REG-Petra Diamonds: Trading Update Q3 FY 2021
20/04/2021 07:05
20 April 2021 LSE: PDL
Petra Diamonds Limited
("Petra" or the "Company" or the “Group”)
Trading Update
Petra Diamonds Limited is pleased to provide the following trading update for
the three (Q3) and nine-month (9M) periods ending 31 March 2021.
Highlights:
* Financials: * Q3 revenue up 16% to US$106.0m (Q3 FY 2020: US$91.3m), as
prices recovered to pre-COVID-19 levels
* 9M revenue of US$284.2m, in-line with prior year (9M FY 2020: US$285.2m)
* Operations: * Q3 production of 704,498 carats (Q3 2020: 932,456 carats) and
9M production of 2,445,360 carats (9M FY 2020: 3,002,697 carats)
* Post period end an exceptional 11.82 carat blue stone was sold for US$9.5m
and an exceptional 39.34 carat blue stone was recovered, to be sold via
special tender
* Health & Safety: * Improving trend in FY 2021, with the Lost Time Injury
Frequency Rate for the 9M decreasing to 0.47, from 0.50 in H1, and 0.65 in Q1
(9M FY 2020: 0.27) ascribed to a behaviour-based intervention programme
* Total injuries, including LTIs, for the 9M decreased to 30 (9M FY 2020: 37)
* Balance Sheet: * Completion of capital restructuring strengthening the
balance sheet, with consolidated net debt reduced to US$290.7m at 31 March
2021 (31 December 2020: US$700.4m)
* Unrestricted cash of US$139.8m at 31 March 2021 (31 December 2020:
US$92.4m), with undrawn banking facilities available of US$10.8m
* Diamond inventory valued at US$75.5m at 31 March 2021 (31 December 2020:
US$105.0m)
Q3 and 9M FY 2021 Production and Sales – Summary
Unit Q3 FY 2021 Q3 FY 2020 Variance 9 months to 31 March 2021 9 months to 31 March 2020 Variance
Gross revenue US$M 106.0 91.3 +16% 284.2 285.2 0%
Total production Mt 1.8 3.4 -48% 6.1 10.9 -44%
Total diamonds Carats 704,498 932,456 -24% 2,445,360 3,002,697 -19%
1. 'Other' includes alluvial diamond mining at Williamson.
Richard Duffy, Chief Executive of Petra Diamonds, commented:
“We are seeing encouraging signs of a recovery in the diamond market,
supporting better pricing, reflected in the third quarter revenue numbers.
Post completion of the capital restructuring, Petra is in a far stronger
position, with a solid platform for future growth and development. Production
during the period reflected continued out-performance from Cullinan, with
remedial action to address waste ingress at Finsch delayed as a result of
excessive rainfall levels, which also negatively impacted Koffiefontein,
whilst the Williamson mine remains on care and maintenance. We expect to see
improved performance from Finsch as underground water ingress reduces and the
remediation steps are implemented.”
Conference Calls
Petra’s Chief Executive, Richard Duffy, and Finance Director, Jacques
Breytenbach, will host a conference call at 9:30am and at 4pm BST today to
discuss the Trading Update with investors and analysts. Please see below for
dial in details.
Trading Update
Health and safety
The Lost Time Injury Frequency Rate (LTIFR) continued to fall in FY 2021,
decreasing to 0.47 for the 9M, from 0.50 in the first half and 0.65 in Q1 FY
2021. The total number of injuries during the nine-month period, which
includes LTIs, decreased to 30 (9M FY 2020: 37).
This trend reflects the benefit of the Company’s behaviour-based
intervention campaign, targeting a zero-harm working environment. The campaign
follows the higher level of LTIFR compared to the same nine-month period last
year, with 20 lost-time injuries recorded, compared to 16 in FY 2020.
COVID-19 continues to pose a significant risk to the health and safety of the
Group’s workforce. Petra has implemented systems and strategies across all
its operations aimed at preventing and/or containing the spread of the virus.
To date, the Company has had 340 confirmed cases. More information on the
Company’s response to the pandemic is available on its website:
https://www.petradiamonds.com/sustainability/health-and-safety/our-response-to-covid-19/.
Production and Operations
Q3 production decreased 24% to 704,498 carats (Q3 FY 2020: 932,456 carats),
with production for the nine-month period decreasing 19% to 2,445,360 carats
(9M FY 2020: 3,002,697 carats).
Q3 production reflected a strong performance from Cullinan, with production up
9% to 436,703 carats, combined with 43% lower production at Finsch, at 253,607
carats, an 18% decrease in production at Koffiefontein, to 14,188 carats, and
Williamson remaining on care and maintenance.
Cullinan continues to recover some exceptional diamonds, including a 299.3ct
type IIa white stone and a 11.82ct type IIb blue stone during the period as
well as an exceptional 39.34ct type IIb blue stone, post the period end.
Production at Finsch was impacted by measures taken to curtail waste ingress.
Production at Finsch and Koffiefontein was also affected by the high level of
rainfall during Q3 FY 2021.
Discussions with the Government of Tanzania in relation to various issues at
the Williamson mine, including the overdue VAT receivables and the blocked
diamond parcel, are ongoing and are expected to conclude during Q4 FY2021.
The Company intends to provide its feedback on the Company’s conclusions and
next steps following the investigation into allegations of human rights abuses
at the Williamson mine around the end of April 2021. The investigation is
being undertaken by an external independent advisor, in conjunction with the
Company’s legal advisors.
Diamond market
Improved demand for rough diamonds continued in Q3, due to robust demand for
jewellery driving continued purchasing by the midstream. Retail demand is
expected to remain positive as economies re-open; albeit the industry has
entered its period of typically lower demand and the resurgence of COVID-19 in
some countries poses some risk to logistics and the timing of sales for the
remainder of FY 2021.
Diamond pricing has been supported by supply discipline, driving a better
supply / demand balance in the midstream, which remains a key factor in the
health of the market in 2021. Due to the impact of COVID-19 and the closure of
the Argyle mine in Australia in 2020, rough diamond production is expected to
have contracted significantly in 2020 and may continue to decline.
Diamond Sales
Q3 revenue increased 16% to US$106.0m (Q3 FY 2020: US$91.3m). This increase
was driven by improved pricing, the sale of a 299.3 carat exceptional diamond
in February for US$12.2m and the carryover of 382 Kcts, of mostly lower value
stock from H1 FY 2021, sold during January 2021. On a like for like basis,
realised diamond prices increased ca.12% from those achieved in H1 FY 2021.
Post the period end, an exceptional 11.82 carat blue stone, recovered during
the period from the Cullinan mine, was sold for US$9.5m. The Company also
announced the recovery of an exceptional 39.34 carat blue stone, also from the
Cullinan mine, which will be sold via a special tender.
Project 2022 Update
Throughput ideas remain the largest contributor to growing operational cash
flow and Cullinan remains on track to deliver its throughput stretch target
for FY 2021. As previously outlined, due to reduced throughput at Finsch,
Koffiefontein and Williamson, the annualised contribution from throughput
initiatives is now expected to be in the region of US$50m, versus previous
expectations of US$70m.
Initiatives undertaken to drive cost efficiencies are expected to deliver an
annualised run rate of US$20m going in to FY 2022. The decrease of US$2m in
cost efficiencies over previous guidance in H1 FY 2022 relates to higher than
anticipated electricity pricing in South Africa, combined with the
postponement of some moveable asset sales into FY 2022.
Corporate and Financial
The recapitalisation of the Group was completed during the period,
significantly strengthening the balance sheet, with consolidated net debt
reducing to US$290.7m, from US$700.4m at the end of December 2020.
Petra Diamonds had unrestricted cash of US$139.8m, available undrawn banking
facilities of US$10.8m and diamond inventory valued at US$75.5m as at 31 March
2021. At 31 December 2020, unrestricted cash was US$92.4m, the Company had
fully drawn bank facilities and the diamond inventory was valued at
US$105.0m.
Board
Following completion of the capital restructuring, the appointment of Mr.
Matthew Glowasky as a Non-Executive Director of the Company became effective.
Matthew’s prospective appointment was initially announced on
22 December 2020.
~ Ends ~
Conference Call:
Participants may join the call by dialling one of the following numbers
shortly before the call:
First Call - 9:30am BST
From the UK: 0330 606 1118
From South Africa (toll free): 80 006 4593
From the rest of the world: +44 330 606 1118
Room Number: 406885
Participant passcode: 0580
A replay of the conference call will be available on the following numbers:
From the UK: 0330 606 1118
From the US (toll free): (877) 890-2416
From South Africa (toll free): 80 006 4593
From the rest of the world: +44 330 606
1118
Playback passcode: 119099
Second Call – 4:00pm BST
An additional conference call to cater for North American and other
international investors will be held at 4:00pm BST today. Participants are
advised to listen to the replay of the first conference call in advance of
this call.
From the United States (toll free): (877) 890-2416
From the rest of the world: +44(0) 333 300 0804
From the UK: 0330 606 1118
From South Africa (toll free): 80 006 4593
From the rest of the world: +44 330 606 1118
Room Number: 406885
Participant passcode: 0580
For further information, please contact:
Petra Diamonds,
London
Telephone: +44 20 7494 8203
Marianna
Bowes
investorrelations@petradiamonds.com
Des Kilalea
Julia Stone
Notes:
1. The following definitions have been used in this announcement:
1. Exceptional Stones: diamonds with a valuation and selling price of US$5m or
more per stone
2. cpht: carats per hundred tonnes
3. Kcts: thousand carats
4. Kt: thousand tonnes
5. LOM: life of mine
6. LTI: lost time injury
7. LTIFR: lost time injury frequency rate
8. Mcts: million carats
9. Mt: million tonnes
10. FY: financial year
11. Q: quarter of the financial year
12. ROM: run-of-mine (i.e. production from the primary orebody)
13. SLC: sub level cave
14. m: million
About Petra Diamonds Limited
Petra Diamonds is a leading independent diamond mining group and a consistent
supplier of gem quality rough diamonds to the international market. The
Company has a diversified portfolio incorporating interests in three
underground producing mines in South Africa (Finsch, Cullinan 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
of ca. 243 million carats, which supports the potential for long-life
operations.
Petra conducts all operations according to the highest ethical standards and
will only operate 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 US$337 million loan notes due
in 2026 will be listed on the Global Exchange market of the Irish Stock
Exchange. For more information, visit www.petradiamonds.com.
APPENDIX – CORPORATE & FINANCIAL AND PRODUCTION & SALES TABLES
Unit 31 March 2021 31 December 2020 30 June 31 March
2020 2020
Closing exchange rate used for conversion R14.77:US$1 R14.69:US$1 R17.32:US$1 R17.84:US$1
Cash at bank (including restricted cash) US$m 153.8 106.3 67.6 77.0
Diamond inventories (1) US$m Carats 75.5 1,020,973 105.0 1,385,402 84.1 1,357,584 61.3 842,144
Diamond debtors US$m 2.6 3.7 4.8 14.9
US$336.7 million loan notes (issued March 2021) (2) US$m 338.7 - - -
US$650 million loan notes (issued April 2017) (3) US$m - 702.0 676.9 650.0
Bank loans and borrowings (4) US$m 108.4 61.2 52.1 28.0
BEE partner bank facilities (4) US$m - 47.2 40.0 40.9
Bank facilities undrawn and available (5) US$m 10.8 - - 22.4
Consolidated net debt (7) US$m 290.7 700.4 693.2 627.0
Notes:
1. Recorded at the lower of cost and net realisable value.
2. The US$336.7 million loan notes represents the gross capital of US$336.7
million of notes, plus accrued interest until the end of the Period, issued
following the Restructuring which completed on 10 March 2021.
3. The US$650 million loan notes represents the gross capital of US$650
million of notes issued on April 2017, plus accrued and unpaid interest for
the relevant periods; these loan notes were settled in full following the
Restructuring which completed on 10 March 2021.
4. Bank loans and borrowings represent amounts drawn under the Group’s
refinanced South African bank facilities as part of the Restructuring, and
comprises the ZAR1.2 billion term loan (US$81.3 million) and ZAR400 million
(US$27.1 million) drawn under the ZAR560 million (US$37.9 million) revolving
credit facility. During the Period and as part of the Restructuring, the BEE
partner bank facilities (which comprised the BEE guarantees) were settled by
the Group through proceeds of the ZAR1.2 billion term loan.
5. Consolidated Net Debt is bank loans and borrowings plus loan notes, less
cash, less diamond debtors and includes the Black Economic Empowerment
guarantees of US$nil (ZARnil) as at 31 March 2021 (ca. US$47.2 million
(ZAR692.8 million) as at 31 December 2020, ca. US$40.0 million (ZAR693.6
million) as at 30 June 2020) ca. US$40.9 million (ZAR729.0 million) as at 31
March 2020).
Group Production and Sales
Unit Q3 FY 2021 Q3 FY 2020 Variance Nine months to 31 March 2021 Nine months to 31 March 2020 Variance
Sales
Diamonds sold Carats 1,069,205 1,082,937 -1% 2,782,002 2,826,744 -2%
Gross revenue US$M 106.0 91.3 +16% 284.2 285.2 0%
Production
ROM tonnes Mt 1.7 3.2 -49% 5.8 10.2 -43%
Tailings & other (1)tonnes Mt 0.1 0.2 -38% 0.3 0.7 -57%
Total tonnes treated Mt 1.8 3.4 -48% 6.1 10.9 -44%
ROM diamonds Carats 656,461 913,017 -28% 2,301,307 2,908,529 -21%
Tailings & other (1)diamonds Carats 48,037 19,439 +147% 144,053 94,168 +53%
Total diamonds Carats 704,498 932,456 -24% 2,445,360 3,002,697 -19%
1. 'Other' includes alluvial diamond mining at Williamson.
Cullinan – South Africa
Unit Q3 FY 2021 Q3 FY 2020 Variance Nine months to 31 March 2021 Nine months to 31 March 2020 Variance
Sales
Revenue US$M 62.9 31.2 +102% 170.2 112.9 +51%
Diamonds sold Carats 651,268 426,283 +53% 1,546,026 1,157,130 +34%
Average price per carat US$ 97 73 +32% 110 98 +13%
ROM Production
Tonnes treated Tonnes 1,054,978 1,016,653 +4% 3,394,451 3,311,850 +2%
Diamonds produced Carats 388,666 391,235 -1% 1,302,292 1,246,606 +4%
Grade cpht 36.8 38.5 -4% 38.4 37.6 +2%
Tailings Production
Tonnes treated Tonnes 105,825 37,412 +183% 327,210 154,524 +112%
Diamonds produced Carats 48,037 9,307 +416% 144,053 43,722 +229%
Grade cpht 45.4 24.9 +82% 44.0 28.3 +56%
Total Production
Tonnes treated Tonnes 1,160,803 1,054,065 +10% 3,721,661 3,466,374 +7%
Diamonds produced Carats 436,703 400,542 +9% 1,446,345 1,290,328 +12%
Note:
1. The Company 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 Q3 FY 2021 Q3 FY 2020 Variance Nine months to 31 March 2021 Nine months to 31 March 2020 Variance
Sales
Revenue US$M 31.4 34.9 -10% 86.2 96.5 -11%
Diamonds sold Carats 391,921 529,443 -26% 1,160,568 1,313,406 -12%
Average price per carat US$ 80 66 +22% 74 73 +1%
Total ROM Production
Tonnes treated Tonnes 460,057 724,690 -37% 1,783,057 2,258,945 -21%
Diamonds produced Carats 253,607 437,537 -42% 948,915 1,318,244 -28%
Grade cpht 55.1 60.4 -9% 53.2 58.4 -9%
Tailings Production
Tonnes treated Tonnes 0 37,373 -100% 0 211,541 -100%
Diamonds produced Carats 0 7,041 -100% 0 39,890 -100%
Grade cpht 0 18.8 -100% 0 18.9 -100%
Total Production
Tonnes treated Tonnes 460,057 762,063 -40% 1,783,057 2,470,486 -28%
Diamonds produced Carats 253,607 444,578 -43% 948,915 1,358,134 -30%
Note:
1. The Company 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.
Koffiefontein – South Africa
Unit Q3 FY 2021 Q3 FY 2020 Variance Nine months to 31 March 2021 Nine months to 31 March 2020 Variance
Sales
Revenue US$M 11.7 8.9 +32% 22.9 23.6 -3%
Diamonds sold Carats 26,007 25,151 +3% 44,951 59,314 -24%
Average price per carat US$ 451 352 +28% 509 398 +28%
ROM Production
Tonnes treated Tonnes 130,494 236,350 -45% 624,155 797,646 -22%
Diamonds produced Carats 14,188 17,307 -18% 50,101 61,852 -19%
Grade cpht 10.9 7.3 +48% 8.0 7.8 +4%
Total Production
Tonnes treated Tonnes 130,494 236,350 -45% 624,155 797,646 -22%
Diamonds produced Carats 14,188 17,307 -18% 50,101 61,852 -19%
Williamson – Tanzania
Unit Q3 FY 2021 Q3 FY 2020 Variance Nine months to 31 March 2021 Nine months to 31 March 2020 Variance
Sales
Revenue US$M 0 16.4 -100% 4.6 52.3 -91%
Diamonds sold Carats 0 102,060 -100% 30,339 296,894 -90%
Average price per carat US$ 0 161 -100% 150 176 -15%
ROM Production
Tonnes treated Tonnes 0 1,225,429 -100% 0 3,880,335 -100%
Diamonds produced Carats 0 66,939 -100% 0 281,827 -100%
Grade cpht 0 5.5 -100% 0 7.3 -100%
Alluvial Production
Tonnes treated Tonnes 0 94,802 -100% 0 293,500 -100%
Diamonds produced Carats 0 3,090 -100% 0 10,555 -100%
Grade cpht 0 3.3 -100% 0 3.6 -100%
Total Production
Tonnes treated Tonnes 0 1,320,231 -100% 0 4,173,835 -100%
Diamonds produced Carats 0 70,029 -100% 0 292,382 -100%
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