
Announcement