TIDMPDL
25 October 2022 LSE: PDL
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$1.0 million shortly after period end through the successful tender offer
to repurchase second lien notes
Safety, sales FY 2023 FY 2022
and production Unit
Q1 Q4 Q3 Q2 Q1 TOTAL
Safety
LTIFR - 0.16 0.33 0.18 0.06 0.31 0.22
LTIs Number 3 6 3 1 5 15
Sales
Diamonds sold Carats 520,011 1,205,240 735,225 1,017,665 578,186 3,536,316
Revenue1 US$m 102.9 178.78 140.6 149.9 114.9 584.1
Contribution US$m 0.0 5.7 5.5 27.7 50.2 89.1
from exceptional
stones
Safety, sales FY 2023 FY 2022
and production Unit
(continued)
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 Tonnes 105,715 65,628 112,414 122,699 115,593 416,334
other tonnes
Total tonnes Tonnes 3,147,731 3,111,471 2,904,808 3,058,187 2,581,637 11,656,103
treated
ROM diamonds Carats 733,014 717,373 780,896 839,643 810,346 3,148,258
Tailings and Carats 30,206 28,417 49,560 61,370 66,065 205,412
other diamonds
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:
1. The following definitions have been used in this announcement:
a. Exceptional Stones: diamonds with a valuation and selling price of US$5m or
more per stone
b. cpht: carats per hundred tonnes
c. LTIs: lost time injuries
d. LTIFR: lost time injury frequency rate, calculated as the number of LTIs
multiplied by 200,000 and divided by the number of hours worked
e. FY: financial year
f. Q: quarter of the financial year
g. ROM: run-of-mine (i.e. production from the primary orebody)
h. m: million
ABOUT PETRA DIAMONDS
Petra Diamonds is a leading independent diamond mining group and a supplier of
gem quality rough diamonds to the international market. The Company's portfolio
incorporates interests in three underground producing mines in South Africa
(Finsch, Cullinan Mine and Koffiefontein) and one open pit mine in Tanzania
(Williamson).
Petra's strategy is to focus on value rather than volume production by
optimising recoveries from its high-quality asset base in order to maximise
their efficiency and profitability. The Group has a significant resource base
of ca. 226.6 million carats, which supports the potential for long-life
operations.
Petra strives to conduct all operations according to the highest ethical
standards and only operates in countries which are members of the Kimberley
Process. The Company aims to generate tangible value for each of its
stakeholders, thereby contributing to the socio-economic development of its
host countries and supporting long-term sustainable operations to the benefit
of its employees, partners and communities.
Petra is quoted with a premium listing on the Main Market of the London Stock
Exchange under the ticker 'PDL'. The Company's loan notes due in 2026 are
listed on the Irish Stock Exchange and admitted to trading on the Global
Exchange Market. For more information, visit www.petradiamonds.com.
Corporate and financial summary 30 September 2022
Unit As at 30 September As at 30 June
2022 2022
Cash at bank - US$m 154.0 288.2
(including
restricted
amounts)¹
Diamond debtors US$m 4.2 37.4
Diamond US$m 76.3 52.7
inventories2,3 Carats 692,219 453,380
2026 US$336.7m US$m 235.8 366.2
loan notes4
Bank loans and US$m - -
borrowings5
Consolidated Net US$m 77.6 40.6
debt6
Bank facilities US$m 55.1 61.5
undrawn and
available5
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:
1. The Group's cash balances comprise unrestricted balances of US$138.2
million, and restricted balances of US$15.8m.
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$336.7m 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$0.1
million of accrued interest.
5. Bank loans and borrowings represent the Group's ZAR1 billion revolving
credit facility which remains undrawn and available.
6. Consolidated Net Debt is bank loans and borrowings plus loan notes, less
cash and diamond debtors.
Mine-by-mine tables:
Cullinan Mine - South Africa
FY 2023 FY 2022
Unit
Q1 Q4 Q3 Q2 Q1 TOTAL
Sales
Revenue US$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 US$ 212 131 180 150 249 170
carat
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
FY 2023 FY 2022
Unit
Q1 Q4 Q3 Q2 Q1 TOTAL
Sales
Revenue US$m 23.4 60.9 39.2 46.4 19.3 165.7
Diamonds sold Carats 177,285 467,195 259,164 474,643 201,652 1,402,654
Average price per US$ 132 130 151 98 96 118
carat
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
FY 2023 FY 2022
Unit
Q1 Q4 Q3 Q2 Q1 TOTAL
Sales
Revenue US$m 21.2 22.4 55.7 20.2 - 75.9
Diamonds sold Carats 71,295 110,386 60,759 26,611 - 197,756
Average price per US$ 297 301 369 760 - 384
carat
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
FY 2023 FY 2022
Unit
Q1 Q4 Q3 Q2 Q1 TOTAL
Sales
Revenue US$m 1.4 5.0 5.4 8.3 2.8 21.5
Diamonds sold Carats 3,703 10,043 6,269 16,400 4,238 36,950
Average price per US$ 383 500 856 505 664 581
carat
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.
END
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