Market Update

9 April 2020

LSE: PDL

Petra Diamonds Limited
(“Petra”, “the Company” or “the Group”)

Market Update

Further to the announcement on 27 March 2020, Petra Diamonds Limited announces a further market update with regards to the impact on the Company of the global COVID-19 pandemic.

Diamond Sales

As noted in the previous announcement, Petra experienced depressed and opportunistic bidding for its diamonds at its fifth sales cycle of FY 2020, particularly in the larger size and higher quality, greater value categories. The Company therefore chose to only sell a portion of its South African goods, representing ca. 75% by volume and ca. 50% by value. The remaining goods were exported to Antwerp and of these, ca. 75% were subsequently sold at the Company’s Antwerp marketing office.

Rough diamond prices achieved at Petra’s fifth sales cycle were down ca. 27% overall on a like-for-like basis in comparison to those achieved at the fourth sales cycle in February 2020.

A total of 24,254 carats, comprising higher value +10.8 carat single stones as well as parcels across the size and quality (gem and clivage) ranges, were withdrawn and will be sold privately or at a subsequent sales cycle, when market conditions allow.

As previously noted, Petra was due to hold two further sales in May and June before the end of its financial year. The Company will continue to monitor marketing conditions before taking any decision on the continuation of the planned May tender while the outlook for the June sale remains uncertain and will depend on travel and export conditions at the time, as well as activity levels in the key diamond buying centres of India, Israel, China and the US.

Operations

Petra remains focused on taking all actions necessary to support the measures to limit the outbreak of COVID-19 in the countries in which the Company operates and to decrease the threat to our employees, contractors and other local stakeholders.

South Africa

The Company’s operations in South Africa remain operating at significantly scaled down levels in order to comply with the requirements of the 21-day lockdown period in South Africa. The lockdown period is due to end at midnight Thursday 16 April 2020, but the operational outlook is uncertain and will depend upon the Governmental approach with regards to managing the spread of COVID-19 in the country.

Tanzania

In light of the unprecedented depressed market environment, the Company has declared force majeure at the Williamson mine in Tanzania and will be placing the operation on care and maintenance from the middle of April, with only essential services to be carried out in order to protect the mine’s assets and resources.

This decision is necessary to preserve the Williamson mine’s cash position in order to protect the long-term sustainability of the operation. The Company will look to resume operations once diamond prices are at a level that make it operationally sustainable.

Discussions with the Government in relation to various issues, including the overdue VAT receivables and the blocked diamond parcel, are ongoing but have been interrupted by the COVID-19 outbreak.

Liquidity and Capital Structure

In the light of the above, Petra continues closely to monitor and manage its liquidity risk, modelling the potential impact on its cashflows of a protracted period of operational shutdown and depressed international diamond prices. Based on this further downside modelling, the Board expects that it may be necessary for the Company to draw on its bank debt facilities in the near-term.  The Company has taken a strategic decision to fully draw down its ZAR500 million working capital facility and is in discussions with its South African lender group to access the ZAR1 billion revolving credit facility.

Deferral of Q3 FY 2020 Trading Update

The Company has decided to delay the release of its Q3 FY 2020 Trading Update to late May in order to be in a position to provide a fuller update to the market, particularly around its liquidity and capital structure further to the developments outlined above.

Richard Duffy, CEO of Petra Diamonds, commented:

“Given the unprecedented trading conditions, we are taking all steps necessary to preserve the Company’s liquidity position in order to withstand this very difficult period until market conditions improve. W]e remain committed to protecting the ongoing viability of our operations, to the benefit of all our stakeholders.”

For further information, please contact:

Petra Diamonds, London	Telephone: [phone]
Cathy Malins	[e-mail]

Marianna Bowes

Des Kilalea

Rothschild & Co

Giles Douglas	[e-mail]
Glen Cronin	[e-mail]
Mahir Quraishi	[e-mail]

About Petra Diamonds Limited

Petra Diamonds is a leading independent diamond mining group and a consistent supplier of gem quality rough diamonds to the international market. The Company has a diversified portfolio incorporating interests in three underground producing mines in South Africa (Finsch, Cullinan and Koffiefontein) and one open pit producing mine in Tanzania (Williamson). Petra also conducts a limited exploration programme in Botswana and South Africa.

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. 250 million carats, which supports the potential for long-life operations.

Petra conducts all operations according to the highest ethical standards and will only operate in countries which are members of the Kimberley Process. The Company aims to generate tangible value for each of its stakeholders, thereby contributing to the socio-economic development of its host countries and supporting long-term sustainable operations to the benefit of its employees, partners and communities.

Petra is quoted with a premium listing on the Main Market of the London Stock Exchange under the ticker 'PDL' and is a constituent of the FTSE4Good Index. The Company’s US$650 million loan notes due in 2022 are listed on the Global Exchange market of the Irish Stock Exchange. For more information, visit www.petradiamonds.com.