3rd Quarter Results
Petra Diamonds Ld
02 May 2006
Petra Diamonds Limited
QUARTERLY ACTIVITIES REPORT
FOR THE THREE MONTH PERIOD ENDED
31 MARCH 2006
Petra Diamonds Limited ('Petra' or 'the Company' or 'the Group'), the AIM-quoted
and ASX-listed diamond mining group (AIM and ASX: PDL), announces its quarterly
activities report (unaudited) for the three month period ended 31 March 2006.
Highlights
• Exceptional exploration progress at Alto Cuilo in Angola, with further
increases in the number and surface area of kimberlitic occurrences
• 67.1 carat diamond recovered in South Africa
• Kono project in Sierra Leone on track for first production June 2006
• Petra's operations in Botswana again deliver solid exploration progress
Post Quarter End Highlights
• Increase in kimberlitic occurrences identified at Alto Cuilo to an
estimated 1,437 hectares in surface area
• 67.1 carat diamond sold for US$704,265
Angola - Project Alto Cuilo
• Alto Cuilo's potential as a major diamond project is further
substantiated, with 38 kimberlitic occurrences now confirmed by drilling
(December Quarterly Activities Report: 26 kimberlitic occurrences), giving a
total estimated surface area of kimberlitic discoveries of approximately
1,437 hectares, as announced on 25 April 2006 (December Quarterly Activities
Report: 1,080 hectares), continuing an unprecedented rate of development
results in global diamond exploration
• The third core drill rig will arrive on site shortly and will further
accelerate the rate of discoveries and information flow
• 74% of the 140 holes drilled to date have intersected kimberlitic
material; 412 alluvial pits now completed, as announced on 25 April 2006
(December Quarterly Activities Report: 245 alluvial pits)
Botswana - Kalahari Diamonds
• 16,802 line kilometres of Falcon airborne gravity and magnetics flown in
the Tshwaane block of the Mabutsane project area
• 6,249 line kilometres of Xcalibur high-resolution low level airborne
magnetic gradiometer survey flown over the Gope area
• Ground geophysical orientation survey (magnetics and gravity) carried out
over five known kimberlites in the Gope area
• Ground follow up on Xcalibur anomalies in progress in the Gope area
• Re-processing of all previous Falcon data to be undertaken
• Drilling planned for the quarter to September 2006
Sierra Leone - Kono project
• Diamond recovery from the first bulk samples expected by June 2006
• Macro diamonds recovered during sampling
• First two bulk sampling intrusion points and shaft areas selected and
pre-sinking programme initiated
• Infrastructure for the central production plant and administrative
facility completed
• On-site construction of the production plant remains on track and is
expected to be completed and commissioned by June 2006; the administrative
facilities are already in place
South Africa - Helam, Sedibeng and Star mines
• Revenue recorded of £2.9 million for the quarter (quarter to December
2005: £2.6 million)
• Production from the South African mines of 42,994 carats for the quarter,
131,634 carats for the nine months to March 2006
• Star will fall short of initial target due to focus on the ventilation
raise-bore project which will be completed by June 2006; the benefit of this
increased ventilation will now assist in tonnage build-up
• The quarter to March was unusually challenging, in that South Africa
suffered from exceptionally high rainfall which affected the continuity of
production; this is not expected to be experienced from May onwards
DIAMOND SALES SUMMARY
Quarter to; Carats sold Price per carat (average) Sales
US$ US$ M
31 March 2006 45,349 113.6 5.1
31 December 2005 33,985 134.4 4.6
30 September 2005 44,135 118.6 5.2
12 Months to;
30 June 2005 141,977 131.1 18.6
DIAMOND SALES SUMMARY
Quarter to;
Total Diamonds Carats per
Total Tonnes Tonnes Recovered 100 tonnes
Hoisted Treated (carats) treated
31 March 2006: ROM 95,364 66,409 38,452 57.90
31 March 2006: Tailings - 40,635 4,542 11.17
31 December 2005: ROM 114,573 77,799 37,588 48.31
31 December 2005: Tailings - 49,801 5,554 11.15
30 September 2005: ROM 101,078 71,894 42,007 58.4
30 September 2005: Tailings - 45,132 3,491 7.7
12 Months to;
30 June 2005: ROM & tailings 363,388 269,947 143,673 53.2
Corporate
Cash Flow Summary
3 months to 3 months to 9 months to
31 March 2006 31 December 2005 31 March 2006
£'000 £'000 £'000
Net operating cash outflow - South 210 271 438
African mines
Net operating cash outflow, 466 388 2,017
excluding exploration activities -
Group
Exploration activity outflows
- Botswana 474 422 896
- Sierra Leone 586 1072 2210
CAPEX 892 629 1,819
Net Group cash outflow 2,166 1,047 10,060
Exploration expenses:
(i) cash outflows are expected to reduce for the Kalahari Diamonds
exploration programme in Botswana from July 2006 in line with the
refocus of exploration activities as covered under the Review of
Operations below;
(ii) cash outflows with regards to the Kono project in Sierra Leone are
expected to reduce from the quarter to June 2006 as the major costs
associated with the construction and commissioning of the recovery plant
and associated activities have been met.
CAPEX outflows as recorded for the quarters to December 2005 and March 2006 will
reduce for the quarter to June 2006 as major CAPEX programmes are nearing
completion.
Cash and Stock Summary
31 March 2006 31 December 2005
£ million £ million
Cash balance 4.9 7.1
Diamond stock 1.2 1.2
Total 6.1 8.3
Diamond stock is recorded at production cost; the quality of stock held at end
March was unusually high and will give rise to significant cash inflows,
including the 67.1 carat stone which was sold in April for £405,000
(US$704,265).
REVIEW OF OPERATIONS
Angola, Project Alto Cuilo
Kimberlite Exploration Programme
Since the Company's last update on 15 March 2006 within the Interim Results
Statement, solid exploration progress has been made at Alto Cuilo, with a
further increase in the estimated surface area of kimberlitic occurrences to
approximately 1,437 hectares.
Ongoing drilling of the anomalies identified by the Midas low level helicopter
aeromagnetic survey has now resulted in the identification of a further 5
kimberlitic occurrences with an estimated surface area of approximately 114
hectares. This takes the total to 38 kimberlitic occurrences with an estimated
surface area of approximately 1,437 hectares, a significant increase over the
results reported by the Company on 15 March 2006. Drilling in excess of 19,196
metres on 140 holes has been undertaken to date, with 104 of these holes
intersecting kimberlitic material, an exceptional rate of 74%.
The estimated surface area of the kimberlitic occurrences is based on the
interpretation of the magnetic anomalies identified, together with analysis of
drilling results.
The third core drill rig, which will serve to further accelerate the rate of
discoveries and information flow, is set to arrive on site shortly, two months
ahead of schedule. The importance of this third rig is supported by the fact
that there are approximately 3,000 hectares of anomalies still to be drilled.
Whilst it is unlikely that all of these unexplored anomalies will all be
kimberlitic in nature, the size of the area to be investigated and success rate
can continue to be viewed as unprecedented with regards to global kimberlite
exploration.
The large diameter drill rig and 10 tonne per hour sample plant both remain on
track for delivery in June 2006. This rig will initially take a minimum of 200
tonne bulk samples from the most prospective anomalies and the 10 tonne per hour
mobile dense media separation ('DMS') plant will treat these bulk samples.
Alluvial Exploration Programme
The alluvial pitting and trenching programme continues in order to further
evaluate the potential for economically viable alluvial deposits, with 412 pits
already completed. An economic feasibility study is underway on an area of
specific interest.
BHP Billiton Joint Venture
As at 31 March 2006, BHP Billiton had advanced funding of US$16.1 million (31
December 2005: US$13.3 million) to Petra Diamonds Alto Cuilo Limited in respect
of exploration at Alto Cuilo.
Botswana, Kalahari Diamonds
Since the acquisition of Kalahari Diamonds Limited by Petra in September 2005,
there has been a change in exploration focus from primarily large kimberlites
(greater than 20 hectares), to include smaller kimberlites (approx 10 hectares)
that would not necessarily be detectable by Falcon airborne gravity under deep
(greater than 50 metres) Kalahari cover.
Gope
With the above in mind, a low level (15 metres above ground level) survey was
flown over 680 km(2) of the Gope area, covering an area containing known
kimberlites of 10 hectares or less, and the larger part of a historical
kimberlitic indicator minerals ('KIM') anomaly covering approximately 1,000 km
(2). Historical Falcon magnetic data is also in the process of being re-gridded
and levelled to enhance anomalies that could represent smaller kimberlites.
In addition to detecting the known kimberlites in the area, the airborne survey
identified 25 anomalies from a first pass interpretation, and a further 22
anomalies from more detailed interpretation with similar characteristics to the
known kimberlites.
Ground orientation geophysics (magnetics and gravity) has also been undertaken
over five of the known kimberlites covered by the Xcalibur survey to assess
their magnetic and gravity signatures from ground follow-up work. This will help
in assessing and prioritising Xcalibur anomalies during the ground follow-up
exploration phase that is currently in progress in the area.
Mabutsane / Tshwaane
The Falcon airborne gravity and magnetic survey of the Tshwaane block to the
north of previous Mabutsane flight blocks was completed during the March 2006
quarter, and preliminary gravity and magnetic data was received at the end of
that quarter. There were no patently obvious large targets identified from the
gravity data, though a number of exciting magnetic anomalies have been
identified that will be further assessed once the final data set has been
received during the quarter to June. Follow up ground field work is projected to
start on this area and the reprocessed Mabutsane flying blocks, during the
quarter to June 2006.
The prominent gravity-only circular anomaly of 1.5 kilometre diameter that was
drilled during the quarter to December 2005 is still to be adequately explained.
The borehole has been re-logged in conjunction with the University of Botswana,
and the base of the Kalahari has now been placed at 47 metres. Indicator
minerals have been recovered from borehole chips from 0 -130 metres (covering
the first and second interpreted positions of the base of the Kalahari), and
from 200 metres -240 metres (covering the Beaufort/Ecca contact). Insignificant
amounts of KIM's were recovered in all samples, and all potential KIM garnets
from the end of the hole (230 metres -240 metres) were sent to Mineral Services
in Cape Town for microprobe analyses; all proved to be non-kimberlitic.
Density measurements of chips taken over the length of the borehole give density
ranges typical of normal Karoo sediments, indicating that the source of the
anomaly has not yet been tested. Further ground gravity work will be carried out
over the anomaly to facilitate more accurate geophysical modelling of the
causative body. This anomaly must therefore be further investigated, with the
possibility of an intra-formational deep-seated kimberlite still to be tested.
Other Areas
All Falcon data from previous fly-blocks is being re-processed, with the primary
aim of enhancing the magnetic data. Interpretation of new data from areas apart
from those already mentioned will start with the Orapa South Falcon blocks that
lie in close proximity to Orapa and Lethlakane, and straddle the 90 million year
kimberlite trend. Preliminary review of this magnetic data reveals anomalies as
close as 10 kilometres to the AK6 kimberlite which is presently being appraised
by African Diamonds.
Follow up ground field work will commence in the second quarter as the
interpretation of the re-processed data proceeds.
Sierra Leone - Kono Project
Site establishment
The infrastructure of the central production treatment and administrative
facility at the former National Diamond Mining Company facilities in the Yengema
Village has been completed. The facility has been positioned centrally between
the Lion dykes to reduce the ore transportation distance from the exploration
and shaft sites.
The construction of the production plant is well advanced with plant
commissioning underway and it is expected that it will be ready for diamond
recovery from treatment of initial bulk samples in June 2006.
Exploration developments
Exploration for the intrusion points (shaft sinking sites) on the Kono
kimberlite fissures is ongoing. During the quarter, investigation of the Lion 1
intrusion point in the Nimikoro area was suspended because of unsatisfactory
results. However, two intrusion points have been selected, one on Lion 5 and one
on Lion 3. These sites are being prepared for shaft establishment. It is
expected that each shaft will be sunk to a depth of 30 metres, when adits will
be driven along strike of the kimberlite fissures to recover in the order of
10,000 tons of kimberlite from each shaft site. These kimberlite bulk samples
will be processed in separate batches so that grades and diamond values for each
kimberlite fissure can be established to prioritise the full scale mining of the
fissures.
Kimberlite fissure exploration is being actively pursued on Lion 1 (Kamao
Chiefdom), Lion 5 (Tankoro Chiefdom), the extentions of Lion 5 into the the
Nimikoro Chiefdom and the Lion 2 and Lion 3 localities. Kimberlite fissures have
been located at many localities and are being systematically opened up and test
sampled. Macro diamonds have been recovered from small sample lots at Lion 2 and
Lion 3 whilst 6 macro diamonds, totaling approximately 1 carat, have been
recovered from the kimberlite fissure selected for the intrusion point at Lion
5.
South Africa
All the operations suffered from the effects of the unusually high rainfall
experienced in South Africa for the period mid-February to mid-April.
Star Mine
A total of 8,502 ROM fissure tonnes was delivered to the plant for 3,655 carats,
yielding a grade of 42.9 carats per hundred tonnes ('cpht') for the quarter. In
addition 5,253 tonnes of tailings were processed for 905 carats. This resulted
in a total of 4,560 carats for the combined operations.
During the quarter the pilot drilling and reaming of the raise-bore ventilation
shaft (1.4 metres diameter) was completed. This entailed the drilling of 500
vertical metres of shaft which produced approximately 3,000 additional waste
tonnes that had to be hoisted from the mine. Final sealing and support of this
shaft is now being undertaken by contractors and should be complete by the time
the required return-ventilation airways are complete on 13 level. The time frame
for completion is a further two months.
As mentioned in the previous quarter, the upgrade of the plant front-end washing
and crushing section is complete and will be commissioned during the quarter to
June 2006.
In the Wynandsfontein section 3 new panels have been established on 15 level,
utilising the new mining method, and are producing well. The 10 level haulage
continues to be problematic, but replacement by the 14 level haulage is on track
for commissioning before year-end. Now that the raise-bore project is nearing
completion the deepening of the sub-shaft to 16 level will be recommenced.
In the Burns section, 1 one new panel has been established on 15 level,
utilising the new mining method and is producing well. Further, 2 new mining
method panels are near production on this level. In addition 3 traditional
panels are still producing on 14 level. Preparation for the deepening of the
main shaft between 12 and 14 levels has progressed well (pilot raising
complete). Slyping of these two levels will commence during the quarter whilst
the pilot raising of 15 level to 14 level will commence. The preparation (cover
drilling) for the sinking to 16 level will also commence during the quarter to
June.
Helam Mine
A total of 27,824 ROM fissure tonnes was delivered to the plant for 26,658
carats, yielding a grade of 95.8 cpht for the quarter. In addition 1,386 carats
were produced from the tailings operation. This resulted in a total of 28,044
carats for the combined operation.
The slyping and equipping of John Main Shaft to 20 level will be completed
shortly. The pilot raising of the main shaft between 21 and 20 level is 50%
complete. The location of the transfer belt (west sub shaft) to John Shaft has
been re-planned to 22 level (original 21 level). This is being done to utilize
primary development rather than doing 120 metres of additional development.
The Second Lease incline has been holed and equipped to 17 level. A loading
arrangement is now being prepared and will be commissioned during the quarter.
In the interim, ore is being trammed by the traditional tramming route to the
east sub shaft.
At John Main Shaft the preparation for skip hoisting has been completed with the
loading arrangement and measuring flask on 15 level complete. The skip has been
delivered and will be installed shortly. A 1.06 MVA standby generator
installation has been acquired and should be commissioned during the next
quarter.
At Edward Shaft the sub shaft deepening has reached 25 level. On surface, the
ore handling upgrade at Edward Shaft is still on schedule for completion by the
end of the next quarter.
Sedibeng Mine
A total of 30,083 ROM fissure tonnes were delivered from the mining operation,
which yielded 8,139 carats at a ROM grade of 27.0 cpht. In addition 2,251
carats were produced from the Dancarl tailings operation at a grade in excess of
8 cpht. This resulted in a total of 10,390 carats for the combined operation.
The above average rainfall stretched pumping systems to the limit at times (3.5
million litres/day) and resulted in some bottom level flooding. This somewhat
hampered shaft sinking and bottom level development during the quarter but we
will be able to recoup these these reversals.
The 20 South drive into the Dancarl section is 90 metres short of being
vertically beneath Dancarl main shaft. The planning to initiate a raise-bore
holing to the bottom of Dancarl main shaft is in progress so as to open this
block of ground for mining.
JOHAN DIPPENAAR
CHIEF EXECUTIVE OFFICER
Notes
1. The information in this report that relates to Exploration Results, Mineral
Resources or Ore Reserves is based on information compiled by Jim Davidson, Pr.
Sci Nat (reg No 400031/06), who is a Member of the Geological Society of South
Africa, a 'Recognised Overseas Professional Organisation' ('ROPO'), included in
a list promulgated by the ASX from time to time. Jim Davidson is a full-time
employee of the Company and has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person as defined in
the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves'. Jim Davidson has given his written consent
to the inclusion in this report of the matters based on his information in the
form and context in which it appears.
2. It should be noted that the potential quantity in this report is conceptual
in nature, there has been insufficient exploration to define a Mineral Resource
and it is uncertain if further exploration will result in the determination of a
Mineral Resource.
For further information, please contact:
Justine Howarth / Annabel Leather Telephone: +44 (0) 20 7493 3713
Parkgreen Communications, London
Kevin Skinner Telephone: +61 (0) 8 8234 9555
Field PR, Adelaide Mobile: +61 (0) 414 822 631
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report*
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98,30/9/2001.
Name of entity
Petra Diamonds Limited
ACN or ARBN Quarter ended ('current quarter')
114474574 31 March 2006
Consolidated statement of cash flows*
Current quarter Year to date
Cash flows related to operating activities £'000 £'000
9 Months
1.1 Net profit/(loss) before taxation (1,171) (405)
1.2 Adjustments for:
- Depreciation and amortisation 806 2,094
- Foreign exchange loss/(gain) (404) (3,097)
- Other non cash items 37 95
1.3 Operating profit /(loss) before working capital changes (732) (1,313)
1.4 (Increase)/Decrease in trade and other receivables (281) (68)
1.5 (Decrease)/Increase in trade payables 673 435
1.6 (Increase)/Decrease in inventories (47) (838)
Cash generated(used) in operations (387) (1,784)
1.7 Interest paid (79) (233)
Net Operating Cash Flows (466) (2,017)
Cash flows related to investing activities
1.8 Payment for a) development expenditure (1,060) (3,106)
b) instalment for equity and
subsidiary investments - (3,134)
c) property plant and equipment (892) (1,819)
1.9 Proceeds from sale of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets 14 46
1.10 Acquisition of subsidiary net cash - 3,154
1.11 Interest received 41 210
1.12 Other - -
Net investing cash flows (1,897) (4,649)
1.13 Total operating and investing cash flows (carried forward) (2,363) (6,666)
1.13 Total operating and investing cash flows (brought
forward) (2,363) (6,666)
Cash flows related to financing activities
1.14 Subscription for shares and notes - net of costs - -
1.15 Proceeds from sale of forfeited shares - -
1.16 Proceeds from borrowings 244 2,638
1.17 Repayment of borrowing - Convertible Notes and other group (47) (5,863)
borrowings
1.18 Dividends paid - -
1.19 Transaction deal costs - (169)
Net financing cash flows 197 (3,394)
Net (decrease) increase in cash held (2,166) (10,060)
1.20 Cash at beginning of quarter/year to date 7,070 15,375
1.21 Exchange rate adjustments to item 1.20 (47) 12
1.22 Cash at end of quarter 4,857 5,327
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
Current quarter
£'000
1.23 Aggregate amount of payments to the parties included in item 1.1 N/A
1.24 Aggregate amount of loans to the parties included in item 1.17 N/A
1.25 Explanation necessary for an understanding of the transactions
N/A
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated
assets and liabilities but did not involve cash flows
N/A
2.2 Details of outlays made by other entities to establish or increase their share in projects in
which the reporting entity has an interest
N/A
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
£'000 £'000
3.1 Loan facilities 900 470
3.2 Credit standby arrangements Nil Nil
Estimated cash outflows for next quarter
£'000
4.1 Exploration and evaluation 200
4.2 Development 250
Total 450
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as Current quarter Previous quarter
shown in the consolidated statement of cash flows) £'000 £'000
to the related items in the accounts is as follows.
5.1 Cash on hand and at bank 807 860
5.2 Deposits at call 4,520 6,210
5.3 Bank overdraft (470) -
5.4 Other (provide details)
Total: cash at end of quarter (item 1.22) 4,857 7,070
Changes in interests in mining tenements
Tenement Nature of interest Interest at Interest at
reference (note (2)) beginning of end of
quarter quarter
6.1 Interests in mining
tenements relinquished,
reduced or lapsed N/A
6.2 Interests in mining
tenements acquired or
increased N/A
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Total number Number quoted Issue price per Amount paid up per security
security (see note 3) (pence)
(see note 3)
(pence)
7.1 Preference +securities
(description)
7.3 +Ordinary securities 148,229,539 148,229,539 - -
7.4 Changes during quarter
(a) Increases through
new issue 101,563 101,563 - -
(b) Decreases through
returns of capital,
buy-backs - - - -
7.5 +Convertible debt
securities
11% pa Nov 2005 - - - -
7.6 Changes during quarter
(a) Increases through
issues
(b) Decreases through
conversion and
repayment - - - -
7.7 Options (description
and conversion factor
- see details below) 6,398,468 NONE SEE BELOW
7.8 Issued during quarter - - -
7.9 Exercised during
quarter (133,334) - 54.5p
7.10 Expired during quarter - -
Options
276,375 Employee Incentive Options expiring various dates, exercisable at $A1.12 each
86,250 Employee Incentive Options expiring various dates, exercisable at $A1.36 each
400,000 Director incentive Options expiring 11 April 2007 with exercise price of 30p, 35p, 40p and 45p each
for each 100,000 tranche
Director incentive Options expiring 5 September 2013 with exercise price of 44p each
1,500,000
Director incentive Options expiring 28 June 2014 with exercise price of 54.5p each
750,000
Director incentive Options expiring 16 June 2015 with exercise price of 85p each
2,250,000
Employee incentive Options expiring 5 September 2013 with exercise price of 44p each
385,000
Employee incentive Options expiring 13 September 2014 with exercise price of 56.75p each
50,000
Options exercisable by 16 June 2008 at 85p each
200,843
Employee incentive Options expiring 27 November 2015 with an exercise price of 65.75p
500,000
Warrants over ordinary shares
Exercise Expiry
Price
1,500,000 30p 31 December 2007
1,000,000 100p 31 December 2007
1,666,666 55.85p 14 August 2006
200,843 85p 17 June 2006
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