REG - Petra Diamonds Ltd - Sales results for Tender 5 FY 2023

Petra DiamondsAnnouncement

19/05/2023 07:00

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RNS Number : 0175A  Petra Diamonds Limited  19 May 2023

FOR IMMEDIATE RELEASE

 19 May 2023  LSE: PDL

 

Sales results for Tender 5 FY 2023

 

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

 

"Petra's fifth tender for FY 2023 yielded US$42.1m and, in line with others in
the market, saw a softening in demand following stronger sales in our fourth
tender cycle which closed in March 2023. As a result, like-for-like 1 
(#_ftn1) prices for the goods sold declined compared to Tender 4 and were
marginally lower compared to Tender 3. We withheld parcels with a combined
weight of 75.9 kcts of gem and near-gem quality goods throughout all size
ranges in expectation of an improved pricing environment in May and June.
Prices offered on these parcels reflected bidding at prices below our own
estimates.

 

A total of 468.8 kcts of goods from both the Cullinan Mine and Finsch were
sold, yielding US$42.1 million. The softer demand is attributed to inventory
levels in the midstream and extended shutdowns by certain manufacturers
following the recent Indian holidays. With the extended holidays set to end in
the coming weeks, demand is expected to improve and the withdrawn parcels will
be offered for sale at Petra's Antwerp facilities during May and June 2023.
This approach reflects Petra's strategy of maintaining flexibility at its
tenders to optimise pricing.

 

We continue to see a supportive diamond market in the medium to longer-term as
a result of the structural supply deficit, despite the volatility seen in this
current sale."

 

Petra announces the results of Tender 5 of FY 2023, at which 468,817 carats
were sold for a total of US$42.1 million from Petra's South African
operations. This cycle includes one Exceptional Stone 2  (#_ftn2) , a 354.04ct
near-gem quality stone that sold for US$5.6 million from our Cullinan Mine.
Parcels containing 75,880 cts were withdrawn, which are now planned to be sold
in May and June 2023. These parcels contain predominantly higher valued
diamonds, resulting in heavily diluted average prices for both the Cullinan
Mine and Finsch. No sales for either Koffiefontein or Williamson were recorded
in this cycle given the suspension of operations at both mines.

 

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

                                                Tender 5 FY23  Tender 4 FY23  Variance     Tender 5 FY22  YTD FY 2023   YTD FY 2022

                                                May-23         Mar-23         T5 FY23 vs   May-22         Tenders 1-5   Tenders 1-5

                                                                              T4 FY23
 Diamonds sold (carats)                         468,817        505,398        -7%          635,806        2,246,869     2,966,875
 Sales (US$ million)                            42.1           72.1           -42%         86.1           320.6         491.4
 Average price (US$/ct)(1,2)                    90             143            -37%         136            143           166
 Revenue from Exceptional Stones (US$ million)  5.6            7.0            -20%         5.7            12.6          89.1

Note 1: Parcels containing 75,880 cts were withdrawn that contain
predominantly higher valued goods. As a result, the average price was heavily
diluted for the actual goods sold thus far in this cycle

Note 2: Based on bids received and reserve prices for the withheld parcels,
Petra estimates the overall realised price for the cycle, including withdrawn
parcels, to be between US$105 and US$115 per carat.

 

Sales

The results of Tender 5 bring FY 2023 YTD revenue from rough diamond sales to
US$320.6 million, including US$12.6 million from Exceptional Stone sales,
compared to US$491.8 million in the first five tenders of FY 2022, which
included a US$89.1 million contribution from Exceptional Stones. The lower
volumes sold in the first five tenders of FY 2023 relative to the equivalent
tenders last year is driven by lower production from the South African
operations, the shutdown of Koffiefontein during H1 FY 2023 and reduced
production from Williamson pending the restart planned for Q1 FY 2024.

 

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

 US$/carat           Tender 5  Tender 4  Tender 5  YTD FY 2023   YTD FY 2022   FY 2022

                     FY23      FY23      FY22      Tenders 1-5   Tenders 1-5   12 months to

                     May-23    Mar-23    May-22                                30 June 2022
 Cullinan Mine(1,2)  99        154       111       143           172           169
 Finsch(2)           81        121       122       110           114           118
 Williamson(1)       n/a       n/a       341       280           437           384
 Koffiefontein        n/a      461       431       452           578           581

Note 1: Prices for both Cullinan Mine and Williamson include proceeds from the
sale of Exceptional Stones.

Note 2: Based on bids received and reserve prices for the withheld parcels,
Petra estimates the overall realised price for the cycle, 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 for goods sold declined by 13.0% on Tender
4 FY 2023 driven by double-digit decreases in the prices of size categories
smaller than 2 carats, while 2 to 10.8 carat goods saw prices softening by 3
to 5 percent. Like-for-like prices were marginally down by 1.4% against Tender
3, while prices increased by some 8.9% compared to Tender 5 of FY 2022. YTD
prices are up by 3.1% compared to the equivalent five tenders of FY 2022.

 

Product mix

The balance of price movements are attributable to product mix, with a lower
contribution from Cullinan's single stones in this cycle, partly offset by the
sale of the US$5.6 million Exceptional Stone, while Finsch's product mix
remained in line with previous cycles.

 

This announcement includes inside information as defined in Article 7 of the
UK Market Abuse Regulation No. 596/2014 and is being released on behalf of
Petra by the Company Secretary.

 

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  (#_ftnref2) )) Petra classifies "Exceptional Stones" as rough diamonds
which sell for US$5 million or more each

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