20 April 2022 LSE: PDL
Trading Update for the three and nine months ended
“Petra has benefitted from strong diamond prices during the Quarter underpinned by strong operational, cost and safety performance. The 43% increase in the YTD revenue to
“Petra’s balance sheet strengthened further during the Quarter with net debt of
“Although we anticipate some pull back in diamond prices from the elevated March tender levels as a result of the economic impact of the war in
HIGHLIGHTS
Strong performance with quarterly revenue growth of 33%
-- Strong YTD safety performance
o Lost Time Injury Frequency Rate (“LTIFR”) down 62% to 0.18 (9M FY
2021: 0.47)
o Total injuries, including LTIs, down 20% to 24 (9M FY 2021: 30)
-- Q3 revenue up 33% to US$140.6 million (Q3 FY 2021: US$106.0 million )
driven by:
o Strong prices achieved in the 4th Tender in March 2022 with
like-for-like prices up 37.6% compared to the preceding December 2021
tender
o The sale of one Exceptional Stone in the Quarter, a 157.88ct Type IIa
white stone from Cullinan for US$5.5 million
-- Notwithstanding the revenue increase, carats sold were down 31% and 16%
in the Quarter and YTD respectively, given that there was only one sales
tender in Q3. However, no impact is foreseen on expected sales volumes
for the full year with further tenders in April and June 2022
-- Quarterly production up 18% to 830,456 carats (Q3 2021: 704,498 carats)
with YTD production up 7% to 2,607,880 carats (9M FY 2021: 2,445,360
carats), largely attributable to Williamson’s resumption of production
following a period of care and maintenance. In addition, the remedial
steps taken at Finsch following waste ingress in Q2 FY 2021 positively
affected the quarterly comparison
-- Balance Sheet as at 31 March 2022 :
o Consolidated net debt of US$107.0 million (31 December 2021 : US$152.3
million )
o Gross cash of US$249.2 million (31 December 2021 : US$272.3 million )
and unrestricted cash of US$233.2 million (31 December 2021 : US$256.7
million ) following settlement of the ZAR404.6 million (US$27.7
million ) revolving credit facility (“RCF”) and ZAR893.2 million
(US$61.2 million ) term loan under the first lien facilities during the
Quarter. The agreements for the new ZAR1 billion (c. US$68 million )
RCF with Absa Bank, as announced in February, are in the process of
being finalised with the new facility expected to become effective
during April 2022
o Diamond debtors of US$nil (31 December 2021 : US$0.4 million )
o Diamond inventory valued at US$98.1 million (31 December 2021 : US$79.6
million )
Q3 Diamond Production up 18% with the resumption of production at Williamson
Production and sales summary
Unit Q3 FY 2022 Q3 FY 2021 Var. 9M FY 2022 9M FY 2021 Var. FY 20211
Ore Mt 2.9 1.8 +61% 8.6 6.1 +41% 8.1
processed
Diamonds MCts 830,456 704,498 +18% 2,607,880 2,445,360 +7% 3,240,312
recovered
Diamonds MCts 735,225 1,069,205 -31% 2,331,076 2,782,002 -16% 3,960,475
sold
Revenue US$M 140.6 106.0 +33% 405.4 284.2 +43% 406.9
Note 1: For comparative purposes the FY 2021 figures have been restated to include Williamson as it is no longer a discontinued operation
Credit rating upgrades
On 23 March, Moody’s Investor Services upgraded Petra’s Corporate Family Rating (CFR) and its second lien bond rating from Caa1 to B3, taking the outlook from Positive to Stable. This reflects “Petra’s stronger financial and business outlook”. On 26 February,
Guidance reiterated
Key operational guidance
Unit FY22E FY23E FY24E FY25E
Total carats recovered Mcts 3.3 – 3.6 3.3 – 3.6 3.3 – 3.6 3.6 – 3.9
Cash on-mine costs and G&A1 $m 300 - 310 300 – 320 300 – 320 300 - 320
Expansion capex1 $m 47 – 50 105 – 115 125 – 135 115 - 120
Sustaining capex1 $m 28 – 30 30 -32 30 – 32 26 - 28
Note 1: Opex and Capex guidance is stated in FY 2022 real terms and based on an exchange rate of
Detailed guidance is available on Petra’s website at https://www.petradiamonds.com/investors/analysts/analyst-guidance/
-- Petra reiterates the detailed operational guidance provided for the FY
2022 to 2025 period and the guidance for expansion capital expenditure,
of US$61 million , beyond the FY 2025 guidance period.
-- Petra does not provide guidance on diamond pricing. However, it should
be noted that Exceptional Stones have contributed an average of US$47
million per annum over the last three years, and US$37 million per annum
over the last five years, to Group revenue.
Outlook
Our confidence in the outlook for Petra is supported by the structural changes in diamond market supply and demand which continue to underpin prices, despite some expected softening from the highs seen in the March tender as a result of the economic uncertainty arising from the war in Ukraine. The supportive structural market dynamic, coupled with the operational improvements we have made to drive margin and cash generation, give the potential for both improved financial performance and further reduction in our debt.
CONFERENCE CALLS
Petra’s Chief Executive,
Registration for calls:
United Kingdom 0800 640 6441
United States 1 646 664 1960
All other locations +44 20 3936 2999
09:30: Access code: 122879
16:00: Access code: 853531
Press *1 to ask a question, *2 to withdraw your question, or *0 for operator assistance.
Link for recording (available later today):
https://www.petradiamonds.com/investors/results-reports/
FURTHER INFORMATION
Please contact
Petra Diamonds, London Telephone: +44 207494 8203
Julia Stone
REVIEW
Q3 and 9M FY 2022 production and sales summary
Unit Q3 FY 2022 Q3 Variance 9M FY 2022 9M FY 2021 Variance
FY 2021
Revenue US$M 140.6 106.0 +33% 405.4 284.2 +43%
Exceptional US$M 5.5 12.2 -55% 83.4 52.5 +59%
Stones
Total Mt 2.9 1.8 +61% 8.6 6.1 +41%
production
Total diamonds Carats 830,456 704,498 +18% 2,607,880 2,445,360 +7%
Strong YTD revenue growth in a robust diamond market
The 43% increase in revenue for the nine months to
-- 39.34 carat blue diamond from the Cullinan mine which sold for US$40.2
million
-- 342.92 carat Type IIa white diamond from the Cullinan mine which sold
for US$10 million (the Company has retained a 50% interest in the profit
uplift of the polished proceeds, after costs, of the 342.92 carat white
diamond, as well as an 18.30 carat Type IIb blue diamond which sold for
US$3.5 million )
-- 32.32 carat pink diamond from the Williamson mine which sold for US$13.8
million
-- 295.79 carat white diamond from the Cullinan mine which sold for US$13.9
million
-- 157.88 carat white diamond from Cullinan mine which sold for US$5.5
million
Revenue also benefited from a 37.6% like-for-like rise in realised diamond prices in the 4th tender as compared to the preceding tender which closed in
YTD carats sold reduced by some 16% compared to the comparative period when significantly higher volumes were sold, mostly off-tender, following the inventory build-up witnessed late in FY 2020 after the initial COVID-19 outbreak, while sales in Q3 FY 2022 were limited to one tender during the Quarter. Two further sales tenders are planned in this last quarter, in April and June, as previously announced. The higher diamond inventory at the end of Q3 is expected to unwind to normal year-end levels during the fourth quarter.
Production benefiting from operational improvements and good
safety performance
Health and safety
The Lost Time Injury Frequency Rate (“LTIFR”) for 9M FY 2022 decreased to 0.18 (9M FY 2021: 0.47). The LTIs during the Period continued to be of low severity and mostly behavioural in nature. The various remedial actions and behaviour-based intervention programmes previously announced have assisted in achieving the strong improvement in the safety trend. The total number of injuries during 9M FY 2022, which includes LTIs, decreased to 24 (9M FY 2021: 30). Petra continues to target a zero-harm working environment.
COVID-19 remains a risk to the health and safety of the Group’s workforce. Petra has implemented systems and strategies across all of its operations aimed at preventing and/or containing the spread of the virus with an ongoing drive to vaccinate its employees. In
Production
9M FY 2022 production was in line with guidance, totalling 2,607,880 carats (9M FY 2021: 2,445,360 carats). Williamson resumed production during the period, having been on care and maintenance since
The Business Re-engineering Projects at Finsch and Koffiefontein concluded in transition plans with recommended deliverables and due dates.
-- The cost savings and production improvement initiatives at Finsch, to
enhance margins and ensure a long-term sustainable operation, are being
implemented as part of the annual three year planning cycle.
-- While the conclusion for Koffiefontein reaffirmed running the mine to
closure by 2025 as well as exploring other alternatives in parallel, we
have been considering options to curtail the negative cash flow. To this
end, we have been engaging with the Future Forum , comprising organised
labour and management, with the intention of aligning the operations to
a reduced tonnage profile and improved efficiencies. Regretfully, this
is expected to result in job losses.
Production ramp-up at Williamson commenced during the first half and 2.4 Mt ROM was processed in 9M FY2022, yielding 147,876 carats, including the exceptional 32.32 carat pink stone sold during H1 FY 2022.
The diamond market
The strength of the diamond market was evident in the sales results from Petra’s 4th Tender in March. Strong demand for rough diamonds, with resultant price increases, was seen across all size and quality categories. Like-for-like rough diamond prices increased by 37.6% on Tender 3, which closed in
The much stronger diamond market has been evident since mid-2021 with Q3 pricing for rough driven by strong sales of polished and increased demand from the manufacturing centres, bolstered by record sales during the festive season. We believe this market dynamic reflects the structural change in underlying supply and demand, which we expect to continue to be supportive. However, the effects of the current conflict in
Petra is closely monitoring the impact of the war in
Strong cash generation supported by Project 2022
Project 2022, a three-year project that commenced in
Continuous business improvement processes are now embedded in the Company’s Operating Model and Organisational Design and is expected to continue to drive future performance improvement.
As previously announced, Petra has implemented remedial initiatives and is putting in place the Independent Grievance Mechanism (“IGM”) as well as community programmes to address the historical allegations of human rights abuses at the Williamson mine in
A number of other projects are being put in place to provide sustainable benefits to the communities located close to the mine funded by the one million pounds escrow account established by Petra. The Gender Based Violence project completed all planned activities in the first quarter of this calendar year and the next step is to confirm community action plans with the district commissioner. The medical services project continues to provide physiotherapy services and further services are being considered. Feasibility studies for the income generating projects (agri business and artisanal mining) are also progressing.
More information on this can be found on Petra’s website at: https://www.petradiamonds.com/our-operations/our-mines/williamson/allegations-of-human-rights-abuses-at-the-williamson-mine/.
Notes:
1. The following definitions have been used in this announcement:
a. Exceptional Stones: diamonds with a valuation and selling price ofUS$5m or more per stone b. cpht: carats per hundred tonnes c. Kcts: thousand carats d. Kt: thousand tonnes e. LOM: life of mine f. LTI: lost time injury g. LTIFR: lost time injury frequency rate h. Mcts: million carats i. Mt: million tonnes j. FY: financial year k. Q: quarter of the financial year l. ROM: run-of-mine (i.e. production from the primary orebody) m. SLC: sub level cave n. m: million
ABOUT PETRA DIAMONDS
Petra Diamonds is a leading independent diamond mining group and a supplier of gem quality rough diamonds to the international market. The Company’s portfolio incorporates interests in three underground producing mines in
Petra's strategy is to focus on value rather than volume production by optimising recoveries from its high-quality asset base in order to maximise their efficiency and profitability. The Group has a significant resource base of ca. 230 million carats, which supports the potential for long-life operations.
Petra strives to conduct all operations according to the highest ethical standards and only operates in countries which are members of the Kimberley Process. The Company aims to generate tangible value for each of its stakeholders, thereby contributing to the socio-economic development of its host countries and supporting long-term sustainable operations to the benefit of its employees, partners and communities.
Petra is quoted with a premium listing on the Main Market of the
APPENDIX
Corporate and financial summary
Unit As at 31 March As at 31 December As at 30 June As 31 March
2022 2021 2021 2021
Cash at bank – US$m 249.2 272.3 173.0 153.8
(including
restricted
amounts)¹
Diamond debtors US$m — 0.4 38.3 2.6
Diamond US$m 98.1 79.6 56.5 75.5
inventories2,3 Cts 914,402 819,252 637,676 1,020,973
US$336.7m loan US$m 356.2 346.4 327.3 338.7
notes (issued
March 2021)4
Bank loans and US$m — 78.6 103.0 108.4
borrowings5
Consolidated Net US$m 107.0 152.3 228.2 290.7
debt6
Bank facilities US$m 24.5 0.6 7.7 10.8
undrawn and
available5
Note:
The following exchange rates have been used for this announcement: average for 9M FY 2022 US$1:
Notes:
1. Cash at bank and diamond inventories include balances at Williamson as at
31 March 2022 following the Company entering into the MoU with Caspian
during December 2021 . Comparatives for 31 December 2021 , 30 June 2021 and
31 March 2021 have been adjusted to include balances attributable to
Williamson.
2. Recorded at the lower of cost and net realisable value.
3. Diamond inventories includes the Williamson 71,654.45 carat parcel of
diamonds blocked for export during August 2017 , with a carrying value of
US$10.6 million . Under the framework agreement reached with the Government
of Tanzania , as announced on 13 December 2021 , the proceeds from the sale
of this parcel are required to be allocated to Williamson.
4. The US$336.7 million loan notes have a carrying value of US$356.2 million
which represents the gross capital of US$336.7 million of notes, plus
accrued interest and net of unamortised transaction costs capitalised,
issued following the capital restructuring (the “Restructuring”) completed
during March 2021 .
5. Bank loans and borrowings represent amounts drawn under the Group’s
refinanced South African bank facilities as part of the Restructuring and
comprise the term loan and revolving credit facility. Under the revolving
credit facility, ZAR358.4 million (US$24.5 million ) remains undrawn and
available. During the Period, the Group settled the revolving credit
facility of ZAR404.6 million (US$27.7 million ) (capital plus interest) and
the term loan of ZAR893.2 million (US$61.2 million ) (capital plus
interest). The revolving credit facility remains available for drawdown
with the term loan being cancelled upon settlement.
6. Consolidated Net Debt is bank loans and borrowings plus loan notes, less
cash and diamond debtors.
Q3 and 9M FY 2022 production and sales summary
Group
Unit Q3 Q3 Variance 9M 9M Variance
FY 2022 FY 2021 FY 2022 FY 2021
Sales
Diamonds sold Carats 735,225 1,069,205 -31% 2,331,076 2,782,002 -16%
Revenue US$M 140.6 106.0 +33% 405.4 284.2 +43%
Production
ROM tonnes Mt 2.8 1.7 +65% 8.2 5.8 +41%
Tailings & other1 Mt 0.1 0.1 n.a. 0.4 0.3 +33%
tonnes
Total tonnes Mt 2.9 1.8 +61% 8.6 6.1 +41%
treated
ROM diamonds Carats 780,896 656,461 +19% 2,430,885 2,301,307 +6%
Tailings & other1 Carats 49,560 48,037 +3% 176,995 144,053 +23%
diamonds
Total diamonds Carats 830,456 704,498 +18% 2,607,880 2,445,360 +7%
Cullinan –
Unit Q3 Q3 Variance 9M FY 2022 9M Variance
FY 2022 FY 2021 FY 2021
Sales
Revenue US$M 73.7 62.9 +17% 241.4 170.2 +42%
Diamonds sold Carats 409,030 651,268 -37% 1,281,334 1,546,026 -17%
Average price US$ 180 97 +86% 188 110 +71%
per carat
ROM production
Tonnes treated Tonnes 1,053,631 1,054,978 -0% 3,360,618 3,394,451 -1%
Diamonds Carats 404,473 388,666 +4% 1,247,675 1,302,292 -4%
produced
Grade1 cpht 38.4 36.8 +4% 37.1 38.4 -3%
Tailings
production
Tonnes treated Tonnes 112,414 105,825 +6% 350,706 327,210 +7%
Diamonds Carats 49,560 48,037 +3% 176,995 144,053 +23%
produced
Grade1 cpht 44.1 45.4 -3% 50.5 44.0 +15%
Total
production
Tonnes treated Tonnes 1,166,045 1,160,803 +0% 3,711,324 3,721,661 +0%
Diamonds Carats 454,033 436,703 +4% 1,424,670 1,446,345 -1%
produced
Note: 1. Petra is not able to precisely measure the ROM / tailings grade split because ore from both sources is processed through the same plant; the Company therefore back-calculates the grade with reference to resource grades.
Finsch –
Unit Q3 Q3 Variance 9M FY 2022 9M FY 2021 Variance
FY 2022 FY 2021
Sales
Revenue US$M 39.2 31.4 +25% 104.9 86.2 +22%
Diamonds sold Carats 259,164 391,921 -34% 935,459 1,160,568 -19%
Average price per US$ 151 80 +89% 112 74 +51%
carat
ROM production
Tonnes treated Tonnes 656,408 460,057 +43% 2,079,527 1,783,057 +17%
Diamonds produced Carats 303,591 253,607 +20% 1,005,134 948,915 +6%
Grade1 cpht 46.3 55.1 -16% 48.3 53.2 -9%
Total production
Tonnes treated Tonnes 656,408 460,057 +43% 2,079,527 1,783,057 +17%
Diamonds produced Carats 303,591 253,607 +20% 1,005,134 948,915 +6%
Note: 1. Petra is not able to precisely measure the ROM / tailings grade split because ore from both sources is processed through the same plant; the Company therefore back-calculates the grade with reference to resource grades.
Koffiefontein –
Unit Q3 Q3 Variance 9M 9M Variance
FY 2022 FY 2021 FY 2022 FY 2021
Sales
Revenue US$M 5.4 11.7 -54% 16.5 22.9 -28%
Diamonds sold Carats 6,269 26,007 -76% 26,907 44,951 -40%
Average price per carat US$ 856 451 +90% 612 509 +20%
ROM production
Tonnes treated Tonnes 76,453 130,494 -41% 393,763 624,155 -37%
Diamonds produced Carats 7,829 14,188 -45% 30,200 50,101 -40%
Grade cpht 10.2 10.9 -6% 7.7 8.0 -4%
Total production
Tonnes treated Tonnes 76,453 130,494 -41% 393,763 624,155 -37%
Diamonds produced Carats 7,829 14,188 -45% 30,200 50,101 -40%
Williamson –
Unit Q3 Q3 Variance 9M FY 2022 9M FY 2021 Variance
FY 2022 FY 2021
Sales
Revenue US$M 22.4 0 n.a 42.6 4.6 n.a
Diamonds sold Carats 60,759 0 n.a 87,370 30,339 n.a
Average price US$ 369 0 n.a 488 150 n.a
per carat
ROM production
Tonnes treated Tonnes 1,005,901 0 n.a 2,360,017 0 n.a
Diamonds Carats 65,003 0 n.a 147,876 0 n.a
produced
Grade cpht 6.5 0 n.a 6.3 0 n.a
Total
production
Tonnes treated Tonnes 1,005,901 0 n.a 2,360,017 0 n.a
Diamonds Carats 65,003 0 n.a 147,876 0 n.a
produced
