Q1 FY 2025 operating update and final sales results for Tenders 1 and 2 FY 2025
| 22 October 2024 | LSE: PDL |
Petra Diamonds Limited
(Petra or the Company)
Q1 FY 2025 operating update and final sales results for Tenders 1 and 2 FY 2025
Richard Duffy, Chief Executive Officer of Petra, commented:
“Following changes to the mine plans announced at our Investor Day, diamond production increased 7% from the previous quarter on the back of solid performances from Cullinan Mine and Williamson, with Finsch transitioning from continuous to a two-shift operation. We recorded 4 LTIs, resulting in our LTIFR rate increasing to 0.28 from 0.13 in the previous quarter. This is of concern to us given our focus on delivering zero-harm workplaces, and we have implemented a number of behaviour-based interventions aimed at improving our health and safety performance.
Reflecting our agility to respond to weaker market conditions, we announced the decision to defer the sale of the majority of our South African goods from Tender 1 in August/September to support steps taken by major producers to manage supply. Our combined first and second tenders indicate continued weakness in the rough diamond market, more than offset by Petra’s product mix. Overall average prices increased 13% compared to the previous tender, with product mix contributing 22%, partially offset by a 9% decrease in like-for-like[1] prices. Product mix showed improvement across the operations, with Cullinan Mine, in particular, benefitting from an 18.85ct blue diamond, of exceptional quality in terms of colour and clarity, that was sold in Q1 FY2025 for US$8.5 million into a partnership agreement and a top light brown 405ct diamond, of exceptional clarity, from Cullinan Mine that was sold for US$4.7 million. Product mix also benefitted from withdrawal of ca. 88kcts (ca. US$3 million) of brown goods as a result of poor demand for that particular category.
Revenue recorded in Q1 FY 2025 only reflects the proceeds of US$8.5 million for the 18.85ct blue diamond at Cullinan Mine and US$14 million for Williamson. We drew down US$48 million from our Revolving Credit Facility (RCF), which will reduce once the proceeds from the recently closed combined Tenders 1 and 2 are received. We have continued with the open market repurchase (OMR) of our 2026 2L Notes, cancelling US$8 million during the quarter. This brings the total of 2L Notes cancelled as at 30 September 2024 to US$13 million. We will continue to look at opportunities to further reduce our 2L debt through the OMR programme as we consider our options to refinance the 2L Notes ahead of their maturity in March 2026.
I am pleased to confirm completion of the sale of Koffiefontein to Stargems Group, which will enable economic activity to continue under new ownership. As a result, Petra will avoid incurring closure-related costs of US$15-18 million. I would like to extend my thanks and appreciation to all our employees, community members and regulatory bodies for their support in concluding this transaction and wish the new owners every success going forward.
A further review of cash generation opportunities is currently underway to mitigate the impact of ongoing weakness in the diamond market and a stronger Rand, and we remain committed to our target of net cash generation for the full year in FY 2025. We continue to expect prices to show some improvement in CY 2025, with market fundamentals being supportive in the medium-to-longer term.”
Highlights vs Q4 FY 2024
- LTIFR and LTIs increased to 0.28 and 4, respectively, (Q4 FY 2024: 0.13 and 2, respectively) resulting in Petra implementing a number of behaviour-based interventions aimed at improving health and safety performance
- Ore processed increased by 7% to 3.2Mt from 3.0Mt largely due to improved performance at Finsch and Williamson
- The phased ramp-up of the 78-Level phase II has now been completed at Finsch, with tonnes treated increasing 7%, but with run-of-mine grades down 14% due to mining the last remaining level of the sub-level cave. We expect grades to improve as a result of enhanced grade control measures and a higher proportion of less-diluted ore from 78-Level phase II
- Diamonds produced increased to 679,625 carats (Q4 FY 2024: 636,743 carats) largely due to higher grades at Cullinan Mine and higher tonnes mined and grade improvements at Williamson
- Revenue, including profit share arrangements, amounted to US$23 million (Q4 FY 2024: US$113 million), impacted by the deferral of the majority of our South African goods from Tender 1
- A stronger South African Rand has impacted US$-denominated costs, with the Rand averaging ZAR17.96:US$1 (Q4 FY 2024: ZAR18.71:US$1). The impact for the quarter was mostly mitigated through our currency hedging programme
- Capital expenditure for Q1 FY 2025 totalled US$16 million which is in-line with guidance
- A US$48 million drawdown was made under the ZAR1.75 billion (US$101 million) Revolving Credit Facility with Absa Bank, leaving an outstanding balance of ZAR1.30 billion (US$76 million) at 30 September 2024
- Consolidated net debt increased to US$285 million as at 30 September 2024 (30 June 2024: US$201 million) due to the deferral of the majority of our South African goods from Tender 1
Final sales results for Tenders 1 and 2 FY 2025
Sales for the first and second tender cycles of FY 2025 closed this week, yielding US$76 million from 600 kcts sold. Average prices increased 13% over Tender 7 FY 2024, with product mix contributing 22%, partially offset by a 9% decrease in like-for-like prices with weakness evident in the smaller size fractions.
Rough diamond sales results for the respective periods are shown below.
|
| Tenders 1-2 FY 2025 Oct 24
| Tender 7 FY 2024 Jun 24 | Variance | YTD FY 2025 Tenders 1-2 | YTD FY 20241 Tenders 1-2 | FY 2024 |
| Diamonds sold (carats)
| 600,161 | 337,064 | 78% | 600,161 | 1,191,493 | 3,158,780 |
| Sales (US$ million)
| 76 | 38 | 100% | 76 | 131 | 366 |
| Average price (US$/ct) | 126 | 111 | 13% | 126 | 110 | 116 |
1Revenue and volume variances were impacted by the deferral of the final tender of FY 2023 into FY 2024, leading to higher sales in the comparative YTD FY 2024 period.
Price comparison by operation
Mine by mine average prices for the respective periods are set out in the table below:
| US$/carat | Tenders 1-2 FY 2025 Oct 24
| Tender 7 FY 2024 Jun 24 | YTD FY 2025 Tenders 1-2 | YTD FY 2024 Tenders 1-2 | FY 2024 |
| Cullinan Mine
| 1462 | 111 | 146 | 101 | 116 |
| Finsch
| 84 | 93 | 84 | 103 | 98 |
| Williamson | 164 | 158 | 164 | 203 | 191 |
2Including the 88kcts of brown goods withdrawn at a revenue of US$3 million, average prices of US$123/ct would have been achieved.
Pricing assumptions for the remainder of the year remain unchanged:
| US$ per carat | FY 2025 |
| Cullinan Mine | 125 – 135 |
| Finsch | 98 – 105 |
| Williamson | 200 – 225 |
Future diamond prices are influenced by a range of factors outside of Petra’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 as appropriate.
Operating Summary
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| Unit | FY 2025 | FY 2024 | ||||
| Q1 | Q4 | Var. | Q1 | Var. | 12 months | ||
| Safety |
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| LTIFR | Rate | 0.28 | 0.13 | 115% | 0.12 | 133% | 0.16 |
| LTIs | Number | 4 | 2 | 100% | 2 | 100% | 10 |
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| Sales |
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| Diamonds sold | Carats | 85,449 | 1,022,430 | -92% | 932,431 | -91% | 3,158,780 |
| Revenue1 | US$m | 23 | 112 | -80% | 98 | -77% | 366 |
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| Production |
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| ROM tonnes | Mt | 3,112,645 | 2,880,975 | 8% | 2,717,486 | 15% | 11,325,340 |
| Tailings and other tonnes | Mt | 98,002 | 107,203 | -9% | 91,008 | 8% | 369,546 |
| Total tonnes treated | Mt | 3,210,647 | 2,988,178 | 7% | 2,808,494 | 14% | 11,694,886 |
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| ROM diamonds | Carats | 630,768 | 603,217 | 5% | 652,021 | -3% | 2,593,471 |
| Tailings and other diamonds | Carats | 48,857 | 33,526 | 46% | 44,618 | 10% | 136,389 |
| Total diamonds | Carats | 679,625 | 636,743 | 7% | 696,639 | -2% | 2,729,861 |
1 Revenue reflects proceeds from the sale of rough diamonds and excludes revenue from profit share arrangements
INVESTOR WEBCASTS
Webcast presentation for institutional investors and analysts at 09:30am BST today
Petra’s CEO, Richard Duffy, and CFO, Johan Snyman, will host a live virtual presentation including Q&A for institutional investors and analysts at 09:30 BST today to discuss this announcement.
Lines will be open from 09:15 BST and participants are encouraged to register early to avoid queues around the start time of 09:30 BST.
Link for recording (available later in the day):
https://www.petradiamonds.com/investors/results-reports/
Investor Meet Company webcast at 14.30pm BST today
Petra’s CEO, Richard Duffy, and CFO, Johan Snyman, will also present these results live on the Investor Meet Company platform, predominantly aimed at retail investors. To join: https://www.investormeetcompany.com/petra-diamonds-limited/register-investor
FURTHER INFORMATION
Please contact
Investor Relations, London
Patrick Pittaway Telephone: +44 (0)784 192 0021
Kelsey Traynor investorrelations@petradiamonds.com
Notes:
The following definitions have been used in this announcement:
- cpht: carats per hundred tonnes
- LTIs: lost time injuries
- LTIFR: lost time injury frequency rate, calculated as the number of LTIs multiplied by 200,000 and divided by the number of hours worked
- FY: financial year ending 30 June
- CY: calendar year ending 31 December
- Q: quarter of the financial year
- ROM: run-of-mine (i.e. production from the primary orebody)
- m: million
- Mt: million tonnes
- period: the first quarter of FY 2025
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 two underground mines in South Africa (Cullinan and Finsch Mine) 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 Company aims to generate tangible value for each of its stakeholders, thereby contributing to the socio-economic development of its host countries and supporting long-term sustainable operations to the benefit of its employees, partners and communities.
Petra is quoted with a premium listing on the Main Market of the London Stock Exchange under the ticker 'PDL'. The Company’s loan notes due in 2026 are listed on the Irish Stock Exchange and admitted to trading on the Global Exchange Market. For more information, visit www.petradiamonds.com.
Corporate and financial summary as at 30 September 2024
|
| Unit | As at 30 September 2024 | As at 30 June 2024 | As at 31 March 2024 | As at 31 December 2023 | As at 30 September 2023 |
|
Cash at bank – (including restricted amounts)¹
|
US$m
US$m US$m |
36
47 (11) |
40
47 (7) |
37
42 (5) |
75
85 (10) |
74
73 1 |
| Diamond debtors | US$m | — | 31 | 11 | 8 | 33 |
| Diamond inventories2 | US$m Carats | 92 880,479 | 32 286,303 | 71 671,989 | 54 483,142 | 52 479,430 |
| 2026 Loan Notes3 | US$m | 245 | 246 | 256 | 249 | 255 |
| Bank loans and borrowings4 | US$m | 76 | 25 | 24 | 47 | 45 |
| Consolidated Net Debt5 | US$m | 285 | 201 | 232 | 212 | 192 |
| Bank facilities undrawn and available4 | US$m | 26 | 72 | 69 | 8 | 8 |
Note: The following exchange rates have been used for this announcement: average for 3M FY 2025 US$1: ZAR17.96 (FY 2024: US$1: ZAR18.71); closing rate as at 30 September 2024 US$1: ZAR17.26 (30 June 2024: ZAR18.19; 31 March 2024 US$1: ZAR18.92; 31 December 2023: US$1: ZAR18.28; and 30 September 2023: ZAR18.92).
Notes:
- The Group’s cash balances excluding Williamson comprise unrestricted balances of US$27 million, and restricted balances of US$20 million.
- Recorded at the lower of cost and net realisable value.
- The 2026 Loan Notes, originally issued following the capital restructuring (the “Restructuring”) completed during March 2021, have a carrying value of US$245 million which represents the outstanding principal amount of US$199 million (after the repurchases concluded during Q1 FY2025) plus US$52 million of accrued interest and is stated net of unamortised transaction costs capitalised of US$6 million. During quarter 1 of FY 2025 Petra purchased and cancelled 2026 Loan Notes with a nominal value of US$8 million through an open market repurchase programme.
- Bank loans and borrowings represent the Group’s ZAR1.75 billion (US$101 million) revolving credit facility (RCF). In August and September 2024, the Group drew down ZAR855 million (c. US$48 million) from the RCF as a result of the deferral of South African goods from Tender 1 FY 2025. As at 30 September 2024, a total of ZAR1 305 million (US$76 million) was drawn leaving a further balance of ZAR445 million (US$26 million) available for drawdown.
- Consolidated Net Debt is bank loans and borrowings plus loan notes, less cash and diamond debtors.
Mine-by-mine tables:
Cullinan Mine – South Africa
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|
Unit | FY 2025 | FY 2024 | ||||
| Q1 | Q4 | Var. | Q1 | Var. | 12 months | ||
| Sales |
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| Revenue | US$m | 9 | 61 | -86% | 51 | -83% | 189 |
| Diamonds sold | Carats | 19 | 534,767 | -100% | 519,362 | -100% | 1,633,456 |
| Average price per carat | US$ | 450,928 | 113 | +100% | 98 | +100% | 116 |
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| ROM Production |
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| Tonnes treated | Tonnes | 1,089,570 | 1,117,591 | -3% | 1,137,436 | -4% | 4,497,444 |
| Diamonds produced | Carats | 314,126 | 299,301 | 5% | 318,261 | -1% | 1,268,402 |
| Grade1 | Cpht | 28.8 | 26.8 | 8% | 28.0 | 3% | 28.2 |
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| Tailings Production |
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| Tonnes treated | Tonnes | 98,002 | 107,203 | -9% | 91,008 | 8% | 369,546 |
| Diamonds produced | Carats | 48,847 | 33,526 | 46% | 44,618 | 10% | 136,389 |
| Grade1 | Cpht | 49.9 | 31.3 | 59% | 49.0 | 2% | 36.9 |
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| Total Production |
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| Tonnes treated | Tonnes | 1,187,572 | 1,224,795 | -3% | 1,228,443 | -3% | 4,866,990 |
| Diamonds produced | Carats | 362,983 | 332,828 | 9% | 362,879 | 0% | 1,404,791 |
Note: 1. Petra is not able to precisely measure the ROM / tailings grade split because ore from both sources is processed through the same plant; the Company therefore back-calculates the grade with reference to resource grades.
Finsch – South Africa
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Unit | FY 2025 | FY 2024 | ||||
| Q1 | Q4 | Var. | Q1 | Var. | 12 months | ||
| Sales |
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| Revenue | US$m | - | 37 | -100% | 39 | -100% | 120 |
| Diamonds sold | Carats | - | 400,322 | -100% | 375,214 | -100% | 1,227,409 |
| Average price per carat | US$ | - | 93 | -100% | 104 | -100% | 98 |
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| ROM Production |
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| Tonnes treated | Tonnes | 477,267 | 446,012 | 7% | 544,140 | -12% | 2,096,730 |
| Diamonds produced | Carats | 204,238 | 222,387 | -8% | 259,864 | -21% | 1,001,636 |
| Grade1 | Cpht | 42.8 | 49.9 | -14% | 47.8 | -10% | 47.8 |
Williamson – Tanzania
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Unit | FY 2025 | FY 2024 | ||||
| Q1 | Q4 | Var. | Q1 | Var. | 12 months | ||
| Sales |
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| Revenue | US$m | 14 | 15 | -4% | 8 | 82% | 59 |
| Diamonds sold | Carats | 85,430 | 87,341 | -2% | 37,856 | 126% | 297,915 |
| Average price per carat | US$ | 164 | 168 | -2% | 203 | -19% | 191 |
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| ROM Production |
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| Tonnes treated | Tonnes | 1,545,808 | 1,317,372 | 17% | 1,035,911 | 49% | 4,731,166 |
| Diamonds produced | Carats | 112,404 | 81,529 | 38% | 73,896 | 52% | 323,434 |
| Grade1 | Cpht | 7.3 | 6.2 | 17% | 7.1 | 2% | 6.8 |
Capital expenditure breakdown
| US$m | Q1 FY 2025 | FY 2024
| ||
|
| Extension | Stay-in-Business | Total | Total |
| Cullinan Mine | 8 | 0 | 8 | 48 |
| Finsch | 5 | 1 | 6 | 25 |
| Williamson | - | 2 | 2 | 10 |
| Total | 13 | 3 | 16 | 83 |
[1] Like-for-like refers to the change in realised prices between tenders and excludes revenue from all single stones and Exceptional Stones, while normalising for the product mix impact
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