Petra Diamonds
Limited
Q1 FY 2023
Operating Update
Petra reports strong operating results
for the first quarter of FY 2023
Richard Duffy, Chief Executive
Officer of Petra, commented:
“Petra continued its solid and safe
operating performance into the first quarter of FY 2023. We
maintain our production guidance for the year, although expect this
will be towards the lower end of the range for Cullinan Mine and
Finsch. We are very pleased with the successful tender offer for
our bonds that has further strengthened our balance sheet through a
reduction in gross debt of US$143.6m
over the quarter which will save Petra some US$14m in annual interest payments.”
Highlights
- LTIFR improved 48% YoY and 43% against Q4 FY 2022 to 0.16
- LTIs improved 40% YoY and 50% against Q4 FY 2022 to 3
- Ore processed increased 22% YoY due to the resumption of mining
at Williamson in Tanzania and in
line with Q4 FY 2022
- Production was down 13% YoY to 763,220 carats due to lower
grades at Cullinan Mine and Finsch but 2% higher than Q4 FY
2022
- Guidance for FY 2023 remains unchanged, although production is
now expected to be at the lower end of guidance as discussed
below
- Revenue amounted to US$104.3
million (Q1 FY 2022: US$114.9
million, Q4 FY 2022 US$179.8)
- Revenue includes US$1.4 million
from Petra’s 50% share in the profit from the sale of polished
stones cut from the 342.92 carat rough white diamond sold into a
partnership for US$10 million in
August 2021
- Gross debt reduced by US$143.6
million during the quarter, with a further US$1.0 million shortly after period end through
the successful tender offer to repurchase second lien notes
Safety,
sales and production |
Unit |
FY
2023 |
FY 2022 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
TOTAL |
Safety |
|
|
|
|
|
|
|
LTIFR |
- |
0.16 |
0.33 |
0.18 |
0.06 |
0.31 |
0.22 |
LTIs |
Number |
3 |
6 |
3 |
1 |
5 |
15 |
|
|
|
|
|
|
|
|
Sales |
|
|
|
|
|
|
|
Diamonds sold |
Carats |
520,011 |
1,205,240 |
735,225 |
1,017,665 |
578,186 |
3,536,316 |
Revenue1 |
US$m |
102.9 |
178.78 |
140.6 |
149.9 |
114.9 |
584.1 |
Contribution from
exceptional stones |
US$m |
0.0 |
5.7 |
5.5 |
27.7 |
50.2 |
89.1 |
Safety,
sales and production (continued) |
Unit |
FY
2023 |
FY 2022 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
TOTAL |
Production |
|
|
|
|
|
|
|
ROM tonnes |
Tonnes |
3,042,017 |
3,045,843 |
2,792,394 |
2,935,488 |
2,466,044 |
11,239,768 |
Tailings and other
tonnes |
Tonnes |
105,715 |
65,628 |
112,414 |
122,699 |
115,593 |
416,334 |
Total tonnes
treated |
Tonnes |
3,147,731 |
3,111,471 |
2,904,808 |
3,058,187 |
2,581,637 |
11,656,103 |
|
|
|
|
|
|
|
|
ROM diamonds |
Carats |
733,014 |
717,373 |
780,896 |
839,643 |
810,346 |
3,148,258 |
Tailings and other
diamonds |
Carats |
30,206 |
28,417 |
49,560 |
61,370 |
66,065 |
205,412 |
Total diamonds |
Carats |
763,220 |
745,790 |
830,456 |
901,013 |
876,411 |
3,353,670 |
1 Revenue reflects proceeds from the sale
of rough diamonds and excludes revenue from profit share
arrangements (as noted in the text above)
Strong and safe production
- LTI and LTIFR continued to improve due to the ongoing focus on
identifying and mitigating safety risks and behaviour-based
intervention programmes
- Cullinan Mine mined and treated 1.1mt for the quarter. ROM
grades were in line with those achieved in Q4 FY 2022 at 33.2cpht.
This is attributable to a lower ROM grade resulting from the
previously announced change in the ore make-up of the C-Cut block
cave footprint as the production progresses from SW to NE due to
cave maturity with a higher proportion of cave waste. Various
options are being considered to mitigate this impact. Production
guidance for the full year remains unchanged although this is now
expected to be towards the lower end of the range.
- Finsch tonnes from underground were negatively impacted by a
S54 stoppage notice (since been addressed) and lower tunnel
availability on 73 and 75 levels. ROM grade benefited from enhanced
drill, blast and draw controls previously reported on, as well as
certain changes effected in the treatment plant. During the
quarter, the implementation of the Business Re-engineering (BRE)
Project at Finsch progressed to match our cost base to our revised
production levels. Production guidance for the full year remains
unchanged, although this is expected to be towards the lower end of
the guidance range.
- Production at Williamson improved over the prior quarter (Q4 FY
2022), bolstered by an increase in tonnes treated and grade. Full
year production guidance remaining unchanged.
- Petra has been exploring options for a responsible exit at
Koffiefontein, as the mine approaches the end of its mine plan. The
sales process announced in April 2022
however has not resulted in a potential buyer for the mine and
Petra is therefore exploring alternative options in close
consultation with its stakeholders. The impact on production
guidance will be confirmed once a decision on the way forward has
been reached.
Balance sheet further strengthened
through successful debt tender offer
- Balance Sheet as at 30 September
2022:
- Consolidated net debt of US$77.6
million (30 June 2022:
US$40.6 million), increasing in line
with expectations due to the Company’s tender cycle and resultant
inventory build during the quarter
- Gross cash of US$154.0 million
(30 June 2022: US$288.2 million) and unrestricted cash of
US$138.2 million (30 June 2022: US$271.9
million) reflecting the repurchase of the company’s loan
notes totalling US$143.6 million
during the Quarter, with a further US$1.0
million shortly after period end.
Outlook
We continue to benefit from the operational improvements we have
made across the business which provide for greater stability and
resilience. We will continue to seek to mitigate the impact of the
recent challenges experienced at Cullinan Mine and Finsch and
remain confident in our ability to generate cash to fund capex,
allow further deleveraging and the payment of dividends.
While our operations have benefitted from a weaker Rand, we
continue to closely monitor the current macro-economic
uncertainties, particularly the impact of inflation on our cost
base, and the impact of sanctions on Russian producers as well as
the ongoing implications of COVID-19 on demand in China. The backdrop of structural changes to
the supply and demand fundamentals in the diamond market remains
unchanged and we anticipate it to remain supportive going forward,
although we expect some short-term volatility driven largely by the
ongoing lockdowns in China.
We have extended the closing of our second sales tender for FY
2023 for a portion of our gem and near gem quality goods,
particularly in the +1ct to 5ct size ranges, as a result of unusual
market conditions with some build up in inventory pre-Diwali.
Pricing in other size categories are in line with expectations. We
will confirm the sales results for this tender around mid-November.
This extension is not currently expected to have any impact on the
closing of our third sales tender.
CONFERENCE CALLS
09:30am
and 16:00 BST today
Petra’s CEO, Richard Duffy, and
CFO, Jacques Breytenbach, will host
calls today to discuss this trading update at 09:30 and
16:00 BST.
Registration for calls:
United
Kingdom
0800 640 6441
South
Africa
087 550
8441
United States
(Local) 1 646 664
1960
All other
locations
+44 20 3936 2999
09:30: Access
code: 511492
16:00: Access
code: 342891
Press *1 to ask a question, *2 to
withdraw your question, or *0 for operator assistance.
Link for recording (available later today):
https://www.petradiamonds.com/investors/results-reports/
Investor Meet webcast at 11.30 BST
Petra will present the results 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
Petra Diamonds,
London
Telephone: +44 207494 8203
Patrick Pittaway
investorrelations@petradiamonds.com
Julia Stone
Notes:
- The following definitions have been used in this
announcement:
- Exceptional Stones: diamonds with a valuation and selling
price of US$5m or more per
stone
- cpht: carats per hundred tonnes
- LTIs: lost time injuries
- LTIFR: lost time injury frequency rate, calculated as the
number of LTIs multiplied by 200,000 and divided by the number of
hours worked
- FY: financial year
- Q: quarter of the financial year
- ROM: run-of-mine (i.e. production from the primary
orebody)
- m: million
ABOUT PETRA DIAMONDS
Petra Diamonds is a leading independent diamond mining group and
a supplier of gem quality rough diamonds to the international
market. The Company’s portfolio incorporates interests in three
underground producing mines in South
Africa (Finsch, Cullinan Mine and Koffiefontein) and one
open pit mine in Tanzania
(Williamson).
Petra's strategy is to focus on value rather than volume
production by optimising recoveries from its high-quality asset
base in order to maximise their efficiency and profitability. The
Group has a significant resource base of ca. 226.6 million carats,
which supports the potential for long-life operations.
Petra strives to conduct all operations according to the highest
ethical standards and only operates in countries which are members
of the Kimberley Process. The Company aims to generate tangible
value for each of its stakeholders, thereby contributing to the
socio-economic development of its host countries and supporting
long-term sustainable operations to the benefit of its employees,
partners and communities.
Petra is quoted with a premium listing on the Main Market of the
London Stock Exchange under the ticker 'PDL'. The Company’s loan
notes due in 2026 are listed on the Irish Stock Exchange and
admitted to trading on the Global Exchange Market. For more
information, visit www.petradiamonds.com.
Corporate and financial summary
30 September 2022
|
Unit |
As at
30 September
2022 |
As at
30 June
2022 |
Cash at bank –
(including restricted amounts)¹ |
US$m |
154.0 |
288.2 |
Diamond debtors |
US$m |
4.2 |
37.4 |
Diamond
inventories2,3 |
US$m
Carats |
76.3
692,219 |
52.7
453,380 |
2026 US$336.7m loan
notes4 |
US$m |
235.8 |
366.2 |
Bank loans and
borrowings5 |
US$m |
— |
— |
Consolidated Net
debt6 |
US$m |
77.6 |
40.6 |
Bank facilities
undrawn and available5 |
US$m |
55.1 |
61.5 |
Note: The following exchange rates have
been used for this announcement: average for Q1 FY 2023
US$1: ZAR17.02 (FY 2022: US$1: ZAR15.22);
closing rate as at 30 September 2022
US$1: ZAR18.15 (30 June
2022: US$1: ZAR16.27).
Notes:
- The Group’s cash balances comprise unrestricted balances of
US$138.2 million, and restricted
balances of US$15.8m.
- Recorded at the lower of cost and net realisable
value.
- 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.
- The 2026 US$336.7m loan notes,
originally issued following the capital restructuring (the
“Restructuring”) completed during March
2021, have a carrying value of US$235.8 million which represents the outstanding
principal amount of US$211.1 million
(after the early participation phase of the debt tender offer as
announced on 27 September 2022) plus
US$38.7 million of accrued interest
and net of unamortised transaction costs capitalised of
US$14.0 million. Post period end, as
announced on 12 October 2022, a
further US$1.0 million was
repurchased in the final phase of the tender offer comprising,
US$0.9 million (principal amount) and
US$0.1 million of accrued
interest.
- Bank loans and borrowings represent the Group’s ZAR1 billion revolving credit facility which
remains undrawn and available.
- Consolidated Net Debt is bank loans and borrowings plus loan
notes, less cash and diamond debtors.
Mine-by-mine tables:
Cullinan Mine – South Africa
|
Unit |
FY
2023 |
FY 2022 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
TOTAL |
Sales |
|
|
|
|
|
|
|
Revenue |
US$m |
56.9 |
81.0 |
73.7 |
74.9 |
92.8 |
322.4 |
Diamonds sold |
Carats |
267,728 |
617,677 |
409,030 |
500,008 |
372,296 |
1,899,011 |
Average price per
carat |
US$ |
212 |
131 |
180 |
150 |
249 |
170 |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,110,912 |
1,090,897 |
1,053,631 |
1,099,644 |
1,207,343 |
4,451,515 |
Diamonds produced |
Carats |
368,796 |
362,249 |
404,473 |
411,236 |
431,967 |
1,609,925 |
Grade1 |
Cpht |
33.2 |
33.2 |
38.4 |
37.4 |
35.8 |
36.2 |
|
|
|
|
|
|
|
|
Tailings
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
77,572 |
62,844 |
112,414 |
122,699 |
115,593 |
413,550 |
Diamonds produced |
Carats |
26,790 |
28,056 |
49,560 |
61,369 |
66,065 |
205,050 |
Grade1 |
Cpht |
34.5 |
44.6 |
44.1 |
50.0 |
57.2 |
49.6 |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,188,484 |
1,153,741 |
1,166,045 |
1 222,343 |
1,322,936 |
4,865,065 |
Diamonds produced |
Carats |
395,586 |
390,305 |
454,033 |
472,605 |
498,032 |
1,814,975 |
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 |
FY
2023 |
FY 2022 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
TOTAL |
Sales |
|
|
|
|
|
|
|
Revenue |
US$m |
23.4 |
60.9 |
39.2 |
46.4 |
19.3 |
165.7 |
Diamonds sold |
Carats |
177,285 |
467,195 |
259,164 |
474,643 |
201,652 |
1,402,654 |
Average price per
carat |
US$ |
132 |
130 |
151 |
98 |
96 |
118 |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
572,976 |
650,670 |
656,408 |
721,741 |
701,378 |
2,730,197 |
Diamonds produced |
Carats |
260,217 |
269,828 |
303,591 |
351,174 |
350,368 |
1,274,961 |
Grade |
Cpht |
45.4 |
41.5 |
46.3 |
48.7 |
50.0 |
46.7 |
|
|
|
|
|
|
|
|
Tailings
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
17,305 |
2,785 |
- |
- |
- |
2,785 |
Diamonds produced |
Carats |
3,160 |
362 |
- |
- |
- |
362 |
Grade1 |
Cpht |
18.3 |
13.0 |
- |
- |
- |
13.0 |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
590,281 |
653,454 |
656,408 |
721,741 |
701,378 |
2,732,982 |
Diamonds produced |
Carats |
263,377 |
270,190 |
303,591 |
351,174 |
350,368 |
1,275,323 |
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 |
FY
2023 |
FY 2022 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
TOTAL |
Sales |
|
|
|
|
|
|
|
Revenue |
US$m |
21.2 |
22.4 |
55.7 |
20.2 |
- |
75.9 |
Diamonds sold |
Carats |
71,295 |
110,386 |
60,759 |
26,611 |
- |
197,756 |
Average price per
carat |
US$ |
297 |
301 |
369 |
760 |
- |
384 |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,309,359 |
1,231,082 |
1,005,901 |
988,978 |
365,138 |
3,591,099 |
Diamonds produced |
Carats |
100,750 |
80,194 |
65,003 |
68,453 |
14,420 |
228,070 |
Grade |
Cpht |
7.7 |
6.5 |
6.5 |
6.9 |
3.9 |
6.4 |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,309,359 |
1,231,082 |
1,005,901 |
988,978 |
365,138 |
3,591,099 |
Diamonds produced |
Carats |
100,750 |
80,194 |
65,003 |
68,453 |
14,420 |
228,070 |
Koffiefontein – South Africa
|
Unit |
FY
2023 |
FY 2022 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
TOTAL |
Sales |
|
|
|
|
|
|
|
Revenue |
US$m |
1.4 |
5.0 |
5.4 |
8.3 |
2.8 |
21.5 |
Diamonds sold |
Carats |
3,703 |
10,043 |
6,269 |
16,400 |
4,238 |
36,950 |
Average price per
carat |
US$ |
383 |
500 |
856 |
505 |
664 |
581 |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
48,770 |
73,194 |
76,453 |
125,126 |
192,184 |
466,957 |
Diamonds produced |
Carats |
3,253 |
5,101 |
7,829 |
8,780 |
13,592 |
35,302 |
Grade1 |
Cpht |
6.7 |
7.0 |
10.2 |
7.0 |
7.1 |
7.6 |
|
|
|
|
|
|
|
|
Tailings
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
10,837 |
- |
- |
- |
- |
- |
Diamonds produced |
Carats |
255 |
- |
- |
- |
- |
- |
Grade1 |
Cpht |
2.4 |
- |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
59,607 |
73,194 |
76,453 |
125,126 |
192,184 |
466,957 |
Diamonds produced |
Carats |
3,508 |
5,101 |
7,829 |
8,780 |
13,592 |
35,302 |
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.