TIDMPDL
RNS Number : 5239M
Petra Diamonds Limited
15 September 2023
15 September 2023 LSE: PDL
Petra Diamonds Limited
("Petra or "the Company")
Preliminary Results for FY 2023 (unaudited)
Strengthened Balance Sheet and Stabilising Production sets Path
for Growth
Petra announces its preliminary results (unaudited) for the year
ended 30 June 2023 (FY 2023 or Year).
Richard Duffy, Chief Executive Officer of Petra, commented:
"FY 2023 has demonstrated the improved resilience of Petra's
operating model as we realise value from our operations, placing us
in a strong position to deliver on our stated target of increasing
annual group production by up to 1.3 million carats in FY 2026 as
we continue to develop the long-term potential of our large
resource base.
Production in FY 2023 at 2.67 Mcts, while marginally below
revised guidance on the back of some operating challenges, showed
an improving trend during the second half as operating performance
stabilised. Williamson restarted production in July 2023 and is
ramping up ahead of schedule. Key Group operational guidance is
maintained.
In line with our objective of reducing gross debt while
investing in organic growth and life extension, we successfully
repurchased just over one-third, or US$144.6 million, of the
Company's 2026 loan notes during the Year, both strengthening our
balance sheet and reducing future interest costs. This, coupled
with our flexible sales process, enabled us to delay the sales of
some diamonds from our last two Tenders of FY 2023, in expectation
of improved pricing.
The first Tender of FY 2024 reflected persistent softer market
conditions due to prevailing macro-economic uncertainties around
high interest and inflation rates. Although there has been some
stabilisation in global economies and growth outlooks for CY 2023,
the economic outlook for CY 2024 is now more subdued.
Notwithstanding this, we continue to see the prevailing structural
supply deficit of diamonds providing market support in the medium
to longer term.
Actions taken to strengthen our business and improve cash flow
generation, together with our capital discipline around investing
in the growth and life extension of our operations, means that
Petra is resilient in the short-term and well placed in the medium
to longer term to leverage these continued supportive diamond
market fundamentals."
Balance sheet remains robust despite lower production and
deferred tender sales
-- The results, where appropriate, exclude Koffiefontein which
has been classified as a discontinued operation
-- FY 2023 revenue amounted to US$325.3 million (FY 2022:
US$563.7 million), including revenue from profit share agreements
of US$1.4 million (FY 2022: US$1.1 million)
-- The average realised price in FY 2023 was US$139/ct, down 14%
from US$161/ct in FY 2022, largely due to product mix, partially
offset by a 2% like-for-like price increase
-- Adjusted mining and processing costs benefitted from a weaker
ZAR:USD, lower production volumes and royalties, cost savings and
diamond inventory movement. These factors were partly offset by
cost inflation and care & maintenance costs at Williamson
following the Tailings Storage Facility (TSF) failure
-- Adjusted EBITDA, being profit from mining activities less
adjusted corporate overheads, reduced to US$113.1 million (FY 2022:
US$277.8 million), representing a margin of 35%, driven by lower
production, Williamson being on care and maintenance for around 7
months of the Year and the reduced contribution from Exceptional
Stones (those sold for US$5 million or more each), partially
off-set by a weaker ZAR:USD
-- Adjusted net loss of US$2.3 million down from US$115.2 million profit (FY 2022)
-- Adjusted loss per share of USc2.96, down from USc48.01 profit (FY 2022)
-- Operational free cash outflow of US$66.5 million (FY 2022:
US$230.0 million inflow) due to reduced sales, including the
deferral of sales to FY 2024, and the planned increase in capital
expenditure
-- Consolidated net debt increased to US$176.8 million (30 June 2022: US$40.6 million)
-- In September 2022, the Group repurchased a portion of the
2026 loan notes which reduced the Group's loan and borrowings to
US$247.5 million at Year-end, and reduced future interest costs
US$m unless stated otherwise FY 2023 FY 2022 Variance
Restated(2)
Rough diamonds sold (carats) 2,329,817 3,499,412 -33%
Revenue 325.3 563.7 -42%
Average realised price per carat
(US$/carat) 139 161 -14%
Adjusted mining and processing costs 202.1 272.5 -26%
Adjusted EBITDA(1) 113.1 277.8 -59%
Adjusted EBITDA margin (%)(1) 35% 49% -29%
Adjusted profit before tax (1) 8.3 155.1 -95%
Adjusted (loss) / profit after tax
(1) (2.3) 115.2 -102%
Net (loss) / profit after tax (102.4) 88.1 -216%
Basic (loss) / profit per share (USc) (38.10) 40.74 -193%
Adjusted (loss) / profit per share(1)
(USc) (2.96) 48.01 -106%
--------------------------------------- ---------- ------------- ---------
Capital expenditure 117.1 51.6 127%
Operational free cashflow (1) (66.5) 230.0 -129%
--------------------------------------- ---------- ------------- ---------
Consolidated net debt(1) 176.8 40.6 335%
Unrestricted cash 44.1 271.9 -84%
Consolidated net debt : Adjusted
EBITDA (1) 1.6x 0.15x 970%
--------------------------------------- ---------- ------------- ---------
Note 1: For all non-GAAP measures refer to the Summary of
Results table within the Financial Results section below
Note 2: During the Year, Koffiefontein was place on care and
maintenance activities in the run-up to a responsible closure.
Koffiefontein is classified as a discontinued operation in FY 2023
as it has been 'abandoned" in terms of IFRS 5. For comparative
purposes, the relevant FY 2022 results have been restated to
exclude Koffiefontein
Ongoing focus on sustainability and zero harm working
environment
Our Sustainability Framework is being embedded into Petra's
operating model. Sustainability targets will be detailed in the FY
2023 Sustainability Report due to be released in October 2023.
Valuing our people
-- In FY 2023, we recorded 17 lost time injuries (LTIs), a 13%
increase from FY 2022, which translated to a lost time injury
frequency rate (LTIFR) of 0.24 per 200,000 hours worked, up from
0.22 in FY 2022. This largely reflected the ramping up of the two
extension projects at Cullinan Mine and Finsch and a single,
blasting-related, incident at Cullinan Mine in which four employees
were regrettably injured and have since fully recovered
-- In striving for a zero-harm environment, we continue to focus
on remedial actions and behaviour-based intervention programmes
across our operations
-- New Petra Culture Code roll out underway
Respecting our Planet
-- Progress on Petra's response to Climate Change was achieved
through formulating a Climate Change Mitigation and Adaptation
Strategy, setting interim milestones to reach a 35-40% reduction by
2030 (against the 2019 baseline) towards our ambition to reach
net-zero for Scopes 1 and 2 emissions by 2040
-- Following the TSF failure at Williamson, efforts focused on
achieving soil remediation and restoring the ecological
functionality of the affected areas, with preliminary indicators
reflecting positive outcomes
Driving Shared Value Partnerships
-- Our support for local communities was accelerated through our
committed efforts in generating sustainable value through our
Social and Labour compacts
-- Prioritised actions were taken to ensure all affected
community members following Williamson's TSF failure were provided
alternative arrangements, including temporary and new
accommodation, livelihood restoration and health and wellness
support
Delivering Reliable Production
-- Continuing focus on stabilising operational performance, with
Cullinan Mine on track, Williamson's ramp-up ahead of schedule and
Finsch experiencing some volatility
-- Our on-mine capital investments increased by 129% to US$115.3
million, of which US$72.4m was spent on life extension projects
that will contribute to our increased carat production over the
coming years
Adjusted profit contribution per mine
US$ millions FY 2023(1) FY 2022 Restated(1,2)
CDM FDM WDL Central Total CDM FDM WDL Central Total
------ ------ ------ ------- ------- ------ ------- -------
Revenue 182.9 93.3 49.1 - 325.3 322.4 165.7 75.9 (0.3) 563.7
Adjusted mining
and processing
costs(3) (82.0) (65.6) (54.3) (0.2) (202.1) (116.7) (109.0) (45.5) (1.3) (272.5)
Other direct
income/(expenses) - 0.1 (0.6) - (0.5) (0.7) (0.4) 0.1 - (1.0)
Adjusted profit
from mining activities 100.9 27.8 (5.8) (0.2) 122.7 205.0 56.3 30.5 (1.6) 290.2
------ ------ ------ ------- ------- ------
Adjusted profit
margin 55% 30% -12% 38% 64% 34% 40% 52%
------ ------ ------ ------- ------- ------- ------- ------ ------- -------
Other corporate
income Not allocated per mine 1.0 Not allocated per mine 0.6
------------------------------- ---------------------------------
Adjusted Group
G&A (10.6) (13.0)
------ ------ ------ ------- ------- ------- ------- ------ ------- -------
Adjusted EBITDA(1) 113.1 277.8
------ ------ ------ ------- ------- ------- ------- ------ ------- -------
Note 1: For all non-GAAP measures refer to the Summary of
Results table within the Financial Results section below
Note 2: FY 2022 restated to exclude Koffiefontein which is
classified as a discontinued operation.
Note 3: Adjusted mining and processing costs include certain
technical and support activities which are conducted on a
centralised basis; these include sales & marketing, human
resources, finance & supply chain, technical, and other
functions. For purposes of above, these costs have been allocated
60% to CDM and 40% to FDM. For more information, refer to
operational cost reconciliation available on the analyst guidance
pages on our website.
Adjusted profit from mining activities decreased 58% to US$122.7
million (FY 2022: US$290.2 million), mainly due to lower sales of
Exceptional Stones ( those sold for US$5 million or more each)
during the Year, the impact of lower carats recovered and increased
costs at Williamson for care and maintenance following the TSF
failure.
Capital expenditure breakdown
US$ millions FY 2023 FY 2022 Adjusted(1)
Cullinan Cullinan
Mine Finsch Williamson Central Total Mine Finsch Williamson Central Total
-------- ------ ---------- ------- ----- -------- ------ ---------- ------- -----
Extension 41.1 31.3 - - 72.4 27.3 7.0 - - 34.3
Stay in
Business 11.7 11.9 19.3 1.8 44.7 7.7 5.0 3.3 1.3 17.3
-------- ------ ---------- ------- ----- -------- ------ ---------- ------- -----
Total 52.8 43.2 19.3 1.8 117.1 35.0 12.0 3.3 1.3 51.6
-------- ------ ---------- ------- ----- -------- ------ ---------- ------- -----
Note 1: FY 2022 restated to exclude Koffiefontein, classified as
a discontinued operation
Total capital expenditure amounted to US$117.1 million for the
Year following the ramping up of underground extension projects at
both Cullinan Mine and Finsch.
The increase in stay in business capital expenditure was largely
due to the replacement of underground fleet at Finsch to mitigate
the machine availability challenges encountered during the Year and
an increase at Williamson due to the construction of the new TSF
facility.
Dividends
In line with our dividend policy, no dividends are proposed for
FY 2023 and the Board will review this again in FY 2024.
Group production summary
Below is a summary of Group production for FY 2023 (excluding
Koffiefontein)
Production FY 2023 FY 2022
-------- ----------
ROM tonnes Tonnes 8,637,232 10,772,811
----------------------------- -------- ---------- -----------
Tailings and other tonnes Tonnes 399,877 416,335
----------------------------- -------- ---------- -----------
Total tonnes treated Tonnes 9,037,109 11,189,146
----------------------------- -------- ---------- -----------
ROM diamonds Carats 2,517,309 3,112,956
----------------------------- -------- ---------- -----------
Tailings and other diamonds Carats 149,216 205,412
----------------------------- -------- ---------- -----------
Total diamonds Carats 2,666,525 3,318,368
----------------------------- -------- ---------- -----------
Outlook
Actions taken to strengthen our business and improve cash flow
generation, together with our capital discipline, means that Petra
is well placed to take advantage of the medium and longer-term
supportive diamond market fundamentals. In FY 2024, we will
continue to focus on stabilising operational performance. Our
projects remain on track to contribute to the Group's increased
annual production by up to 1.3 million carats in FY 2026 as we
continue to develop the long-term potential of our large resource
base. We remain confident that we will continue to generate
sufficient cash to fund capex.
Market outlook
We expect rough diamond demand will continue to be subdued in
the short-term on account of increased polished inventory,
prolonged weakness in the Chinese market, lab-grown diamond sales
in the bridal jewellery segment and higher interest rates impacting
the mid-stream in particular. Although demand for lab grown goods
increased, this was coupled with further price depreciation that
continues to substantially differentiate this market segment from
our unique and rare natural diamonds that provide enduring benefit
in celebrating life's most significant moments. As a result, the
Group expects ongoing price volatility in the short-term, but
remains confident that the structural supply deficit will support
medium to long-term diamond prices.
Group pricing assumptions
Set out below are the Group's current diamond pricing
assumptions for each of its mines for FY 2024 and how these compare
to FY 2023 achieved prices. Future diamond prices are influenced by
a range of factors outside of the Group's control and so these
assumptions are internal estimates only and no reliance should be
placed on them. The Company's pricing assumptions will be
considered on an ongoing basis and may be updated by the Company
from time to time.
Average US$ per carat price FY 2023 achieved FY 2024 assumptions(1)
Cullinan Mine 139(2) 125 - 140
Finsch 110(2) 105 - 120
Williamson 280 (H1 only) 240 - 270
------------------------------ ------------------ ------------------------
Note 1: Excluding the contribution of Exceptional Stones of
US$15 million or more, as defined below
Note 2: Prices achieved were impacted by the deferral of sales
to FY 2024
Given the impact of product mix on average prices, tender to
tender price variability is expected.
Williamson is expected to see some variability in its product
mix and prices over coming tenders as it continues its ramp-up to
steady-state production.
Change to the Company's definition of Exceptional Stones
The Company has historically defined diamonds which sell for
US$5 million or more as being Exceptional Stones. From FY 2024, the
Company has amended this definition to diamonds which sell for
US$15 million or more. Since 2016, only three Exceptional Stones
have been sold that meet this new threshold, highlighting the
rarity of such diamonds. Revenue from Exceptional Stones exceeding
US$15 million may be regarded as windfall earnings for the Group,
to be applied in line with our Capital Allocation framework.
Key operational guidance maintained
FY 24E FY 25E FY 26E
Total carats recovered (Mcts) 2.9 - 3.2 3.4 - 3.7 3.7 - 4.0
Cash on-mine costs and G&A(1) (US$m) 270 - 290 270 - 290 280 - 300
Extension capex(1) (US$m) 124 - 135 109 - 125 85 - 92
Sustaining capex(1) (US$m) 31 - 36 24 - 28 24 - 28
--------------------------------------- ---------- ---------- ----------
Note 1: 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
More detailed guidance is available on Petra's website at
https://www.petradiamonds.com/investors/analysts/analyst-guidance/
PRESENTATION DETAILS
Richard Duffy, CEO, Jacques Breytenbach, CFO, will present the
results to investors and analysts.
Online at 09.30 BST
To join
https://stream.brrmedia.co.uk/broadcast/64be9e441589e5759adc7f73
Dial in details
-- South Africa (toll free): 0800 980 512
-- UK: +44 (0)33 0551 0200
-- USA: +1 786 697 3501
Password: Quote Petra Diamonds when prompted by the operator
Recording of presentation
A recording of the webcast will be available later today on
Petra's website at
https://www.petradiamonds.com/investors/presentations or on
https://brrmedia.news/PDL_FY23
Investor Meet company presentation 14.30 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
Petra Diamonds, London +44 207 494 8203
Patrick Pittaway investorrelations@petradiamonds.com
Julia Stone
Kelsey Traynor
Camarco (Financial PR)
Gordon Poole Telephone: +44 20 3757 4980
Owen Roberts petradiamonds@camarco.co.uk
Elfie Kent
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 Group'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 Group 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 Group'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 .
FINANCIAL RESULTS
SUMMARY RESULTS (unaudited)
(Restated)
Year ended 30 June 2023 Year ended 30 June 2022
("FY 2023") ("FY 2022")
US$ million US$ million
------------------------- --------------------------
Revenue 325.3 563.7
--------------------------------------------------------------- ------------------------- --------------------------
Adjusted mining and processing costs(1) (202.1) (272.5)
--------------------------------------------------------------- ------------------------- --------------------------
Other net direct mining income / (expense) (0.5) (1.0)
--------------------------------------------------------------- ------------------------- --------------------------
Adjusted profit from mining activity(2) 122.7 290.2
--------------------------------------------------------------- ------------------------- --------------------------
Other corporate income 1.0 0.6
--------------------------------------------------------------- ------------------------- --------------------------
Adjusted corporate overhead (3) (10.6) (13.0)
--------------------------------------------------------------- ------------------------- --------------------------
Adjusted EBITDA(4) 113.1 277.8
--------------------------------------------------------------- ------------------------- --------------------------
Depreciation and Amortisation (80.5) (85.0)
--------------------------------------------------------------- ------------------------- --------------------------
Share-based expense (2.3) (1.1)
--------------------------------------------------------------- ------------------------- --------------------------
Net finance expense (8) (22.0) (36.6)
--------------------------------------------------------------- ------------------------- --------------------------
Adjusted profit before tax 8.3 155.1
--------------------------------------------------------------- ------------------------- --------------------------
Tax expense (excluding taxation credit on unrealised foreign
exchange gain / (loss)) (5) (10.6) (39.9)
--------------------------------------------------------------- ------------------------- --------------------------
Adjusted net (loss)/profit after tax(6) (2.3) 115.2
--------------------------------------------------------------- ------------------------- --------------------------
Impairment reversal - operations and other receivables(7) 52.7 24.3
--------------------------------------------------------------- ------------------------- --------------------------
Impairment charge - operations and non-financial
receivables(7) (37.6) (4.4)
--------------------------------------------------------------- ------------------------- --------------------------
Transaction costs and acceleration of unamortised costs on (9.1) -
partial redemption of Notes (8)
--------------------------------------------------------------- ------------------------- --------------------------
Gain on extinguishment of Notes 0.6 -
--------------------------------------------------------------- ------------------------- --------------------------
Williamson tailings facility - remediation costs (10.7) -
--------------------------------------------------------------- ------------------------- --------------------------
Williamson tailings facility - accelerated depreciation (5.2) -
--------------------------------------------------------------- ------------------------- --------------------------
WDL blocked parcel inventory write down and related receivable (12.5) -
recognition(14)
--------------------------------------------------------------- ------------------------- --------------------------
WDL receivable recognition(14) 12.4
--------------------------------------------------------------- ------------------------- --------------------------
Movement in provision for unsettled and disputed tax claims 0.3 -
--------------------------------------------------------------- ------------------------- --------------------------
Human rights IGM claims provision and transaction (costs) /
reversal of settlement agreement (8.5) 0.8
--------------------------------------------------------------- ------------------------- --------------------------
Net unrealised foreign exchange loss (29.4) (36.4)
--------------------------------------------------------------- ------------------------- --------------------------
Taxation credit on unrealised foreign exchange loss(4) 1.2 2.2
--------------------------------------------------------------- ------------------------- --------------------------
Taxation charge on impairment reversal (13.8) -
--------------------------------------------------------------- ------------------------- --------------------------
(Loss) / profit from continuing operations (61.9) 101.7
--------------------------------------------------------------- ------------------------- --------------------------
Loss on discontinued operations, net of tax(7) (40.5) (13.6)
--------------------------------------------------------------- ------------------------- --------------------------
Net (loss) / profit after tax (102.4) 88.1
--------------------------------------------------------------- ------------------------- --------------------------
Earnings per share attributable to equity holders of the
Company -
US cents
--------------------------------------------------------------- ------------------------- --------------------------
Basic (loss) / profit per share - from continuing and
discontinued operations (54.21) 35.53
--------------------------------------------------------------- ------------------------- --------------------------
Basic (loss) / profit per share - from continuing operations (38.10) 40.74
--------------------------------------------------------------- ------------------------- --------------------------
Adjusted (loss) / profit per share - from continuing
operations(9) (2.96) 48.01
--------------------------------------------------------------- ------------------------- --------------------------
As at
As at 30 June 2023 30 June 2022
Unit (US$ million) (US$ million)
-------- -------------------
Cash at bank - (including restricted amounts) US$m 61.8 288.2
----------------------------------------------------------------- -------- ------------------- ----------------
Diamond debtors US$m 8.9 37.4
----------------------------------------------------------------- -------- ------------------- ----------------
Diamond inventories(14) US$m 65.9 52.7
/Cts 715,222 453,380
-------------------------------------------------------------------------- ------------------- ----------------
Loan notes (issued March 2021) (10) US$m 247.5 366.2
----------------------------------------------------------------- -------- ------------------- ----------------
Bank loans and borrowings(11) US$m - -
----------------------------------------------------------------- -------- ------------------- ----------------
Consolidated net debt(12) US$m 176.8 40.6
----------------------------------------------------------------- -------- ------------------- ----------------
Bank facilities undrawn and available(11) US$m 53.1 61.5
----------------------------------------------------------------- -------- ------------------- ----------------
Consolidated net debt : Adjusted EBITDA (rolling twelve months) 1.6x 0.15x
--------------------------------------------------------------------------- ------------------- ----------------
The following exchange rates have been used for this
announcement: average for FY 2023 US$1:ZAR17.77 (FY 2022:
US$1:ZAR15.22); closing rate as at 30 June 2023 US$1:ZAR18.83 (30
June 2022: US$1:ZAR16.27).
Notes :
The Group uses several non-GAAP measures above and throughout
this report to focus on actual trading activity by removing certain
non-cash or non-recurring items. These measures include adjusted
mining and processing costs, profit from mining activities,
adjusted EBITDA, adjusted net profit after tax, adjusted earnings
per share, adjusted US$ loan note, and consolidated net debt for
covenant measurement purposes. As these are non-GAAP measures, they
should not be considered as replacements for IFRS measures. The
Group's definition of these non-GAAP measures may not be comparable
to other similarly titled measures reported by other companies. The
Board believes that such alternative measures are useful as they
exclude one-off items such as the impairment charges and non-cash
items to provide a clearer understanding of the underlying trading
performance of the Group.
1. Adjusted mining and processing costs are mining and
processing costs stated before depreciation.
2. Adjusted profit from mining activities is revenue less
adjusted mining and processing costs plus other direct income.
3. Adjusted corporate overhead is corporate overhead expenditure
less corporate depreciation, tender offer transaction costs and
share-based expense.
4. Adjusted EBITDA is stated before depreciation, amortisation
of right-of-use asset, share-based expense, net finance expense,
tax expense, impairment reversal/(charges), expected credit loss
release/ (charge), recovery of fees relating to investigation and
settlement of human rights abuse claims, Williamson tailings
facility remediation costs and accelerated depreciation, unrealised
foreign exchange gains and (losses) and loss on discontinued
operations.
5. Tax expense is the tax expense for the Period excluding
taxation credit on unrealised foreign exchange gain/(loss)
generated during the Year; such exclusion more accurately reflects
resultant adjusted net profit.
6. Adjusted net (loss)/profit after tax is net (loss)/profit
after tax stated before impairment (charge)/reversal, Williamson
tailings facility remediation costs and accelerated depreciation,
recovery of fees relating to investigation and settlement of human
rights abuse claims net unrealised foreign exchange losses and
excluding taxation credit on net unrealised foreign exchange losses
and excluding a taxation charge on impairment reversals.
7. Net impairment reversal of US$15.1 million (30 June 2022:
US$19.9 million reversal) was due to the Group's impairment review
of its operations and other receivables. Refer to note 15 for
further details.
The loss on discontinued operations reflects the results of the
Koffiefontein operation (net of tax), including impairment, of
US$40.5 million (FY 2022 results have been amended for
comparability) as per the requirements of IFRS 5 for an abandoned
operation; refer to Note 18.
8. Transaction costs and acceleration of unamortised costs on
partial redemption of Notes comprise transaction costs of US$0.8
million included within corporate expenditure (refer to note 5) and
US$8.3 million in respect of the redemption premium and
acceleration of unamortised costs included within Finance expense
(refer to note 6).
9. Adjusted EPS from continuing operations is stated before
impairment reversal, gain on extinguishment of Notes net of
unamortised costs, acceleration of unamortised costs on Notes,
Williamson tailings facility remediation costs and accelerated
depreciation, costs relating to investigation and settlement of
human rights abuse claims, and net unrealised foreign exchange
gains and losses, and excluding taxation credit on net unrealised
foreign exchange gains and losses and excluding a taxation charge
on impairment reversals .
10. The 2026 US$336.7 million loan notes, originally issued
following the capital restructuring (the "Restructuring") completed
during March 2021, have a carrying value of US$247.5 million (30
June 2022: US$366.2 million) which represents the outstanding
principal amount of US$209.7 million (after 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$10.3 million. Refer to Note 8 for further
detail.
11. Bank loans and borrowings represent the Group's ZAR1 billion
(US$53.1 million) revolving credit facility which remained undrawn
at Year end and available. Subsequent to Year end, as a result of
the deferment of the June 2023 diamond tender, the Group drew down
ZAR850 million (US$45.1 million) on the RCF.
During the FY 2022, the South African banking facilities held
with the Group's previous consortium of South African lenders were
settled and cancelled, comprising of the revolving credit facility
of ZAR404.6 million (US$24.9 million) (capital plus interest) and
the term loan of ZAR893.2 million (US$54.9 million) (capital plus
interest) .
12. Consolidated Net Debt is bank loans and borrowings plus loan
notes, less cash and less diamond debtors.
13. Operational free cashflow is defined as cash generated from
operations less cash outflows on the acquisition of property, plant
and equipment.
14. 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 and expensed to other direct
mining expense with the calculated fair value proceeds of US$12.3
million for the blocked parcel recognised as other direct mining
income and trade and other receivables as at 30 June 2023. During
these recent discussions, the parties also confirmed their intent
to resolve the treatment of the blocked parcel sale proceeds and
the related US$20 million settlement liability.
Principal Business Risks
The Group is exposed to a number of risks and uncertainties
which could have a material impact on its long-term sustainability.
Performance and management of these risks forms an integral part of
the management of the Group.
A summary of the risks identified as the Group's principal
external, strategic and operational risks (in no order of
priority), which may impact the Group over the next 12 months is
listed below. A more detailed description of the Group's principal
risks will be included in the Company's FY 2023 Annual Report.
External Risks Change in FY 2023
1. Rough diamond prices Higher - whilst diamond prices for Q1 to Q3 FY 2023
Risk appetite: High remained robust, like-for-like diamond
Risk Rating: Medium prices softened in Q4 FY 2023, with Tender 5 (May) seeing
Nature of risk: Long term a 13% reduction in like-for-like
prices on Tender 4 (March). Due to continuing softer
prices resulting from elevated inventory
levels in the mid-stream on the back of what we consider
to be a temporary slowdown in demand
for rough diamonds, the majority of sales from Tender 6,
together with the c. 76kcts withdrawn
from Tender 5, were deferred and offered for sale in
Tender 1 of FY 2024 in August 2023, with
like-for-like prices in Tender 1 declining by 4.3% on
Tender 5. While subdued demand and pricing
volatility are expected to continue in the short-term,
including from increased polished inventory,
prolonged weakness in the Chinese market, lab-grown
diamond sales in the bridal jewellery
segment and higher interest rates impacting the
mid-stream in particular, we see the prevailing
structural supply deficit providing market support in the
medium to longer term.
----------------------------------------------------------
2. Currency Lower - The ZAR/USD rate weakened during FY 2023, opening
Risk appetite: High at R16.27 and ending the Year at
Risk Rating: Medium R18.83, averaging R17.77 over the twelve-month period.
Nature of risk: Long term Since Q3 FY 2023, various domestic
South African factors have contributed to the Rand's
continuing weakness which positively
impacted Petra's FY 2023 financial results.
----------------------------------------------------------
3. Country and political No change - The risk of political instability remains in
Risk appetite: High South Africa and with general elections
Risk Rating: Medium due in 2024, is expected to increase. In addition,
Nature of risk: Long term increased levels of load shedding/curtailment
in the Year continued to disrupt South Africa.
Furthermore, South Africa's non-aligned stance
in the war between Russia and Ukraine has been
increasingly questioned.
Country and political risk in Tanzania has decreased due
to the positive economic and structural
changes implemented by the government which was well
received by the international community.
This has resulted in a significant increase in Foreign
Direct Investment and an upgrade in
the country's credit rating.
----------------------------------------------------------
Strategic Risks Change in FY 2023
----------------------------------------------------------
4. Group Liquidity Higher - Whilst the Group's balance sheet was
Risk appetite: Medium strengthened through the repurchase of the
Risk Rating: Medium Company's loan notes totalling US$144.6m, resulting in
Nature of risk: Short to long term annual interest savings of c.US$15m,
the Group experienced softening rough diamond prices (see
above) and operational challenges
in FY 2023, including lower grades at the Cullinan Mine,
lower tonnes mined at Finsch and
the production suspension and remediation costs at
Williamson arising from the TSF failure
in November 2022, which all impacted Petra's liquidity
position. A number of ongoing mitigating
actions are being taken to address these challenges.
Koffiefontein was placed on care and
maintenance during the Year with activities underway
towards closure.
----------------------------------------------------------
5. Licence to operate: regulatory and social impact & No Change - In light of operations at Koffiefontein
community relations having ceased and the mine being placed
Risk appetite: Medium on care and maintenance, community tensions in H1 of FY
Risk Rating: High 2023 increased, though improved relations
Nature of risk: Long term have been observed in H2 FY 2023 following extensive
engagements with the local communities,
the DMRE and the local municipality.
At Williamson, the IGM became operational at the end of
November 2022 with the commencement
of the pilot scheme and following completion of
feasibility studies for the ASM and ADI projects,
the remaining escrow funds will now be committed towards
the ADI projects.
Whilst no fatalities or serious injuries were reported
after the TSF failure at Williamson,
the livelihoods of a number of community members were
affected. A variety of short-term measures
were initially taken, followed by an assessment of the
impact on the surrounding communities
and longer-term remediation measures. An Entitlement
Framework has been developed that enables
community members impacted by the TSF failure to be
appropriately compensated, with Phase
1 and 2 compensation payments having already been made.
----------------------------------------------------------
Operating Risks Change in FY 2023
----------------------------------------------------------
6. Mining; production (including ROM grade and product Higher - Lower grades at the Cullinan Mine are expected
mix volatility) to continue through FY 2024. This
Risk appetite: Medium is attributable to the C-Cut cave maturity as the cave
Risk Rating: High progresses from SW to NE and the earlier
Nature of risk: Long term than anticipated waste ingress from the overlying
depleted mining blocks. Several mitigating
actions are underway to address these grade issues,
including:
-- Tailings treatment has been maximised to partially
offset lower carats from the C-Cut.
-- The re-opening of Tunnel 36 (which has already
occurred) and Tunnel 41 and the establishment
of Tunnels 46 and 50 (the development of which was
approved by the Board in FY 2023) will
provide additional volume from FY 2025 and, in
conjunction with production from the CC1E development
(expected to contribute meaningfully from FY 2025), will
see grades move back towards 40cpht.
Finsch's production target fell short of guidance largely
attributable to low machine availability
owing to an ageing underground fleet, challenges with the
centralised blasting system and
emulsion quality and an extended rock-winder breakdown,
with mitigating actions in place to
stabilise production, with the extension projects at
Finsch expected to improve grade and
production levels.
Whilst production at Williamson was suspended for the
remainder of FY 2023 due to the TSF
failure in November 2022, commissioning of the interim
TSF took place in July 2023, enabling
operations to restart at the beginning of Q1 FY 2024,
ahead of schedule.
Operations at Koffiefontein have ceased and the mine has
been placed on care and maintenance.
----------------------------------------------------------
7. Labour relations No Change - Stable labour relations were experienced at
Risk appetite: Medium all operations throughout FY 2023,
Risk Rating: Medium noting that at Koffiefontein a section 189 retrenchment
Nature of risk: Short to medium term process was concluded, with the mine
subsequently being placed on care and maintenance. For FY
2023, the Group has introduced a
quarterly production bonus scheme for lower band
employees to ensure alignment with other
incentive structures across the Group.
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.
A Collective Bargaining Agreement with TAMICO, the
majority union at Williamson, was signed
in November 2022.
----------------------------------------------------------
8. Safety Higher - LTIFR and LTIs marginally increased to 0.24 and
Risk appetite: Medium 17 respectively in comparison to
Risk Rating: Medium FY 2022 (0.22 and 15). The increased activities
Nature of risk: Short to medium term associated with the ramping up of extension
projects at the Cullinan and Finsch Mines has contributed
to this regression in safety performance
and increased risk. Whilst FY 2023 safety indicators
showed a declining trend, improvements
have been made in Q4 FY 2023. Remedial actions,
Group-wide learnings, visible felt leadership
and behaviour intervention programmes with various focus
areas have been undertaken to address
this trend.
----------------------------------------------------------
9. Environment Higher - Following the TSF failure at Williamson in
Risk appetite: Medium November 2022, significant work was undertaken
Risk Rating: Medium to contain the breach, determine the extent of the
Nature of risk: Long term environmental impact and commence environmental
remediation. An investigation is being conducted to
determine the root cause of the TSF failure.
WDL continues to engage with Tanzania's environmental
regulator regarding the breach.
Elevated water levels at the tailings facility (No 7 Dam)
at the Cullinan Mine have required
permitted emergency releases of water to be made. The
releases have resulted in water quality
and volume requirements being temporarily exceeded which
is permitted for emergency releases.
Short- and long-term mitigation measures to address water
levels at the dam are being taken.
----------------------------------------------------------
10. Climate Change No Change - During the Year, the Company developed its
Risk appetite: High Climate Change Position Statement
Risk Rating: Medium and engaged Ernst & Young to develop a Climate Scenario
Nature of risk: Long term Analysis which identifies key climate
risks and opportunities using different scenarios across
different time horizons, together
with the impacts of these risks and opportunities and
existing and future resilience measures.
Petra also initiated a renewables strategy that, once
implemented, will be key in enabling
Petra to reach its 2030 interim target of a 35-40%
reduction in Scope 1 & 2 emissions (against
Petra's 2019 baseline). Management continues to monitor
progress against annual climate change
targets set for on-mine water and electricity consumption
and efficiency.
----------------------------------------------------------
11. Capital Projects Higher - Whilst the CC1E and C-Cut extension projects at
Risk appetite: Medium the Cullinan Mine and the Lower
Risk Rating: High Block 5 3 Levels SLC at Finsch remain on-track to deliver
Nature of risk: Short to medium term production growth over the next
three years, management have proactively initiated
various mitigating actions and expedited
Trackless Mining Machinery and drill rig availability to
address the risk of these projects
falling behind project plans. Alternate labour sourcing
strategies are also being considered.
----------------------------------------------------------
12. Supply Chain Governance Higher - An independent external expert was engaged to
Risk appetite: Medium conduct a gap analysis of existing
Risk Rating: High Supply Chain processes and systems, and this has resulted
Nature of risk: Short to medium term in management initiating a project
to address areas that require improvement. During FY
2023, the diagnostic and design phases
of the project were largely completed, with
implementation to commence during Q1 FY 2024.
Management expects to roll-out and embed the new way of
working during FY 2024. The project
focuses on Supply Chain processes, systems and structures
with enhancements expected in compliance,
governance and risk management, improved procurement,
tender and supplier registration procedures
and filling critical roles in the function. An online due
diligence platform, administered
by an external third party, went live in December 2022 to
improve the vetting and screening
of suppliers.
----------------------------------------------------------
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 30 JUNE 2023
US$ million Notes (Unaudited) (Restated)
Year ended Year ended
30 June 30 June
2023 2022
---------------------------------------------------- ------ ------------ ------------
Revenue 325.3 563.7
Mining and processing costs (297.6) (356.6)
Other direct mining expense (12.9) (1.0)
Other direct mining income 12.3 -
Corporate expenditure including settlement
costs 5 (22.9) (14.1)
Other corporate income 1.0 0.6
Impairment reversal of non-financial assets 15 52.7 21.4
Impairment charges of non-financial assets 15 (32.7) -
Impairment charge of other receivables 15 (4.9) (1.5)
Total operating costs (305.0) (351.2)
Financial income 6 11.1 18.7
Financial expense 6 (70.8) (91.7)
Gain on extinguishment of Notes net of unamortised
costs 6,8 0.6 -
(Loss) / profit before tax (38.8) 139.5
Income tax charge (23.1) (37.8)
---------------------------------------------------- ------ ------------ ------------
(Loss)/profit for the year from continuing
operations (61.9) 101.7
Loss on discontinued operation including
associated impairment charges (net of tax) 18 (40.5) (13.6)
---------------------------------------------------- ------ ------------ ------------
(Loss)/profit for the Year (102.4) 88.1
---------------------------------------------------- ------ ------------ ------------
Attributable to:
Equity holders of the parent company (105.3) 69.0
Non-controlling interest 2.9 19.1
---------------------------------------------------- ------ ------------ ------------
(102.4) 88.1
---------------------------------------------------- ------ ------------ ------------
(Loss) / Profit per share attributable to the equity holders of the
parent during the Period:
From continuing operations:
Basic (loss)/earnings per share - US$ cents 13 (38.10) 40.74
Diluted (loss)/earnings per share - US$ cents 13 (38.10) 40.74
From continuing and discontinued operations:
Basic (loss)/earnings per share - US$ cents 13 (54.21) 35.53
Diluted (loss)/earnings per share - US$ cents 13 (54.21) 35.53
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2023
US$ million (Unaudited) (Audited)
Year ended Year ended
30 June 30 June
2023 2022
----------------------------------------------------- ------------ ------------
(Loss) / profit for the Year (102.4) 88.1
Exchange differences on translation of the
share-based payment reserve 0.2 (0.3)
Exchange differences on translation of foreign
operations(1) (50.4) (46.8)
Exchange differences on non-controlling interest(1) (1.9) (0.4)
Total comprehensive (loss) / income for the
Year (154.5) 40.6
------------------------------------------------------ ------------ ------------
Total comprehensive income and expense attributable
to:
Equity holders of the parent company (155.5) 21.9
Non-controlling interest 1.0 18.7
------------------------------------------------------ -------- -----
(154.5) 40.6
----------------------------------------------------- -------- -----
(1) These items will be reclassified to the consolidated income
statement if specific future conditions are met.
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2023
US$ million Notes (Unaudited) (Audited)
30 June 30 June
2023 2022
--------------------------------------- ------ ------------- ----------
ASSETS
Non-current assets
Property, plant and equipment 7 598.1 633.2
Right-of-use assets 26.6 21.9
BEE loans and receivables 11 37.3 44.6
Other receivables 2 6.6 2.6
Total non-current assets 668.6 702.3
--------------------------------------- ------ ------------- ----------
Current assets
Trade and other receivables 42.0 49.8
Inventories 88.4 70.6
Cash and cash equivalents (including
restricted amounts) 61.8 288.2
--------------------------------------- ------ ------------- ----------
Total current assets 192.2 408.6
--------------------------------------- ------ ------------- ----------
Total assets 860.8 1,110.9
--------------------------------------- ------ ------------- ----------
EQUITY AND LIABILITIES
Equity
Share capital 12 145.7 145.7
Share premium account 12 609.5 959.5
Foreign currency translation reserve (499.3) (448.9)
Share-based payment reserve 3.9 1.9
Other reserves (0.8) (0.8)
Accumulated reserves / (losses) 12 61.7 (183.6)
--------------------------------------- ------ ------------- ----------
Attributable to equity holders of the
parent company 320.7 473.8
Non-controlling interest (3.9) 4.7
--------------------------------------- ------ ------------- ----------
Total equity 316.8 478.5
--------------------------------------- ------ ------------- ----------
Liabilities
Non-current liabilities
Loans and borrowings 8 222.4 353.9
Provisions 2 104.1 97.7
Lease liabilities 25.8 19.2
Deferred tax liabilities 82.0 71.3
--------------------------------------- ------ ------------- ----------
Total non-current liabilities 434.3 542.1
--------------------------------------- ------ ------------- ----------
Current liabilities
Loans and borrowings 8 25.1 12.3
Lease liabilities 3.0 3.2
Trade and other payables 69.0 74.8
Provisions 2 12.6 -
--------------------------------------- ------ ------------- ----------
Total current liabilities 109.7 90.3
--------------------------------------- ------ ------------- ----------
Total liabilities 544.0 632.4
--------------------------------------- ------ ------------- ----------
Total equity and liabilities 860.8 1,110.9
--------------------------------------- ------ ------------- ----------
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2023
US$ million Notes (Unaudited) (Restated)
Year ended Year ended
30 June 30 June
2023 2022
-------------------------------------------------- ------ ------------ ------------
(Loss)/profit before taxation for the Year
from continuing and discontinued operations (79.3) 125.9
Depreciation of property plant and equipment 82.5 82.5
Amortisation of right-of-use asset 3.2 2.5
Impairment reversal of non-financial assets 15 (52.7) (21.4)
Impairment charges of non-financial assets 15 32.7 -
Impairment charge - other receivables 15 4.9 1.5
Movement in provisions 7.0 1.0
Dividend received from BEE partner (0.5) (0.6)
Gain on extinguishment on Notes (0.6) -
Non-cash items relating to discontinued
operations 21.5 1.2
Financial income 6 (11.1) (18.7)
Financial expense 6 70.8 91.7
Loss on disposal of property, plant and
equipment 1.4 1.6
Share based payments 2.3 1.1
Operating profit before working capital
changes 82.1 268.3
Increase in trade and other receivables 0.4 (7.1)
Increase in trade and other payables (9.9) 24.5
Increase in inventories (26.1) (1.7)
-------------------------------------------------- ------ ------------ ------------
Cash generated from operations 46.5 284.0
Net realised gains on foreign exchange contracts 1.9 12.6
Finance costs paid (8.4) (6.3)
Income tax received / (paid) 0.6 (7.8)
-------------------------------------------------- ------ ------------ ------------
Net cash generated from operating activities 40.6 282.5
-------------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Acquisition of property, plant and equipment (113.0) (54.0)
Proceeds from sale of property, plant and 1.0 -
equipment
Loan repayment from BEE partners - 0.2
Dividend paid to BEE partners (3.8) (3.5)
Dividend received from BEE partners 0.5 0.6
Repayment from KEMJV 0.5 2.5
Finance income received 3.9 1.3
Net cash utilised in investing activities (110.9) (52.9)
-------------------------------------------------- ------ ------------ ------------
Cash flows from financing activities
Cash paid on lease liabilities (4.6) (3.2)
Repayment of borrowings (including Notes
redemption premium of US$1.5 million; 30
June 2022: US$nil) 8 (146.1) (98.2)
Net cash utilised by financing activities (150.7) (101.4)
-------------------------------------------------- ------ ------------ ------------
Net (decrease) / increase in cash and cash
equivalents (221.0) 128.2
Cash and cash equivalents at beginning of
the Year 271.9 156.9
Effect of exchange rate fluctuations on
cash held (6.8) (13.2)
-------------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at end of the
Year(1) 44.1 271.9
-------------------------------------------------- ------ ------------ ------------
1. Cash and cash equivalents in the Consolidated Statement of
Financial Position includes restricted cash of US$17.7 million (30
June 2022: US$16.3 million) and unrestricted cash of US$44.1
million (30 June 2022: US$271.9 million.
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2023
(Unaudited) Share Share Foreign Share-based Other Accumulated Attributable Non-controlling Total
capital premium currency payment reserves reserves / to the interest equity
account translation reserve (losses) parent
US$ million reserve
-------- -------- ------------ ------------ --------- ------------ ------------- ---------------- --------
At 1 July 2022 145.7 959.5 (448.9) 1.9 (0.8) (183.6) 473.8 4.7 478.5
(Loss) / profit
for the Year - - - - - (105.3) (105.3) 2.9 (102.4)
Other
comprehensive
(expense) /
income - - (50.4) 0.2 - - (50.2) (1.9) (52.1)
Conversion of
share premium
(refer note 12) - (350.0) - - - 350.0 - - -
Dividend paid to
non-controlling
interest
shareholders - - - - - - - (9.6) (9.6)
Equity settled
share-based
payments - - - 2.4 - - 2.4 - 2.4
Transfer between
reserves - - - (0.6) - 0.6 - - -
At 30 June 2023 145.7 609.5 (499.3) 3.9 (0.8) 61.7 320.7 (3.9) 316.8
----------------- -------- -------- ------------ ------------ --------- ------------ ------------- ---------------- --------
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FOR THE YEARED 30 JUNE 2023
(Unaudited) Share Share Foreign Share-based Other Accumulated Attributable Non-controlling Total
capital premium currency payment reserves losses to the interest equity
account translation reserve parent
US$ million reserve
----------------- -------- -------- ------------ ------------ --------- ------------ ------------- ---------------- -------
At 1 July 2021 145.7 959.5 (402.1) 1.8 (0.8) (253.3) 450.8 (10.5) 440.3
Profit for the
Year - - - - - 69.0 69.0 19.1 88.1
Other
comprehensive
expense - - (46.8) (0.3) - - (47.1) (0.4) (47.5)
Dividend paid to
non-controlling
interest
shareholders - - - - - - - (3.5) (3.5)
Equity settled
share-based
payments - - - 1.1 - - 1.1 - 1.1
Transfer between
reserves: - - - (0.7) - 0.7 - - -
At 30 June 2022 145.7 959.5 (448.9) 1.9 (0.8) (183.6) 473.8 4.7 478.5
----------------- -------- -------- ------------ ------------ --------- ------------ ------------- ---------------- -------
NOTES TO THE CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL
STATEMENTS
FOR THE YEARED 30 JUNE 2023
1. GENERAL INFORMATION
Petra Diamonds Limited (the "Company"), a limited liability
company listed on the Main Market of the London Stock Exchange, is
registered in Bermuda with its Group management office domiciled in
the United Kingdom. The Consolidated Preliminary Financial
Statements of the Company for the year ended 30 June 2023 comprise
the Company and its subsidiaries, joint operations and associates
(together referred to as the "Group").
2. ACCOUNTING POLICIES
This preliminary report, which is unaudited, does not include
all the notes of the type normally included in an annual financial
report. This condensed report is to be read in conjunction with the
Annual Report for the year ended 30 June 2022, and any public
announcements made by the Group during the reporting period. The
annual financial report for the year ended 30 June 2022 was
prepared in accordance with International Financial Reporting
Standards as adopted by the European Union ("IFRS's") and the
accounting policies applied in this condensed preliminary report
are consistent with the polices applied in the annual financial
report for the year ended 30 June 2022 unless otherwise noted. The
preliminary report has been prepared in accordance with accounting
policies compliant with International Financial Reporting Standards
as adopted by the European Union.
Accounting policy for discontinued operations
Where an operation within the Group is separately identified or
forms part of a separate reporting structure, the Group will
classify the asset as a discontinued operation, in accordance with
IFRS 5 . For this to be the case, the asset must represent a
separate major line of business or geographical area of operations,
is part of a single coordinated plan to dispose of a separate major
line of business or geographical area of operations or is a
subsidiary acquired exclusively with a view to resale. Non-current
assets (or disposal groups) to be abandoned include non-current
assets (or disposal groups) that are to be used to the end of their
economic life and non-current assets (or disposal groups) that are
to be closed rather than sold. The disposal group's assets are
measured at the lower of their carrying amount and recoverable
value less costs to sell. An impairment loss is recognised for any
initial or subsequent write-down of the asset to recoverable value
less costs to sell. A gain is recognised for any subsequent
increases in recoverable value less costs to sell of an asset but
not in excess of any cumulative impairment loss previously
recognised. The assets and liabilities of a disposal group are
presented separately from the other assets and liabilities in the
statement of financial position.
A discontinued operation is a component of the entity that has
been disposed of or is classified as held for sale, or if it is
designated as abandoned and represents a separate major line of
business or geographical area of operations, is part of a single
coordinated plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively with a view to
resell. The results of discontinued operations are presented
separately in the statement of profit or loss.
Unrealised foreign exchange gains and losses on historic
retranslation of the subsidiaries results into US Dollars are
recycled to the consolidated income statement upon cessation of the
subsidiary. The Group designates the results of discontinued
activities, including those of disposed subsidiaries, separately in
accordance with IFRS and reclassifies the results of the operation
in the comparative period from continuing to discontinued
operations.
Basis of preparation including going concern
Going concern
The twelve-month period to 30 June 2023 delivered US$113.1
million in adjusted EBITDA and US$40.6 million in cash from
operating activities, while total capital expenditure amounted to
US$117.1 million for the Year following the ramping up of
underground development projects at both Cullinan Mine and Finsch.
Consolidated Net Debt increased from US$40.6 million at 30 June
2022 to US$176.8 million as at 30 June 2023. This was largely
driven by the decision to defer a portion of Tender 5 (May) and the
majority of Tender 6 (June) in FY 2023 on account of seasonal
weakness coupled with a more cautious and disciplined approach with
regards to inventory management by the mid-stream as a result of
high finance costs. Based on the previous definition of Exceptional
Stones (diamonds sold for US$5 million or more each), FY 2023
realised US$12.6 million as a contribution from these Exceptional
Stones, compared to US$89.1 million in FY 2022. Applying the
updated definition of Exceptional Stones (diamonds sold for US$15
million or more each), there was no contribution from Exceptional
Stones in FY 2023, compared to US$40.2 million realised in FY
2022.
Operational Update
The first half of FY 2023 saw Petra's operations having to deal
with operational challenges. CDM experienced lower grades in the
C-Cut block cave on account of earlier than expected waste ingress,
resulting in lower ROM carats being recovered, while also lowering
the projected ROM carat production for the remainder of FY 2023 and
FY 2024. FDM challenges were as a result of low machine
availability owing to an aging underground fleet, challenges with
the centralised blasting system and emulsion quality and an
extended rock-winder breakdown. WDL was performing well during H1
FY 2023, until the Tailings Storage Facility (TSF) incident in the
1st week of November 2022, which led to a suspension of operations
for the remainder of the Year. Finally, KDM continued to struggle
in achieving its budgeted production targets and was subsequently
placed on Care & Maintenance (C&M) in November 2022.
Several mitigation steps were initiated during H2 FY 2023 to
minimise the above impacts. At CDM, these included re-opening of
Tunnels 36 (which has already occurred) and 41 and the addition of
pillar retreats, while the addition of two more tunnels (T46 and
T50) adjacent to the current C-Cut centre was also approved during
H2 FY 2023, both of which are anticipated to deliver on relatively
higher-grade ore towards the end of FY 2024 (compared to the
current grades being achieved from the balance of the C-Cut). The
CC1E project, which is expected to significantly increase the
overall ROM grade at CDM, remains on track for production to
commence in FY 2025.
At FDM, mitigation steps included new underground equipment
being delivered and commissioned, coupled with positive changes to
the blasting process, the introduction of new long hole drill rigs
and Load Haul Dump (LHDs) loaders as well as the appointment of
individuals to a number of key positions. Furthermore, the 3-Level
SLC project scope was amended to go up to 90L, which adds
additional production tonnes to the Life of Mine plan. The
mitigation steps undertaken are expected to stabilise production at
FDM, while the 3-Level-SLC 90L project is planned to start
contributing to production from FY 2025 onwards, supporting
increased grades at FDM.
At Williamson, the TSF failure in November 2022 significantly
disrupted WDL's operational run-rate which had largely stabilised
after a lengthy care & maintenance period post the COVID-19
pandemic. There were no serious injuries as a result of the
failure, both at the mine and the surrounding communities. Since
the TSF incident, WDL has been focused on rehabilitation efforts
due to the tailings failure, with new infrastructure being built to
further safe-guard the communities downstream of the mine. In
parallel, a new TSF was constructed, which received the required
permits and complies with the GISTM standards. Subsequently,
production resumed at WDL in July 2023, shortly after Year-end,
with a steady ramp-up currently underway. While most of the
activities were funded by WDL's on-mine cash reserves, PDL and the
mining contractor, Taifa, have advanced priority loans totalling
US$12m to assist WDL's liquidity requirements, with a local
overdraft facility also in place. WDL's short term liquidity needs
are receiving focused attention to ensure WDL remains as a going
concern.
As noted above, KDM was placed on C&M in November 2022. The
KDM workforce was retrenched through a Section 189(3) process, as
set out in the South African Labour Relations Act. Certain of the
retrenched employees were appointed on fixed-term contracts to
carry out C&M activities. In parallel, the KDM sales process
failed to identify a possible buyer. Consequently, the mine has
commenced with detailed closure planning, with the main focus on
obtaining the required permits to cease dewatering of the
underground workings, which remains a significant cost element
during the C&M period. The Social transition, including
implementation of the committed Social & Labour Plans (SLP)
also continue in parallel to the C&M activities and the closure
roadmap planning.
Diamond prices and Market Outlook
The diamond prices consolidated their gains from FY 2022 up
until the Q3 FY 2023, but experienced softness in Q4 of FY 2023.
The softening of the diamond prices during Q4 FY 2023 is ascribed
to two main factors, namely the seasonal weakness due to summer
holidays and lack of festive induced demand coupled with high
financing costs, on account of the elevated interest rates,
resulting in a far more cautious and disciplined approach applied
by the midstream for their inventory management. Indications are
that interest rates have now peaked and will start to decline,
providing support to our view of improved demand in the medium-term
because of the structural supply deficit, as well as entering the
seasonally stronger period ahead of Diwali, Thanksgiving, Christmas
and the Chinese New Year, with an anticipated increase in demand
for diamond jewellery.
The Group achieved an all-in diamond price of US$135/ct during
FY 2023 (excluding contributions from Exceptional Stones, applying
the previous definition) compared to an all-in diamond price of
US$140/ct during FY 2022 (also excluding contributions from
Exceptional Stones, again applying the previous definition). This
represents a marginal reduction of 3.6% year-on-year and was partly
also influenced by lower contributions from both WDL and KDM
product mix, which averages higher US$/ct prices, albeit at reduced
volumes. Post period end, Tender 1 of FY 2024 closed in August, and
realised prices in line with expected levels.
Williamson updates
The Group announced the signing of a framework agreement with
the Government of Tanzania (GoT) in December 2021, which sets out
key principles on the economic benefit sharing amongst
shareholders, treatment of outstanding VAT balances, as well as
agreement reached on the blocked parcel of diamonds and settlement
of historic disputes, amongst others. During the Year, it came to
Petra's attention that the GoT sold the blocked diamond parcel,
either partially or fully. The framework agreement provides for the
proceeds of the sale of this parcel to be allocated to Williamson.
The GoT has not yet remitted the proceeds to the mine, and Petra
has opened discussions with the GoT to resolve this matter in due
course. Should the proceeds not be remitted, in accordance with the
terms of the framework agreement, the obligation to commence with
payments towards settling an amount of US$20 million owed to the
GoT related to historic disputes, would not be triggered.
The framework agreement is expected to provide fiscal stability
for the mine and its investors and is expected to become effective
during the second half of FY 2024, pending satisfaction of certain
suspensive conditions.
During FY 2023, Petra and Taifa (previously Caspian) executed a
Sale of Shares Agreement, to give effect to a Memorandum of
Understanding (MOU) entered into in December 2021, for Taifa to
acquire 50% of Petra's stake in Williamson for a purchase
consideration of US$15m. This agreement is subject to certain
regulatory approvals and is anticipated to become effective during
the second half of FY 2024.
Williamson short term liquidity outlook
It should be noted that the Group's Going Concern assessment is
performed excluding Williamson's trading results, as Williamson is
considered a ring-fenced operation for these purposes, as per the
definitions and requirements set forth in the Group's Financing
agreements.
Williamson continues to focus on steadily ramping-up production
post its restart in July 2023, and is currently performing ahead of
its assumed ramp-up profile. Williamson has also successfully
upsized its overdraft facility from US$7 million to US$10 million,
effective September 2023. Williamson may, however, encounter
short-term liquidity challenges over the next 12 - 18 months. These
may be mitigated by means of optimising tender timings, initiating
cost reduction/deferral opportunities, and/or benefitting from the
faster-than-anticipated startup and increasing production.
From a Group perspective, if these levers at Williamson
materialise, then as a last resort, there may be further
contribution of up to US$5 million from the Group to Williamson, as
a priority shareholder loan, during the going concern assessment
period. This further cash contribution to Williamson will be at the
discretion of the Petra Board and is not expected to impact the
Group's ability to continue as a Going Concern, should this
materialise.
Bond tender offer and South African banking facilities
During FY 2023, the Group carried out a successful tender offer
to its Noteholders, repaying the Noteholders US$144.6 million
(principal plus interest), utilising existing cash reserves,
resulting in further deleveraging of the Group. This will save the
Group c.US$15 million per annum in interest.
The Group's ZAR 1 billion senior Revolving Credit Facility (RCF)
facility remained undrawn at 30 June 2023, with the Group having
access to the full ZAR 1 billion (US$53.1 million). Post Year-end,
the Group utilised ZAR 850 million following a decision to defer
tenders during Q4 FY 2023, as noted above. The Group anticipates
settling the drawn balances during H1 FY 2024 from the proceeds of
sales tenders.
The Group continues to assess opportunities for further debt
optimization in the current market, with the Group's bonds maturing
in March 2026.
Forecast liquidity and covenants
The Board has reviewed the Group's forecasts with various
sensitivities applied for the Going Concern assessment to December
2024, including both forecast liquidity and covenant measurements.
As per the First Lien agreements, the liquidity and covenant
measurements exclude contributions from Williamson's trading
results and only recognises cash distributions payable to Petra
upon forecasted receipt, or Petra's funding obligations towards
Williamson upon payment.
The Board has given careful consideration to potential risks
identified in meeting the forecasts under the review period.
Therefore, the following downside sensitivities have been performed
(sensitivities applied throughout the period) in assessing the
Group's ability to operate as a going concern (in addition to the
Base Case) at the date of this report:
-- ZAR stronger by 5%
-- Revenue down 10%
-- OPEX up by 5% (could be higher inflation, logistics costs, direct energy costs, etc.)
-- Extension CAPEX up by 5%
-- Combined Sensitivity: Revenue down 5% + ZAR stronger by 5%
(effectively resulting in OPEX and total CAPEX up by 5% in USD
terms)
The forward-looking covenant measurements for the base case and
sensitised cases do not project any breaches for any of the
covenants, other than the potential minimum liquidity covenant for
the unmitigated Combined- and Revenue down 10% sensitivities during
the 18-month review period.
Any potential liquidity breaches as a result of the above
sensitivities could be cured by means of the following levers at
Management's disposal:
a. Hedging opportunities - the Group actively monitors the
USD:ZAR exchange rate and pro-actively locks in hedges to benefit
from periods of weaker ZAR, which results in cash flow savings
compared to the base case USD:ZAR forecast;
b. Deferral of Feasibility Studies - this includes planned costs
associated with feasibility studies on future extension
opportunities;
c. Release of diamond inventory - the Group would be able to
release inventory through optimising mine to market lead times
and/or more frequent tenders;
d. Deferral of extension CAPEX - the Group is projecting
substantial CAPEX spend largely driven by the approved extension
projects at CDM & FDM;
e. OPEX and SIB CAPEX Cost Savings or deferrals - the Group,
upon further assessment and as may be required once the above
levers are extinguished, will look to initiate potential cost
avoidance and/or deferral measures, such as temporary freezing of
non-critical appointments, cash cost reduction initiatives
targeting non-critical spend, working capital management, etc.
Management will implement the required mitigation levers and
believes it would be able to prevent potential liquidity covenant
breaches, in the event that the downside sensitivities materialise
during the going concern period.
Conclusion
The Board is of the view that despite the current volatility
being experienced, the supply/demand fundamentals of the diamond
market remain intact, with the Group also continuing to benefit
from an improving operating model throughout the review period and
beyond.
Based on its assessment of the forecasts, principal risks and
uncertainties and mitigating actions considered available to the
Group in the event of downside scenarios, the Board confirms that
it is satisfied the Group will be able to continue to operate and
meet its liabilities as they fall due over the review period.
Accordingly, the Board have concluded that the going concern basis
in the preparation of the financial statements is appropriate and
that there are no material uncertainties that would cast doubt on
that basis of preparation.
New standards and interpretations applied
The IASB has issued new standards, amendments and
interpretations to existing standards with an effective date on or
after 1 July 2022 which are not considered to have a material
impact on the Group during the Period under review.
New standards and interpretations not yet effective
Certain new standards, amendments and interpretations to
existing standards have been published that are mandatory for the
Group's accounting periods beginning after 1 July 2023 or later
periods. The only standard which is anticipated to be significant
or relevant to the Group is:
Amendments to IAS 1: Classification of Liabilities as Current or
Non-current
Amendments to IAS 1, which are intended to clarify the
requirements that an entity applies in determining whether a
liability is classified as current or non-current. The amendments
are intended to be narrow scope in nature and are meant to clarify
the requirements in IAS 1 rather than modify the underlying
principles. The amendments include clarifications relating to:
-- how events after the end of the reporting period affect liability classification;
-- what the rights of an entity must be in order to classify a liability as non-current;
-- how an entity assesses compliance with conditions of a
liability (e.g., bank covenants); and
-- how conversion features in liabilities affect their classification.
The amendments to IAS1 are effective for periods beginning on or
after 1 January 2024. Earlier application is permitted but
Amendments to IAS 1 has not yet been endorsed for application by
the European Union.
Significant assumptions and judgements:
The preparation of the condensed consolidated preliminary
financial statements requires management to make estimates and
judgements and form assumptions that affect the reported amounts of
the assets and liabilities, reported revenue and costs during the
periods presented therein, and the disclosure of contingent
liabilities at the date of the preliminary financial statements.
Estimates and judgements are continually evaluated and based on
management's historical experience and other factors, including
future expectations and events that are believed to be reasonable.
The estimates and assumptions that have a significant risk of
causing a material adjustment to the financial results of the Group
in future reporting periods are discussed below.
Key estimates and judgements:
Going concern
Management have considered the Group's ability to meet its
obligations as they fall due for a period of at least 12 months
from the date of this report and, in light of this review and the
current financial position, they are satisfied that the Group has
access to adequate resources to continue in operational existence
for the foreseeable future. As part of its going concern
assessment, the Group exercised judgement in making assumptions
about forecasted future rough diamond prices, foreign exchange
rates, volumes of production, ore reserves and resources included
in the current life of mine plans, future development and
production costs and factors such as inflation and discount rates
and other macroeconomic factors.
Impairment reviews
The Group prepares impairment models and assesses mining assets
for impairment or reversals of previous impairments. While
conducting an impairment test of its assets using recoverable
values using the current life of mine plans, the Group exercised
judgement in making assumptions about future rough diamond prices,
foreign exchange rates, volumes of production, ore reserves and
resources included in the current life of mine plans, future
development and production costs and factors such as inflation and
discount rates. Changes in estimates used can result in significant
changes to the 'Consolidated Income Statement' and 'Statement of
Financial Position'.
Cullinan, Finsch, Koffiefontein and Williamson Mines
The impairment tests for the Cullinan, Finsch and Williamson
Mines indicated a net impairment reversal of US$ 20.0 million to be
recognised, on a carrying value of the Group's property, plant and
equipment of US$573.8 million (pre-impairment). This follows
US$21.1 million impairment reversal recognised at 30 June 2022
(comprising Koffiefontein impairment charge of US$0.3 million and a
Group level impairment reversal relating to Williamson, previously
recognised under IFRS 5, of US$21.4 million as Williamson was no
longer considered an asset held for sale ) on a carrying value of
the Group's property, plant and equipment of US$608.2 million
(pre-impairment) at the time of recognition. For further details of
the inputs, assumptions and sensitivities in the impairment model,
refer to note 15. For impairment considerations of Koffiefontein,
refer to note 18.
Recoverability of trade and other receivable, ownership of
blocked diamond parcel and disputed tax claims provision in
Tanzania
During FY 2018, an investigation into the Tanzanian diamond
sector by a parliamentary committee in Tanzania was undertaken to
determine if diamond royalty payments were being understated. In
connection with this, Petra announced on 11 September 2017 that a
parcel of diamonds (71,654.45 carats) from the Williamson mine in
Tanzania had been blocked for export to Petra's marketing office in
Antwerp.
The confirmation from the GoT confirming that the blocked
diamond parcel has been partially sold, resulted in the inventory
no longer being available for sale. As such, the full carrying
value of US$12.5 million (30 June 2022: US$12.5 million) has been
expensed as other direct mining expense in the Consolidated Income
Statement as at 30 June 2023. Management have applied judgement to
the sales proceeds of the blocked diamond parcel by estimating the
fair value as at 30 June 2023, based on the original valuation of
US$14.8 million (11 September 2017), the movement in the diamond
index (147.1 in Q1 FY2017, compared to 162.1 at June 2023), a
two-year expected delay to concluding the discussions with the GoT
and a discount rate of 14%. Based on the aforesaid factors a fair
value of US$12.3 million was recognised in the Consolidated Income
Statement as other direct mining income/expense with a trade and
other receivable recognised in the Statement of Financial Position
as at 30 June 2023. The blocked diamond parcel was written up from
its net realisable value of prior periods to historical cost during
FY 2022. The recommencement of operations and the diamond tenders
at Williamson during FY 2022 provided additional information for
management to assess the value of the blocked diamond parcel
forming the basis used to revalue the diamond parcel to the lower
of cost or net realisable value.
The assessment of the recoverability of the trade and other
receivable required significant judgement. In making such a
judgement, the Group considered the Framework Agreement that was
signed with the GoT on 13 December 2021, ongoing discussions held
with the GoT regarding the receipt of the proceeds from the partial
disposal of the diamond parcel and legal advice received from the
Group's in-country attorneys which supports the Group's
position.
Under the Framework Agreement entered into with the GoT in
December 2021, it is stated that the proceeds from the sale of the
blocked diamond parcel are to be applied to the Williamson mine to
assist with the restart of operations (which had previously been on
C&M from April 2020 to August 2021) 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 (refer to note 16 for further detail). During 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.
While these engagements between the Company and the GoT are
ongoing, based on the above judgements and assessment thereof,
management remain confident that based on the signed Framework
Agreement, and the legal advice received from the Group's
in-country attorneys, WDL will derive future economic benefit from
the sale proceeds of the parcel (both the portion already sold and
any portion that is yet to be sold).
Recoverability of VAT in Tanzania
The Group has VAT receivable of US$6.6 million (30 June 2022:
US$2.6 million) in respect of the Williamson mine, all of which are
past due and have therefore been classified, after provision
including amounts related to providing for a time-value of money
inclusive of risk adjustments for various factors, as non-current
given the potential delays in receipt.
The VAT receivable as at 30 June 2023, can be split into two
identifiable component time periods as set out below:
30 June 2023
Carrying
US$ million VAT Receivable Provision value
--------------------------------------- --------------- ---------- ---------
Pre July 2017 and Post June 2020 16.5 (9.9) 6.6
--------------------------------------- --------------- ---------- ---------
16.5 (9.9) 6.6
--------------------------------------- --------------- ---------- ---------
30 June 2022
Written Carrying
US$ million VAT Receivable Provision off value
------------------------ --------------- ---------- -------- ---------
July 2017 to June 2020 26.9 - (26.9) -
Pre July 2017 and Post
June 2020 8.6 (6.0) - 2.6
------------------------ --------------- ---------- -------- ---------
35.5 (6.0) (26.9) 2.6
------------------------ --------------- ---------- -------- ---------
Pre-July 2017 and Post-June 2020
An amount of US$16.5 million (30 June 2022: US$8.6 million) of
VAT is receivable for the period for the period pre-July 2017 and
subsequent to 1 July 2020. The Group is considering various
alternatives in pursuing payment in accordance with legislation. A
provision of US$9.9 million (30 June 2022: US$6.0 million), given
the uncertainty around the timing of receipts of the amount
outstanding, has been provided for against the US$16.5 million (30
June 2022: US$8.6 million) receivable resulting in a carrying value
of US$6.6 million (30 June 2022: US$2.6 million).
While the remaining pre-July 2017 and post-July 2020 VAT balance
is considered recoverable, significant uncertainty exists regarding
the timing of receipt. A discount rate of 14.00% inclusive of
estimated country credit risk has been applied to the expected cash
receipts. A 1% increase in the discount rate would increase the
provision by US$0.4 million and a one year delay would increase the
provision by US$0.8 million.
During the Year, an impairment charge of US$3.9 million (30 June
2022: US$4.1 million) was recognised in the Consolidated Income
Statement.
BEE receivables - expected credit loss provision
The Group has applied the expected credit loss impairment model
to its BEE loans receivable. In determining the extent to which
expected credit losses may apply, the Group assessed the future
free cashflows to be generated by the mining operations, based on
the current mine plans. In assessing the future cashflows, the
Group considered the diamond price outlook and the probability of
reaching an offset agreement. Based on the assessment, no expected
credit loss reversal was recognised in the respective periods. For
further detail refer to note 11.
Life of mine and ore reserves and resources
There are numerous risks inherent in estimating ore reserves and
resources and the associated current life of mine plan. The life of
mine plan is the current approved management plan for ore
extraction that considers specific resources and associated capital
expenditure. The life of mine plan frequently includes less tonnes
than the total reserves and resources that are set out in the
Group's Resource Statement and which management may consider to be
economically viable and capable of future extraction.
Management must make a number of assumptions when making
estimates of reserves and resources, including assumptions as to
exchange rates, rough diamond and other commodity prices,
extraction costs, recovery and production rates. Any such estimates
and assumptions may change as new information becomes available.
Changes in exchange rates, commodity prices, extraction costs,
recovery and production rates may change the economic viability of
ore reserves and resources and may ultimately result in the
restatement of the ore reserves and resources and potential
impairment to the carrying value of the mining assets and life of
mine plans . Refer to note 15 for further detail on the
assumptions.
The current life of mine plans are used to determine the ore
tonnes and capital expenditure in the impairment tests. Ore
reserves and resources, both those included in the life of mine and
certain additional tonnes which form part of reserves and resources
considered to be sufficiently certain and economically viable, also
impact the depreciation of mining assets depreciated on a unit of
production basis. Ore reserves and resources, outside the current
mine plan further impact the estimated date of decommissioning and
rehabilitation.
Williamson Tailings Storage Facility
On 7 November 2022, the tailings storage facility at the
Williamson mine was breached, resulting in flooding away from the
pit which extended into certain areas outside of the mine lease
area. As a result, remediation costs relating to the incident have
been incurred during the Period and additional costs will be
incurred going forward. The remediation costs comprise establishing
the root cause of the failure, humanitarian relief to the affected
community, livelihood and environmental restoration and costs to
repair. Judgement has been applied by Management in assessing the
future remediation costs. Management have considered the current
work streams, the estimated time of completion and appropriate
information received from suppliers and contractors involved in the
remediation process.
In FY 2023, US$2.4 million of costs, comprising management's
best estimate based on the current information available, has been
provided for in respect of ongoing remediation costs.
Human rights settlement claims
The IGM is a non-judicial process that has the capacity to
investigate and resolve complaints alleging severe human rights
impacts in connection with security operations at the Williamson
mine. It is being overseen by an Independent Panel of Tanzanian
experts taking an approach informed by principles of Tanzanian law,
and with complainants having access to free and independent advice
from local lawyers. The overall aim of the IGM is to promote
reconciliation between the Williamson Diamond Mine, directly
affected parties and the broader community by providing remedy to
those individuals who have suffered severe human rights impacts.
Petra Diamonds Limited (PDL) has agreed to fund the remedies
determined by the IGM.
On 28 November 2022, the IGM became operational with the
commencement of the IGM's pilot phase. The pilot phase, which was
completed in May 2023, has allowed the IGM's systems and procedures
to be further developed and adjusted to take into account
learnings. The Independent Panel ("IP") have started making
decisions on the merits of the cases considered during the pilot
phase and the associated remedies for successful grievances.
Judgement has been applied by Management in assessing the
estimated future cost of remedies for successful grievances based
on the outcome of claims investigated during the pilot phase.
Management have assessed the results and performed their own
estimate based on calculations received from consultants. The
estimate makes a number of different assumptions, including,
amongst others, regarding the categories of the grievances, the
success rates of the grievances and the settlement payment that
apply to successful grievances. These estimates also do not make
any allowance for non-financial remedies that the IP may award. The
concluded cases of the initial pilot phase grievances have been
extrapolated across the grievance population of 5,577, based on the
average claim settlement per category and the various categories of
the grievances (nature of claim). Management's assessment resulted
in estimated aggregate costs of US$7.9 million to be provided at
Year end; this compares to a range estimated by external
consultants of US$ 7.2 - 10.1 million. The estimate will be
reassessed at each future reporting date.
Koffiefontein - discontinued operation
Judgement is required when determining whether a component of an
entity classifies as a discontinued operation. A component of the
Group should be classified as a discontinued operation when it has
been disposed of, or abandoned, and represents a separate major
line of business or geographical area of operations. Judgement is
required when determining whether the component represents a
separate major line of business or geographical area of operations.
Judgement is required when determining whether the component
represents an abandoned operation. This was applied to the
classification of the Koffiefontein mine as a discontinued
operation. The Koffiefontein mine is considered a major
geographical area of operations which has been reported as a
separate segment in the past.
The Koffiefontein operation was placed on care and maintenance
in November 2022 after it continuously failed in achieving its
budgeted production targets. The operation mine is considered to
have reached the end of its economic life and has commenced with
detailed closure planning. The income producing activities of the
operation which involve the mining, recovery and sale of rough
diamonds have ceased. Care and maintenance activities have
commenced and are ongoing. These ongoing activities at the
Koffiefontein operation are more focused towards identifying and
managing the mine's ongoing environmental compliance obligations in
terms of local mining and environmental legislation and the
implementation of the committed Social and Labour Plans (SLP). As
these are legislative requirements, these activities are necessary
and cannot be avoided.
Based on the above, management considered that the Koffiefontein
mine is abandoned and therefore a discontinued operation and as
such Management have determined that the classification of a
discontinued operation in terms of IFRS 5 to be appropriate at 30
June 2023. Refer to note 18 for further details.
Koffiefontein - care and maintenance
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of past events, for which it is
probable that an outflow of economic benefits will occur and where
a reliable estimate can be made of the amount of the obligation.
Where the effect of discounting is material, provisions are
discounted. The discount rate used is a pre-tax rate that reflects
current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
As mentioned above, income producing activities of the
Koffiefontein operation have ceased and care and maintenance
activities have commenced. These ongoing activities are a necessary
bridge to eventual closure of the mine.
When a mine is not in production, environmental degradation
continues and needs to be monitored closely even though the mine is
not fully operational. As the Koffiefontein operation has reached
end of its Life of Mine (LOM) and a decision has been taken by
management to close the operation, the committed costs associated
with operating Koffiefontein during the care and maintenance phase
are more focused towards identifying and managing the mine's
ongoing environmental compliance obligations until such time that a
closure certificate is issued by the Department of Mineral
Resources and Energy (DMRE). As such, there is a present obligation
that exists for these committed costs related to care and
maintenance at Year end.
Significant estimates and assumptions are made in determining
the amount attributable to care and maintenance provisions. These
deal with uncertainties such as the regulatory framework, timing
and future costs. In determining the amount attributable to care
and maintenance provisions at Koffiefontein, management used a
discount rate of 10.5%, estimated timing to final closure of 11
years and an inflation rate of 6%. Management's estimate of costs
has taken into account discussions with suppliers, contractors,
quotes and historical on mine costs. Management's assessment
resulted in estimated aggregate costs of US$10.7 million provided
at Year end. The estimate will be reassessed at each future
reporting date.
Other key estimates and judgements
In addition to the key estimates and judgements disclosed above,
the following estimates and judgements have not significantly
changed from those disclosed in the FY 2022 Annual Report and will
be discussed in further detail in the FY 2023 Annual Report:
- Provision for rehabilitation
- Inventory and inventory stockpile
- Depreciation
- Pension and post-retirement medical fund schemes
- Net investments in foreign operations
- Taxation
3. DIVIDS
No dividends have been declared in respect of the current Year
(30 June 2022: US$nil).
4. SEGMENTAL INFORMATION
Segment information is presented in respect of the Group's
operating and geographical segments:
Mining - the extraction and sale of rough diamonds from mining
operations in South Africa and Tanzania.
Corporate - administrative activities in the United Kingdom.
Beneficiation - beneficiation activities in South Africa.
Segments are based on the Group's management and internal
reporting structure. Management reviews the Group's performance by
reviewing the results of the mining activities in South Africa,
Tanzania and reviewing the results of reviewing the corporate
administration expenses in the United Kingdom. Each segment
derives, or aims to derive, its revenue from diamond mining and
diamond sales, except for the corporate and administration cost
centre.
Segment results, assets and liabilities include items directly
attributable to a segment, as well as those that can be allocated
on a reasonable basis. Segment results are calculated after
charging direct mining costs, depreciation and other income and
expenses. Unallocated items comprise mainly interest-earning assets
and revenue, interest-bearing borrowings and expenses and corporate
assets and expenses. Segment capital expenditure is the total cost
incurred during the year to acquire segment assets that are
expected to be used for more than one period. Eliminations comprise
transactions between Group companies that are cancelled on
consolidation. The results are not materially affected by seasonal
variations. Revenues are generated from tenders held in South
Africa and Antwerp for external customers from various countries,
the ultimate customers of which are not known to the Group.
4. SEGMENTAL INFORMATION (continued)
Operating South Africa - Mining activities Tanzania United South Africa
segments -Mining Kingdom
activities
Corporate
US$ million Cullinan Koffiefontein and Beneficiation
Mine Finsch (5) Williamson treasury (4) Inter-segment Consolidated
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
2023 2023 2023 2023 2023 2023 2023 2023
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Revenue(1) 182.9 93.3 - 49.1 - 0.2 (0.2) 325.3
Segment result
(2) 49.1 10.1 - (29.2) (23.2) (0.1) (1.9) 4.8
Impairment
reversal /
(charge)
- operations (1.5) 52.7 - (31.2) - - - 20.0
Impairment
charge - other
receivables - - - (3.9) (1.0) - - (4.9)
Other direct
income - - - (0.6) 1.0 - - 0.4
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Operating profit
/ (loss) (3) 47.6 62.8 - (64.9) (23.2) (0.1) (1.9) 20.3
Financial income 11.1
Financial
expense (70.8)
Gain on
extinguishment
of Notes
net of
unamortised
costs 0.6
Income tax
charge (23.1)
Loss on
discontinued
operation
including
associated
impairment
charges (net of
tax) (5) (40.5)
Non-controlling
interest (2.9)
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Profit
attributable to
equity
holders of the
parent company (105.3)
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Segment assets 418.6 248.9 0.3 85.0 3,018.6 5.5 (2,916.1) 860.8
Segment
liabilities 335.6 143.1 50.1 84.1 1,946.3 6.2 (2,021.4) 544.0
Capital
expenditure 52.8 43.2 0.3 19.3 1.8 - - 117.4
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
(1) The Group's revenue of US$325.3 million comprises the sale
of rough diamonds and polished stones. The sale of rough diamonds
contributed US$323.7 million, with polished stones contributing
US$0.2 million and US$1.4 million from profit share agreements. The
sale of rough diamonds for Koffiefontein of US$4.4 million is
included under loss on discontinued operation.
(2) Total depreciation of US$82.5 million included in the
segmental result comprises depreciation incurred at the Cullinan
Mine US$53.5 million, Finsch US$20.2 million, Williamson US$8.2
million and Corporate and treasury US$0.6 million.
(3) Operating profit is equivalent to revenue of US$325.3
million less total costs of US$305.0 million as disclosed in the
Consolidated Income Statement.
(4) The beneficiation segment represents Tarorite, a cutting and
polishing business in South Africa, which can on occasion cut and
polish select rough diamonds.
(5) The operating results in respect of Koffiefontein have been
reflected within loss on discontinued operation (refer to note 18
).
4. SEGMENTAL INFORMATION (continued)
Operating South Africa - Mining activities Tanzania United South Africa
segments -Mining Kingdom
(Restated) activities
Corporate
US$ million Cullinan Koffiefontein and Beneficiation
Mine Finsch (5) Williamson treasury (3) Inter-segment Consolidated
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
2022 2022 2022 2022 2022 2022 2022 2022
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Revenue (1) 322.4 165.7 - 75.9 - 2.2 (2.5) 563.7
Segment result
(2) 154.4 34.8 - 22.2 (14.5) 0.4 (4.3) 193.0
Impairment
charge -
operations - - - 21.4 - - - 21.4
Impairment
reversal /
(charge)
- other
receivables - - - (4.1) 2.6 - - (1.5)
Other direct
income (0.7) (0.4) - 0.1 0.6 - - (0.4)
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Operating profit
/ (loss) (2) 153.7 34.4 - 39.6 (11.3) 0.4 (4.3) 212.5
Financial income 18.7
Financial
expense (91.7)
Income tax
charge (37.8)
Loss on
discontinued
operation
including
associated
impairment
charges (net of
tax) (13.6)
Non-controlling
interest (19.1)
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Profit
attributable to
equity
holders of the
parent company 69.0
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
Segment assets 463.9 229.8 6.0 123.2 3,575.2 5.1 (3,292.3) 1,110.9
Segment
liabilities 384.0 111.2 17.1 75.1 2,430.1 5.9 (2,391.0) 632.4
Capital
expenditure 35.0 12.0 0.6 3.3 1.6 - (0.3) 52.2
----------------- --------- ------- -------------- ----------- ---------- -------------- -------------- -------------
(1) The Group's revenue comprises the sale of rough diamonds and
polished stones. The sale of rough diamonds contributed US$560.4
million with polished stones contributing US$3.3 million. Included
within the US$3.3 million polished stones contribution is US$1.1
million from a profit share agreement.
(2) Total depreciation of US$82.5 million included in the
segmental result comprises depreciation incurred at the Cullinan
Mine US$52.5 million, Finsch US$24.4 million, Williamson US$5.0
million and Corporate and treasury US$0.6 million.
(3) Operating profit is equivalent to revenue of US$563.7
million less total costs of US$351.2 million as disclosed in the
Consolidated Income Statement.
(4) The beneficiation segment represents Tarorite, a cutting and
polishing business in South Africa, which can on occasion cut and
polish select rough diamonds.
(5) The operating results in respect of Koffiefontein have been
reflected within loss on discontinued operation (refer to note 18
).
US$ million 2023 2022
------------------------------------------------- ------- -------
5. CORPORATE EXPITURE
Corporate expenditure includes:
Depreciation of property, plant and equipment 0.6 0.6
Amortisation of right-of-use asset 0.2 0.2
London Stock Exchange and other regulatory
expenses 1.4 1.5
Transaction costs - redemption of Notes 0.8 -
Costs / (settlement reversal) - human rights
claims at Williamson (including IGM remedies) 8.5 (0.8)
------------------------------------------------- ------- -------
Share-based expense - Directors 2.3 1.1
Other staff costs 4.9 5.1
------------------------------------------------- ------- -------
Total staff costs 7.2 6.2
------------------------------------------------- ------- -------
6. FINANCING EXPENSE
2023 (Restated)
US$ million 2022
---------------------------------------------------------- ---- ------- --- ------------
Interest received on BEE loans and other receivables 5.3 4.1
Interest received bank deposits 3.9 1.3
Foreign exchange gains on settlement of forward
exchange contracts(1) 1.9 13.3
Financial income 11.1 18.7
---------------------------------------------------------------- ------- --- ------------
Gross interest on senior secured second lien
notes, bank loans and overdrafts (27.9) (45.3)
Other debt finance costs, including facility
fees and IFRS 16 charges (1.6) (2.3)
Unwinding of present value adjustment for rehabilitation
costs (5.7) (5.0)
Notes redemption premium and acceleration of
unamortised bank facility and Notes costs(2) (8.3) (1.6)
Foreign exchange losses on the settlement of
forward exchange contracts(1) - (1.0)
Net foreign exchange losses (27.3) (36.5)
---------------------------------------------------------------- ------- --- ------------
Financial expense (70.8) (91.7)
---------------------------------------------------------------- ------- --- ------------
Gain on extinguishment of Notes(3) 0.6 -
---------------------------------------------------------- ---- ------- --- ------------
Net financial expense (59.1) (73.0)
---------------------------------------------------------------- ------- --- ------------
(1) The Group predominantly enters into hedge contracts where
the risk being hedged is the volatility in the South African Rand,
Pound Sterling and US Dollar exchange rates affecting the proceeds
in South African Rand of the Group's US Dollar denominated diamond
tenders. The fair value of the Group's hedges as at the end of the
Period are based on Level 2 mark-to-market valuations performed by
the counterparty financial institutions. The contracts are all
short dated in nature and mature within the next 12 months.
(2) The Notes redemption premium and acceleration of unamortised
bank facility and Notes costs of US$8.3 million relate to the costs
associated with the tender offer to Noteholders during the Year (30
June 2022: early settlement of RCF), comprising unamortised upfront
costs of US$6.8 million (30 June 2022: US$1.6 million) previously
capitalised and the make-whole premium of US$1.5 million.
(3) The gain on extinguishment of Notes in the Year arose from
the cancelation of US$492,000 Notes during the Year. Refer to note
8 for further detail.
7. PROPERTY, PLANT AND EQUIPMENT
The net movement in property, plant and equipment for the Period
is a decrease of US$35.1 million (30 June 2022: US$63.6 million
decrease). This is primarily as a result of:
30 June 30 June
US$ million 2023 2022
----------------------------------------------------- -------- ---------
As at 1 July 633.2 696.8
Foreign exchange movement (84.4) (83.4)
Additions 117.4 52.2
Reconsolidation of non-current assets held
for sale (including reversal of IFRS 5 impairment)
relating to Williamson - 52.6
Change in rehabilitation assets (2.8) -
Depreciation (82.7) (82.8)
Impairments reversal / (charge) 19.2 (0.3)
Disposals (1.8) (1.9)
As at 30 June 598.1 633.2
------------------------------------------------------ -------- ---------
8. LOANS AND BORROWINGS
US$ million 30 June 30 June
2023 2022
---------------------------------------------- -------- ---------
Non-current liabilities
Loans and borrowings - Senior secured second
lien notes 222.4 353.9
222.4 353.9
Current liabilities
Loans and borrowings - senior secured lender
debt facilities 25.1 12.3
25.1 12.3
Total loans and borrowings - bank facilities 247.5 366.2
----------------------------------------------- -------- ---------
Significant non-cash transactions
US$ million 1 July 1 July
2022 - 2021 -
30 June 30 June
2023 2022
----------------------------------------------- --------- ---------
Senior secured second lien notes and secured
debt facilities:
As at 1 July 366.2 430.2
Cash payments:
Repayment of Notes and bank debt facilities (144.6) (103.7)
Coupon payment (7.6) -
Non-cash:
Acceleration of unamortised transaction costs 6.8 (1.6)
Interest accrued during the year 27.3 44.4
Cancelation of Notes (0.6)
Effect of foreign exchange - (3.1)
------------------------------------------------ --------- ---------
247.5 366.2
----------------------------------------------- --------- ---------
a) US$336.7 million Senior Secured Second Lien Notes
A wholly owned subsidiary of the Company, Petra Diamonds US$
Treasury Plc, issued debt securities consisting of US$336.7 million
five-year senior secured second lien loan notes ("Notes"), with a
maturity date of 8 March 2026. The Notes are guaranteed by the
Company and by the Group's material subsidiaries and are secured on
a second lien basis on the assets of the Group's material
subsidiaries. The Notes carry a coupon from:
- 9 March 2021 to 31 December 2022 of 10.50% per annum, which is
capitalised to the outstanding principal amount semi-annually in
arrears on 31 December and 30 June of each year;
- 1 January 2023 to 30 June 2023 of 10.50% per annum on 37.7778%
of the aggregate principal amount outstanding, which is capitalised
to the outstanding principal amount semi-annually in arrears on 31
December and 30 June of each year and 9.75% per annum on 62.2222%
of the aggregate principal amount outstanding which is payable in
cash semi-annually in arrears on 31 December and 30 June of each
year;
- 1 July 2023 to 31 December 2025 of 9.75% per annum on the
aggregate principal amount outstanding which is payable in cash
semi-annually in arrears on 31 December and 30 June of each year;
and
- 1 January 2026 to 8 March 2026 (final coupon payment) of 9.75%
per annum on the aggregate principal amount outstanding which is
payable in cash
On 27 September 2022, the Group repaid, through a debt tender
offer to Noteholders, an amount of US$143,627,622, comprising the
principal amount of US$125,590,338 and PIK interest of
US$18,037,284. On 12 October 2022, a further US$1,000,667 was
repaid to Noteholders comprising the principal amount of US$875,000
and PIK interest of US$125,667. A further principal amount of
US$492,000 and PIK interest of US$124,528 were cancelled due to
Notes not being claimed by Noteholders in the prescribed period
post the Debt Restructuring in FY 2021. The principal amount of
Notes outstanding after the repayments to Noteholders is
US$209,698,662 (excluding the accrued PIK interest to 30 June
2023). Cash costs of US$1,521,187 relating to the repayment of
Noteholders have been expensed in the Consolidated Income Statement
under finance expense (refer to Note 6).
The Group performed an assessment under its accounting policies
and the requirements of IFRS 9 as to whether the debt tender offer
to the Noteholders represented a substantial modification. A
qualitative test was performed which determined the terms of the
Notes, repayment profile and interest rate were not amended or
modified as part of the tender offer process therefore, no
substantial modification was relevant.
The remaining costs associated with issuing the Notes of US$13.9
million, after adjusting for the acceleration of US$6.8 million of
unamortised costs associated with the debt tender offer to
Noteholders which have been expensed through profit and loss within
net finance expense (refer to note 6) have been capitalised against
the principal amount and US$10.5 million remains unamortised as at
30 June 2023 (30 June 2022: US$18.5 million). Interest of US$48.3
million has been accrued as at 30 June 2023.
Further details about the Notes (including security) have been
included in the Group's FY 2023 Annual Report.
b) Senior Secured Lender Debt Facilities
In June 2022, the Group restructured its existing banking
facilities resulting in Absa Corporate and Investment Banking
("Absa") becoming the Group's banking partner under the new banking
facilities .
The terms under the RCF are:
-- termination date of 7 January 2026 with a 60-day buffer
between the redemption of the Notes and the maturity of the
RCF;
-- interest rate of SA JIBAR + 4.15% per annum (with the margin
to be reconsidered annually based on Petra's credit metrics with a
view of further optimising the margin to be achieved); and
-- certain covenant ratios as mentioned below.
.
The Group's debt and hedging facilities are detailed in the
table below:
Senior Lender Debt Facilities 2023 2022
Facility Facility
amount amount
------------------------------ --------------- ---------------
ZAR Debt Facilities:
ZAR Lenders RCF ZAR1.0 billion ZAR1.0 billion
FX Hedging facilities ZAR300 million ZAR300 million
------------------------------ --------------- ---------------
The terms and conditions of the Group facilities are detailed in
the Group's FY 2023 Annual Report. The facilities are secured on
the Group's interests in the Cullinan, Finsch and Koffiefontein
Mines.
As at date of this report, an amount of ZAR150 million (US$8.0
million) remained available for drawdown on the RCF, following
drawdowns of ZAR850 million (US$45.1 million) during July and
August 2023 for working capital requirements due to the deferral of
the June 2023 diamond tender. During FY 2022, the Company paid
ZAR404.6 million (US$24.9 million) (capital plus interest) to
settle the old RCF and ZAR893.2 million (US$54.9 million) (capital
plus interest) to settle the previous Term Loan.
Covenant ratios
As part of the revised RCF facility entered into with ABSA in FY
2022, the Company is required:
-- to maintain a consolidated net debt : consolidated EBITDA
ratio tested semi-annually on a rolling 12-month basis;
-- to maintain an Interest Cover Ratio tested semi-annually on a
rolling 12-month basis; and
-- to maintain minimum 12 month forward looking liquidity
requirement that consolidated cash and equivalents shall not fall
below US$20.0 million.
All the covenants associated with the RCF facility exclude
Williamson. The Company's revised RCF covenant levels for the
respective measurement periods are outlined below:
FY23 FY23 FY24 FY24 FY25 FY25 FY26
H1 H2 H1 H2 H1 H2 H1
---------------------------------- ------- ------- ------- ------- ------- ------- -------
Consolidated net debt : EBITDA
Leverage ratio (maximum) 4.00 3.50 3.50 3.25 3.25 3.00 3.00
Interest Cover Ratio (minimum) 1.85 2.50 2.50 2.75 2.75 3.00 3.00
---------------------------------- ------- ------- ------- ------- ------- ------- -------
The covenants were not in breach at the measurement date.
9. COMMITMENTS
As at 30 June 2023, the Company had committed to future capital
expenditure totalling US$102.5 million (30 June 2022: US$49.5
million) , mainly comprising the Cullinan Mine US$36.9 million (30
June 2022: US$25.2 million), Finsch US$64.9 million (30 June 2022:
US$23.7 million), Koffiefontein US$nil (30 June 2022: US$0.3
million) and Williamson US$0.7 million (30 June 2022: US$0.3
million ) .
10. RELATED PARTY TRANSACTIONS
The Group's related party BEE partners, Kago Diamonds (Pty) Ltd
("Kago Diamonds") and its gross interests in the mining operations
of the Group are disclosed in the table below.
Mine Partner and respective Partner and respective
interest interest
as at 30 June 2023 as at 30 June 2022
(%) (%)
-------------- ----------------------- -----------------------
Cullinan Kago Diamonds (14%) Kago Diamonds (14%)
Finsch Kago Diamonds (14%) Kago Diamonds (14%)
Koffiefontein Kago Diamonds (14%) Kago Diamonds (14%)
The Itumeleng Petra Diamonds Employee Trust ("IPDET") holds a
12% interest in each of the Group's South African operations, with
Petra's commercial BEE Partners holding the remaining 14% interest
through their respective shareholdings in Kago Diamonds, in which
Petra has a 31.46% interest. The effective interest percentages
attributable to the remaining operations for the Group's
shareholders is 78.4%.
The non-current loans receivable, non-current loans payable,
finance income and finance expense, due from and due to the related
party BEE partners and other related parties, including dividends
paid are disclosed in the table below:
US$ million 2023 2022
------------------------------------- --------------- --------------
Non-current receivable
Kago Diamonds(1) 21.1 26.6
21.1 26.6
------------------------------------- --------------- --------------
Current trade and other receivables
KEM JV(2) 2.7 3.7
Impairment provision(2) (2.6) (2.0)
-------------------------------------- --------------- --------------
0.1 1.7
------------------------------------- --------------- --------------
1 July 2022 1 July 2021
- -
30 June 2023 30 June
2022
Finance income
Kago Diamonds 2.4 2.1
2.4 2.1
------------------------------------- --------------- --------------
Dividend paid
Kago Diamonds (3) 1.1 1.3
1.1 1.3
------------------------------------- --------------- --------------
(1) The movement in the Kago Diamonds receivable of US$4.5
million (30 June 2022: US$6.9 million) is attributable to
repayments received from Kago Diamonds during the Year totalling
US$3.5 million (30 June 2022: US$nil), a foreign exchange decrease
of US$3.0 million (30 June 2022: US$4.1 million decrease) and
accrued interest of US$2.4 million (30 June 2022: US$2.1 million)
.
(2) Included in current trade and other receivables are amounts
advanced to KEM JV in respect of a working capital facility and
equipment finance facility of US$0.1 million (30 June 2022: US$1.7
million). During the Year, the Group received payments of US$0.5
million (FY 2022: US$2.5 million) from the KEM JV as settlement of
the outstanding purchase consideration . The Group has applied the
expected credit loss impairment model to the KEM JV receivables,
taking into account various factors, including an amended agreement
entered into during the which resulted in the expected credit loss
increasing by US$1.0 million to US$3.1 million (30 June 2022:
US$2.0 million).
(3) During the Year, Finsch declared and paid a dividend out of
profits generated in FY 2022 to its shareholders. The BEE partners
received a gross dividend of US$9.6 million (30 June 2022: US$2.5
million). An amount of US$6.1 million (30 June 2022: US$0.2
million) was used by BEE partners to repay a portion of their loans
owing to the Group and a net cash payment of US$2.0 million (30
June 2022: US$2.5 million) was received by the BEE partners,
comprising Kago US$1.1 million (30 June 2022: US$1.3 million) and
IPDET US$0.9 million (30 June 2022: US$1.2 million).
11. BEE LOANS RECEIVABLE
US$ million 2023 2022
------------------------------ ----- ----------
Non-current assets
Loans and other receivables 37.3 44.6
------------------------------ ----- ----------
The non-current BEE loans receivable represents those amounts
receivable from the Group's BEE Partners (Kago Diamonds and the
IPDET) in respect of advances historically provided to the Group's
BEE Partners to enable them to discharge interest and capital
commitments under the BEE Lender facilities, advances to the BEE
Partners to enable trickle payment distributions to both Kago
Diamonds shareholders and to the beneficiaries of the IPDET (Petra
Directors and Senior Managers do not qualify as beneficiaries under
the IPDET Trust Deed), and financing of their interests in the
Koffiefontein mine. In addition, US$36.3 million (30 June 2022:
US$42.0 million) has been recorded as part of the gross receivable
(before expected credit loss provisions) in respect of amounts to
be reimbursed to the Group in respect of the guarantee under the
BEE Lender facilities. Judgement was required in determining the
extent to which reimbursement is applicable based on the terms of
the agreements, South African legislation and discussions with the
BEE partners.
As a result of historical delays in the Cullinan Mine plant
ramp-up and the Finsch SLC ramp-up, the Group has historically and
through the Period elected to advance the BEE Partners' funds using
Group treasury to enable the BEE Partners to service their interest
and capital commitments under the BEE Lender facilities (refer
below). These BEE receivables, including interest raised, will be
recoverable from the BEE Partners' share of future cashflows from
the underlying mining operations. As part of a previous Debt
Restructuring in FY 2021, Petra has assumed the BEE Lender facility
obligations.
For detail on expected credit loss provision and reversal
associated with the BEE loans receivable refer to note 2.
1 July 2022 1 July 2021
- -
US$ million 30 June 2023 30 June 2022
As at 1 July 44.6 46.6
Foreign exchange movement on opening balance (6.0) (5.9)
Interest receivable 4.8 4.1
Repayment of loan from BEE partner (6.1) (0.2)
As at 30 June 37.3 44.6
----------------------------------------------- -------------- --------------
12. SHARES ISSUED AND SHARE PREMIUM
During the Year, there were no new shares issued by the Company.
On 16 November 2022, at the FY 2022 Annual General Meeting, the
Company's shareholders approved the Company's share premium account
be reduced by US$350 million with such amount being credited
against accumulated losses with the balance being credited to the
Company's other distributable reserves.
Accumulated
reserves
US$ million Share premium / (losses)
---------------------------------------------- -------------- ------------
As at 1 July 2022 959.5 (183.6)
Conversion of share premium to distributable
reserves (350.0) 350.0
Transfer between reserves - 0.6
Movement during year - (105.3)
As at 30 June 2023 609.5 61.7
----------------------------------------------- -------------- ------------
In FY 2022, at the FY 2021 Annual General Meeting the Company's
shareholders approved a 50 for 1 Share Consolidation. Admission of
the Company's New Ordinary Shares took place on 29 November 2021.
As a result of the Share Consolidation, the Company's shares in
issue comprise of 194,201,785 ordinary shares of 0.05 pence
each.
13. EARNINGS PER SHARE
Continuing Discontinued Continuing Discontinued
operations operation30 Total operations operation
30 June June 2023 30 June 30 June 30 June 2022 Total
2023 US$ 2023 2022 US$ 30 June 2022
US$ US$ US$ US$
Numerator
(Loss) /
profit for
the Year (73,991,245) (31,290,280) (105,281,525) 79,122,756 (10,127,219) 68,995,537
--------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
Denominator
Shares Shares Shares Shares Shares Shares
Weighted
average number
of
ordinary
shares used in
basic
EPS
Brought
forward 194,201,785 194,201,785 194,201,785 9,710,089,272 9,710,089,272 9,710,089,272
Effect of 50
for 1 share
consolidation
November 2021 - - - (9,515,887,487) (9,515,887,487) (9,515,887,487)
--------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
Carried
forward 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
Shares Shares Shares Shares Shares Shares
Dilutive
effect of
potential
ordinary
shares - - - - - -
--------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
Weighted
average
number of
ordinary
shares in
issue used
in diluted
EPS 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
--------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
US cents US cents US cents US cents US cents US cents
--------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
Basic (loss) /
profit per
share - US
cents (38.10) (16.11) (54.21) 40.74 (5.21) 35.53
Diluted (loss)
/ profit per
share - US
cents (38.10) (16.11) (54.21) 40.74 (5.21) 35.53
The number of potentially dilutive ordinary shares, in respect
of employee share options, Executive Director and Senior Management
share award schemes is nil (30 June 2022: nil).
14. ADJUSTED EARNINGS PER SHARE (non-GAAP measure)
In order to show earnings per share from operating activities on
a consistent basis, an adjusted earnings per share is presented
which excludes certain items as set out below. It is emphasised
that the adjusted earnings per share is a non-GAAP measure. The
Petra Board considers the adjusted earnings per share to better
reflect the underlying performance of the Group. The Company's
definition of adjusted earnings per share may not be comparable to
other similarly titled measures reported by other companies.
Continuing Discontinued Continuing Discontinued
operations operation30 Total operations operation30
30 June June 2023 30 June 30 June June 2022 Total
2023 US$ 2023 2022 US$ 30 June 2022
US$ US$ US$ US$
Numerator
(Loss) / profit
for the Year (73,991,245) (31,290,280) (105,281,525) 79,122,756 (10,127,219) 68,995,537
Net unrealised
foreign
exchange
loss * 29,322,988 (2,678) 29,320,310 34,824,936 26,799 34,851,735
Taxation credit
on unrealised
foreign
exchange loss
* (892,795) - (892,795) (1,618,908) - (1,618,908)
Present value
discount -
Williamson
VAT receivable 3,938,983 - 3,938,983 4,076,760 - 4,076,760
Impairment
(reversal) /
charge
- operations* (8,903,290) 646,142 (8,257,148) (21,438,351) 231,616 (21,206,735)
Impairment
(reversal) /
charge
- other
receivables 957,770 - 957,770 (2,544,704) - (2,544,704)
Taxation charge
on impairment
reversal* 10,812,285 - 10,812,285 - - -
Transaction
costs and
acceleration
of unamortised
costs on Notes
and
restructured
bank
facilities 9,040,386 - 9,040,386 1,628,757 - 1,628,757
Gain on
extinguishment
of Notes
net of
unamortised
costs (616,528) - (616,528) - - -
Williamson
tailings
facility
- remediation
costs 10,740,548 - 10,740,548 - - -
Williamson
tailings
facility
- accelerated
depreciation 5,220,536 - 5,220,536 - - -
Human rights
IGM claims
provision
and
transaction
costs /
(reversal)
of settlement
agreement 8,485,571 - 8,485,571 (816,270) - (816,270)
Inventory
Impairment
(WDL blocked
parcel 1
Inventory and
related
receivable
adjustment) (112,284) - (112,284) - - -
Movement in
provision for
unsettled
and disputed
tax claims 253,941 - 253,941 - - -
Adjusted loss
for the Year
attributable
to parent (5,743,134) (30,646,816) (36,389,950) 93,234,976 (9,868,804) 83,366,172
---------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
*Portion
attributable to
equity
shareholders of
the Company
Denominator
Shares Shares Shares Shares Shares Shares
Weighted
average number
of
ordinary shares
used in basic
EPS
As at 1 July 194,201,785 194,201,785 194,201,785 9,710,089,272 9,710,089,272 9,710,089,272
Effect of
shares issued
during
the Period - - - - - -
Effect of 50
for 1 share
consolidation
November 2021 - - - (9,515,887,487) (9,515,887,487) (9,515,887,487)
---------------- ------------------ -------------- ---------------- ------------------ ----------------
Carried forward 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
Shares Shares Shares Shares Shares Shares
Dilutive effect
of potential
ordinary shares - - - - - -
---------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
Weighted
average number
of
ordinary
shares in
issue used
in diluted EPS 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
----------------
US cents US cents US cents US cents US cents US cents
---------------- ---------------- ------------------ -------------- ---------------- ------------------ ----------------
Adjusted basic
profit / (
loss)
per share - US
cents (2.96) (15.78) (18.74) 48.01 (5.08) 42.93
Adjusted
diluted profit
/ (
loss) per
share - US
cents (2.96) (15.78) (18.74) 48.01 (5.08) 42.93
15. IMPAIRMENT CHARGE
The current market conditions in the global rough diamond
market, volatility of and variability in product mix are all
factors impacting the rough diamond prices achieved by Petra during
the Period, and the tailings facility failure at Williamson which
have resulted in management taking a critical review of the Group's
business models and operational assets. The carrying amounts of the
Group's assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If there is any
indication that an asset may be further impaired or an impairment
reversal may apply, its recoverable amount is estimated. The
recoverable amount is determined on a fair value less cost to
develop basis.
During the Year under review, the Group reviewed the carrying
value of its investments, loan receivables and operational assets
for indicators of impairment. Following the assessment, impairment
of property, plant and equipment was considered appropriate for
Cullinan and Williamson, and an impairment reversal was considered
appropriate for Finsch in the current Year. The Group recognised an
asset level net impairment reversal of US$20.0 million being
managements' estimate of the increase in the value of the Cullinan,
Finsch and Williamson Mines. The Group also recognised a
non-financial receivables charge of US$4.9 million, comprising an
impairment charge of US$3.9 million being management's estimate of
the recoverability of the Tanzania VAT receivable, an impairment
charge of US$1.0 million related to the KEM JV receivable. For
impairment considerations of Koffiefontein, refer to note 18.
Impairment Asset class Carrying Impairment Carrying
(US$ million) value pre reversal value post
impairment / (charge) impairment
Impairment operations:
Cullinan Mine Property, plant & equipment 356.8 (1.5) 355.3
Finsch Property, plant & equipment 155.1 52.7 207.8
Williamson Property, plant & equipment 61.9 (31.2) 30.7
------------------------ ----------------------------- ------------ ------------ ------------
Sub-total 573.8 20.0 593.8
Impairment -
non-financial
receivables:
Other - current
receivable KEM JV receivable 1.1 (1.0) 0.1
Tanzania VAT receivable
Other - non-current (refer to note 2) 10.5 (3.9) 6.6
------------------------ ----------------------------- ------------ ------------ ------------
Sub-total 11.6 (4.9) 6.7
------------------------------------------------------- ------------ ------------ ------------
Total 585.4 15.1 600.5
------------------------------------------------------- ------------ ------------ ------------
30 June 2022
The operations of the Cullinan, Finsch, Koffiefontein and
Williamson Mines are held at recoverable value as a result of FY
2021 impairments. During FY 2022, the Group reviewed the carrying
value of its investments, loan receivables and operational assets
for indicators of impairment. Following the assessment, no further
impairment of property, plant and equipment was considered
appropriate for the Cullinan, Finsch and Williamson Mines, nor was
any impairment reversal considered appropriate in the current Year.
The Group recognised an asset level impairment charge of US$0.3
million being managements' estimate of the decrease in the value of
the Koffiefontein assets. The Group also reversed a Group level
impairment charge relating to Williamson, previously recognised
under IFRS 5, of US$21.4 million as Williamson is no longer
considered an asset held for sale. The Group recognised a
non-financial receivables charge of US$1.5 million comprising an
impairment charge of US$4.1 million being management's estimate of
the recoverability of the Tanzania VAT receivable, an impairment
charge of US$0.3 million related to other receivables and an
impairment reversal of US$2.9 million of the KEM JV receivable.
Impairment Asset class Carrying Impairment Carrying
(US$ million) value pre reversal value post
impairment / (charge) impairment
------------------------ ----------------------------- ------------ ------------ ------------
Impairment operations:
Cullinan Mine Property, plant & equipment 419.9 - 419.9
Finsch Property, plant & equipment 157.9 - 157.9
Williamson Property, plant & equipment 29.3 21.4 50.7
------------------------ ----------------------------- ------------ ------------ ------------
Sub-total 607.1 21.4 628.5
------------------------------------------------------- ------------ ------------ ------------
Impairment -
non-financial
receivables:
Other - current
receivable KEM JV receivable (1.2) 2.9 1.7
Other - current
receivable Other receivables 0.3 (0.3) -
Other - non-current Tanzania VAT receivable 6.8 (4.1) 2.7
------------------------ ----------------------------- ------------ ------------ ------------
Sub-total 5.9 (1.5) 4.4
------------------------------------------------------- ------------ ------------ ------------
Total 613.0 19.9 632.9
------------------------------------------------------- ------------ ------------ ------------
Cullinan, Finsch, Koffiefontein and Williamson Mine impairment
considerations and assumptions
The Group performs impairment testing on an annual basis of all
operations and when there are potential indicators of impairment.
The impairment testing performed resulted in impairments of the
Cullinan Mine, Finsch, Koffiefontein and Williamson assets. The key
assumptions used in determining the recoverable value calculations,
determined on fair value less cost to develop basis, are listed in
the table below:
Group assumptions for 30 June 2023 and 30 June 2022:
Key assumptions Explanation
--------------------------- --------------------------------------------------------------
Current mine plan and Economically recoverable reserves and resources are
recoverable value of based on management's expectations based on the availability
reserves and resources of reserves and resources at mine sites and technical
studies undertaken in house and by third party specialists.
The end of life of mine based on current mine plans
for the operations are as follows:
Cullinan Mine: FY 2032 (FY 2022: FY 2031)
Finsch: FY 2031 (FY 2022: FY 2030)
Koffiefontein: Mine on C&M (FY 2022: FY 2025) - current
production has ceased and the operation has been
placed on permanent care and maintenance with no
intention of bringing the operation back into production
in the future.
Williamson: FY 2030 (FY 2022: FY 2030)
Resources remaining after the current mine plans
have not been included in impairment testing for
the operations.
--------------------------- --------------------------------------------------------------
Current mine plan reserves Cullinan Mine: Current mine plan, including the C-Cut
and resources Extension approved during FY 2023, over the next
nine years; total resource processed 32.9 Mt (FY
2022: Current mine plan over the next nine years;
total resource processed 34.2 Mt).
Finsch: Current mine plan, including the rescoped
3L-SLC project to 90L approved during FY 2023, over
the next eight years; total resource processed 22.3
Mt (FY 2022: Current mine plan over the nine years;
total resource processed 23.1 Mt).
Koffiefontein has been put on permanent care and
maintenance and has ceased production.
Williamson: Current mine plan over the next seven
years, total resource processed 37.4 Mt (FY 2022:
Current mine plan over the next eight years, total
resource processed 43.3 Mt).
--------------------------- --------------------------------------------------------------
Current mine plans Management has estimated the timing and quantum of
- capital expenditure the capital expenditure based on the Group's current
mine plans for each operation. There is no inclusion
of capital expenditure to enhance the asset beyond
exploitation of the current mine plan orebody.
--------------------------- --------------------------------------------------------------
Residual Value Cullinan Mine: Management included a residual value
of property, plant and equipment to be used beyond
the current mine plan, given the significant resource
base estimated to be available at the end of the
current mine plan.
No residual values were included in the impairment
assessments of the other mining operations due to
the mine plan aligning with the resource base estimated
to be available at the end of the current mine plan.
--------------------------- --------------------------------------------------------------
Diamond prices The diamond prices used in the impairment test have
been set with reference to recently achieved pricing
and market trends, and long-term diamond price escalators
are informed by industry views of long-term market
supply/demand fundamentals. Given the current market
uncertainty, the assessment of short-term diamond
prices and the rate and extent of pricing recovery,
together with the longer-term pricing escalators,
represented a critical judgement.
The 30 June 2023 impairment testing models starting
price assumptions have been adjusted to reflect the
pricing achieved during the FY 2023. The long-term
models incorporate normalised diamond price escalation
of 1.9% above a long-term US inflation rate of 2.0%
per annum from FY 2025 onwards. The Cullinan Mine
and Williamson, from time to time, recover stones
of high value. The Group used to classify stones
above US$5m in value as Exceptional Stones. From
FY 2024 onwards, the Group has revised its definition
of Exceptional Stones to those stones with a value
above US$15m. The Group does not include any contribution
from Exceptional Stones (as per the new definition
of US$15m) as part of the Business Planning or price
assumptions, and these stones would represent windfall
earnings for the Group. For context, the Group has
sold stones meeting the new Exceptional Stones definition
on three occasions since FY2016.
The 30 June 2022 impairment testing models starting
price assumptions have been adjusted to reflect the
improved pricing achieved during the Year when compared
to the 30 June 2021 impairment models. Diamond prices
(excluding Exceptional Stones) have been assumed
to remain unchanged during FY 2023, then increase
by 3.9% from FY 2024 onwards. The long-term models
incorporate normalised diamond price escalation of
1.9% above a long-term US inflation rate of 2.0%
per annum from FY 2024 to FY 2030. Estimates for
the contribution of Exceptional Diamonds sold for
more than US$5m each are determined with reference
to historical trends. Based on the historical trends,
management have increased the contribution from Exceptional
Stones (as per previous US$5m definition) at the
Cullinan Mine from US$25m to US$35m per annum.
--------------------------- --------------------------------------------------------------
Discount rate A ZAR discount rate of 13.5% (30 June 2022: 13.0%)
was used for the South African operations and a USD
discount rate of 15.2% (30 June 2022: 14.00%) for
Williamson. Discount rates calculated based on a
nominal weighted average cost of capital including
the effect of factors such as market risk and country
risk as at the Year end. USD and ZAR discount rates
are applied based on respective functional currency
of the cash generating unit.
--------------------------- --------------------------------------------------------------
Cost inflation rate Long-term inflation rates of 3.5%-9.0% (30 June 2022:
3.5%-7.5%) above the long-term US$ inflation rate
were used for Opex and Capex escalators. Management
have taken into account the current short-term pressures
in the inflation environment and the impact on Opex
and capex costs, allowing for the inflation rate
to normalise over the longer-term.
--------------------------- --------------------------------------------------------------
Exchange rates Exchange rates are estimated based on an assessment
of current market fundamentals and long-term expectations.
The US$/ZAR exchange rate range used for all South
African operations commenced at ZAR18.36 (30 June
2022: ZAR16.04) for FY 2024 and FY 2025 reflecting
the current volatility, inflationary pressures and
quantitative tightening by Central banks, and thereafter
devaluing at 3.5% per annum (which is the theoretical
inflation differential between the US and SA, as
per their policy targets). Given the volatility in
the USD/ZAR exchange rate and the current levels
of economic uncertainty, the determination of the
exchange rate assumptions required significant judgement.
--------------------------- --------------------------------------------------------------
Valuation basis Discounted present value of future cash flows.
--------------------------- --------------------------------------------------------------
Williamson For impairment testing at Williamson, management
used the above assumptions, noting that production
recommenced in July 2023 following the TSF failure
in November 2022.
--------------------------- --------------------------------------------------------------
Sensitivity analysis
The impact of applying reasonable downside sensitivities on the
key inputs based on management's assumptions at 30 June 2023 is
noted below:
Potential Impairment impact
---------------------------- --------------------------------------------------------------
(US$ million) Cullinan Finsch Koffiefontein(1) Williamson
Mine
---------------------------- -------------- -------------- ----------------- -----------
Base case
Increase in discount rate
by 2% No impairment No impairment n/a 3.1
Reduction in pricing by 5%
over Life of Mine 14.1 No impairment n/a 23.5
Reduction in production by
10% 53.2 37.2 n/a 35.6
Increase in Opex by 5% No impairment No impairment n/a 27.8
ZAR stronger by 5% through
the LOM period 112 89 n/a n/a
1. Production at Koffiefontein has ceased and the operation has
been placed on permanent care and maintenance.
16. WILLIAMSON (30 June 2022)
a) Framework Agreement
On 13 December 2021, the Company signed an agreement in
principle with the Government of Tanzania relating to the
Williamson operations. Williamson resumed operations and sales
during August 2021, having been on care and maintenance since April
2020.
The Framework Agreement provides for a capital restructuring of
Williamson Diamonds Limited ("WDL"), the entity that owns the
Williamson Mine, including the 16% free carried interest that the
Government of Tanzania is entitled to receive in WDL and its
shareholder loans under Section 10 of the Tanzanian Mining Act,
2017 and Regulation 10 of the Tanzanian Mining (State
Participation) Regulations, 2020. The capital restructuring will
include:
-- a WDL share issue with the effect of reducing Petra's
indirect shareholding from 75% to 63% and consequently increasing
the Government of Tanzania's shareholding from 25% to 37%;
-- a contribution to the Government of Tanzania of 16% of the
principal outstanding value of the Group's shareholder loans
payable by WDL, with the remaining 84% of such principal
outstanding loans continuing to be owed to the Group; and
-- the transfer of the WDL shares held by the Group to another
member of the Petra Group (either Petra itself or a special purpose
subsidiary). Petra have registered Mwadui Mining Holdings Ltd, a
subsidiary registered in the United Kingdom, for this purpose.
With respect to the reorganisation of the parties' legal
interests in WDL, the Framework Agreement also provides for an
overall 55:45 economic benefit sharing ratio between the Government
of Tanzania and Petra in relation to future economic benefits from
the Williamson Mine. This arrangement is intended to capture the
parties' entitlements as shareholders as well as, with respect to
the Government of Tanzania, the revenue it collects from WDL
arising from taxes, royalties, duties, fees and other fiscal levies
("Government Imposed Charges"). The Framework Agreement also
provides that WDL shall be entitled to off-set its undisputed
unpaid and overdue VAT receivables against future Government
Imposed Charges, whereby such Government Imposed Charges will be
off-set and treated as paid for the purposes of the economic
benefit sharing ratio.
The Framework Agreement provides that Petra and the Government
of Tanzania will provide financial assistance for the restart of
operations at the Williamson Mine. The Government of Tanzania does
this by allocating the sales proceeds of the 71,654.45 carat
diamond parcel from the Williamson Mine that was previously
confiscated and blocked for export. Based on the recent
confirmation that the parcel was sold in whole or part, the full
carrying value of US$12.5 million (30 June 2022: US$12.5 million)
has been expensed as other direct mining/expense in the
Consolidated Income Statement and a fair value of US$12.3 million
in respect of the sale of the parcel has been recognised in the
Consolidated Income Statement as other direct mining income/expense
with a trade and other receivable recognised in the Statement of
Financial Position at 30 June 2023. The original value of this
parcel was assessed in September 2017 at approximately US$15
million, as previously disclosed, although Petra has not had the
parcel independently valued.
The Framework Agreement records an important US$20.0 million
settlement between the parties concerning long-standing historic
disputes with the Government of Tanzania. In FY 2021, the Group
raised a provision of US$19.5 million (adjusted for time-value of
money) in respect of the aforementioned settlement. This settlement
payment is required to be made in instalments, with the first
instalment of US$5.0 million to be paid when the Framework
Agreement becomes effective and upon receipt of proceeds by WDL
from the sale of the confiscated diamond parcel. The subsequent
annual instalments of the settlement amount are to be made annually
at amounts as determined by WDL's board of directors.
The Framework Agreement is subject to a number of conditions,
including Tanzanian regulatory approvals and is therefore not yet
effective as at 30 June 2023. Certain conditions precedent remain
outstanding awaiting resolution from the GoT.
Memorandum of Understanding with Caspian Limited ("MoU")
On 15 December 2021, the Company announced that it had signed a
non-binding Memorandum of Understanding ("MoU") to sell 50% less
one share of the entity that holds the Group's shareholding in
Williamson Diamonds Limited ("WDL"), along with a pro rata portion
of shareholder loans owed by WDL, to Caspian Limited or its nominee
(a company now known as Taifa Mining and Civils Limited or "Taifa")
for a total consideration of US$15.0 million. Taifa is the
long-term technical services contractor at the Williamson Mine.
Upon completion of the transactions contemplated by the MoU and
the capital restructuring in the aforementioned Framework Agreement
becoming effective, Petra and Taifa will each indirectly hold a
31.5% stake in WDL but with Petra retaining a controlling interest
in Williamson.
Taifa's purchase will be funded through the settlement of US$15
million of past technical services payments owed by WDL to
Caspian.
Completion of the Transaction with Taifa is subject to the
parties obtaining all necessary Governmental, regulatory and lender
approvals, including the Tanzanian Fair Competition Commission.
17. PROVISIONS
Williamson - Independent Grievance Mechanism ("IGM")
The IGM is a non-judicial process that has the capacity to
investigate and resolve complaints alleging severe human rights
impacts in connection with security operations at the Williamson
mine. It is being overseen by an Independent Panel of Tanzanian
experts taking an approach informed by principles of Tanzanian law,
and with complainants having access to free and independent advice
from local lawyers. The overall aim of the IGM is to promote
reconciliation between the Williamson Diamond Mine, directly
affected parties and the broader community by providing remedy to
those individuals who have suffered severe human rights impacts.
The Group has agreed to fund the remedies determined by the
IGM.
On 28 November 2022, the IGM became operational with the
commencement of the IGM's pilot phase. The pilot phase, which
completed in May 2023, has allowed the IGM's systems and procedures
to be further developed and adjusted to take into account
learnings.
Whilst the IGM was still being established, a mechanism was set
up to enable community members to confidentially and securely
register alleged historical human rights grievances, with 5,577
having been registered to date. T he Independent Panel ("IP") has
started making decisions on the merits of the cases considered
during pilot phases and the associated remedies for successful
grievances (i.e., grievances that meet the evidential
threshold).
Judgement has been applied by Management in assessing estimated
future costs of remedies for successful grievances based on the
outcome of the pilot phase. Management have assessed the results
and performed their own estimate based on calculations received
from consultants. The estimate makes a number of different
assumptions, including, amongst others, regarding the categories of
the grievances, the success rates of the grievances and the
settlement payments that apply to successful grievances. These
estimates also do not make any allowance for non-financial remedies
that the IP may award. The concluded cases of the initial pilot
phase grievances have been extrapolated across the grievance
population of 5,577, based on the average claim settlement per
category and the various categories of the grievances (nature of
claim). Management's assessment resulted in estimated aggregate
costs of US$7.9 million to be provided at Year end; this compares
to a range estimated by external consultants of US$ 7.2 - 10.1
million. The estimate will be reassessed at each future reporting
date.
18. DISCONTINUED OPERATION
Post the unsuccessful disposal process of Koffiefontein mine,
management took the decision to put the mine on care and
maintenance. The Company has started the process of winding-up the
operation and has, completed a significant restructuring of the
staff complement at the operation, completed the retrenchment
process, finalising workstreams to meet its rehabilitation
obligations and is in discussions with the DMRE to formalize the
ultimate closure of the operation.
A discontinued operation is a component of the entity that has
been disposed of and is classified as held for sale or abandoned
(as the Koffiefontein assets are currently not undergoing a formal
sales process, it met the criteria of IFRS 5 and were classified as
a discontinued operation) and that represents a separate major line
of business or geographical area of operation, is part of a single
co-ordinated plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively with a view to
resale. The results of discontinued operations are presented
separately in the statement of profit or loss.
Results of Koffiefontein:
1 July 2022- 1 July 2021-
US$ million 30 June 2023 30 June 2022
-------------------------------------------------- ------------ ------------
Revenue 4.4 21.5
Cost of sales (19.7) (34.7)
-------------------------------------------------- ------------ ------------
Gross loss (15.3) (13.2)
Impairment charge - property, plant and equipment (0.8) (0.3)
Provisions for closure(1) (22.0) -
Financial income - -
Financial expense (2.4) (0.1)
-------------------------------------------------- ------------ ------------
Loss before tax (40.5) (13.6)
Income tax charge - -
-------------------------------------------------- ------------ ------------
Net loss for the Year (40.5) (13.6)
-------------------------------------------------- ------------ ------------
Attributable to:
Equity holders of the parent (31.3) (10.2)
Non-controlling interest (9.2) (3.4)
-------------------------------------------------- ------------ ------------
(40.5) (13.6)
-------------------------------------------------- ------------ ------------
(1.) Included in provisions for closure are estimated cost for
the environmental rehabilitation and decommissioning, social
development programmes to closure and care and maintenance costs at
Koffiefontein, which is based on current legal requirements and the
Group's planned rehabilitation strategy.
19. EVENTS AFTER THE REPORTING PERIOD
Revolving Credit Facility drawdown - in July and August 2023, as
a result of the deferment of the June 2023 diamond tender, the
Group drew down, in total, an amount of ZAR850 million (US$45.1
million) from the RCF.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a) the preliminary financial statements have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union, and give a true and fair view of the
assets, liabilities, financial position and profit of the Group for
the Year; and
b) the preliminary management report for the Year includes a
fair review of the information required by the FCA's Disclosure and
Transparency Rules (DTR 4.1.8 R and 4.1.9 R).
By order of the Board
Richard Duffy
Chief Executive Officer
15 September 2023
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 or visit 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.
END
FR EAPNLFDLDEFA
(END) Dow Jones Newswires
September 15, 2023 02:00 ET (06:00 GMT)
Petra Diamonds (LSE:PDL)
Historical Stock Chart
From Mar 2024 to Apr 2024
Petra Diamonds (LSE:PDL)
Historical Stock Chart
From Apr 2023 to Apr 2024
