Q1 FY 2024 Operating Update

Petra Diamonds Limited
24 October 2023
 

 

 

24 October 2023

 LSE: PDL

 

 

Petra Diamonds Limited

("Petra" or "the Company")

 

Q1 FY 2024 Operating Update

Petra reports improved diamond production in the first quarter of FY 2024

 

Richard Duffy, Chief Executive Officer of Petra, commented:

 

"With stabilising operations at Cullinan Mine and Finsch, and Williamson resuming production ahead of schedule, production increased 12% from the previous quarter. This was accompanied by a continuation of our strong safety performance from Q4 FY 2023 following our renewed safety focus.

 

We believe the actions taken by the major producers to curb supply and the two-month Indian diamond import moratorium will assist in stabilising the market and supporting prices as inventory levels reduce. Whilst we continue to see support for the market in the medium to longer term as a result of the structural supply deficit, we are taking prudent steps to enhance our business resilience in light of these market challenges and uncertainties that are expected to continue over the coming months. By bringing forward our second tender of FY 2024 we were able to sell 75% of our goods ahead of the moratorium, with the balance sold shortly after. We are in discussions with our first lien lender to upsize our existing Revolving Credit Facility and are evaluating options to provide further financial flexibility, such as optimising our operational expenditure and deferring capital spend.

 

We are confident these actions will enable us to navigate this period of market weakness whilst limiting the impact on our value-led growth strategy."

 

Highlights vs Q4 FY 2023

                                                                                                                          

·    We maintained our improved safety performance with LTIs and LTIFR remaining at 2 and 0.12, respectively.

·    Total diamond production increased 12% to 696,639 carats mainly due to Williamson successfully resuming operations ahead of schedule. Production at Cullinan Mine was largely in line with expectations, with a small increase in tonnes treated offset by grade trending towards the lower end of expectations. At Finsch, tonnes treated decreased 23% from the preceding quarter, largely offset by a 26% increase in ROM grade, reflecting increased quarter-on-quarter volatility associated with the sub-level cave maturity. Production guidance for FY 2024 remains unchanged.

·    Revenue totalled US$97.6 million, which included Tender 1 sales of US$79.3 million and a portion of Tender 2 sales concluded prior to 30 September, with the balance of Tender 2 adding a further US$22.2 million post period end.

·    Unrestricted cash balances amounted to US$56.5 million (30 June 2023: US$44.1 million), with a further US$33.0 million (30 June 2023: US$8.9 million) cash received from diamond debtors shortly after period end. Cash balances include a ZAR850 million (US$45.0 million) drawdown from the Company's ZAR1 billion (US$53.0 million) Revolving Credit Facility.

 

·    Consolidated net debt increased to US$192.4 million (30 June 2023: US$176.8 million) due to the timing of closing the Company's sales tenders, the continued lower diamond pricing environment, working capital funding for the resumption of mining at Williamson and the increasing capex spend profile, as previously announced, to extend the life of our operations at Cullinan Mine and Finsch.

 

Operating Summary


Unit

FY 2024

FY 2023

Q1

Q4

Var.

Q1

Var.

12 months

Safety


 


 

 

 

 

LTIFR

Rate

0.12

0.12

-

0.16

-25%

0.24

LTIs

Number

2

2

-

3

-33%

17



 


 

 



Sales


 


 

 



Diamonds sold

Carats

932,431

561,624

+66%

516,308

+81%

2,329,799

Revenue1

US$m

97.6

49.9

+96%

101.4

-4%

323.9

Contribution from Exceptional Stones2

US$m

0.0

0.0

-

0.0

-

0.0



 


 

 



Production


 


 

 



ROM tonnes

Mt

2.7

1.8

+49%

3.0

-9%

8.6

Tailings and other tonnes

Mt

0.1

0.1

-

0.1

-

0.4

Total tonnes treated

Mt

2.8

1.9

+46%

3.1

-9%

9.0



 


 

 



ROM diamonds

Carats

652,021

592,374

+10%

729,761

-11%

2,517,309

Tailings and other diamonds

Carats

44,618

27,644

+61%

29,951

+49%

149,216

Total diamonds

Carats

696,639

620,018

+12%

759,712

-8%

2,666,525

1 Revenue reflects proceeds from the sale of rough diamonds and excludes revenue from profit share arrangements

2 Petra classifies "Exceptional Stones" as rough diamonds which sell for US$15 million or more each

 

 

INVESTOR WEBCASTS

Webcast presentation for institutional investors and analysts at 09:30am BST today

Petra's CEO, Richard Duffy, and CFO, Jacques Breytenbach, will host a live webcast including Q&A for institutional investors and analysts today at 09:30 BST to discuss this operating update.

Webcast link for live presentation: https://brrmedia.news/PDL_Q1FY24

Dial in details:

 

United Kingdom                033 0551 0200

South Africa                      0800 980 512

United States (Local)        +1 786 697 3501

 

Password (if prompted): Quote "Petra Diamonds Q1 Operations Update"

 

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, Jacques Breytenbach, 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 20 7494 8203

Julia Stone                                                                  investorrelations@petradiamonds.com

Kelsey Traynor

 

Financial PR (Camarco)

Gordon Poole                                                              Telephone: +44 20 3757 4980

Owen Roberts                                                             petradiamonds@camarco.co.uk

Elfie Kent

 

 

Notes:

1.     The following definitions have been used in this announcement:

a.     cpht: carats per hundred tonnes

b.     LTIs: lost time injuries

c.     LTIFR: lost time injury frequency rate, calculated as the number of LTIs multiplied by 200,000 and divided by the number of hours worked

d.     FY: financial year ending 30 June

e.     CY: calendar year ending 31 December

f.      Q: quarter of the financial year

g.     ROM: run-of-mine (i.e. production from the primary orebody)

h.     m: million

i.      Mt: million tonnes

j.      period: the first quarter of FY 2024

 

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 mines in South Africa (Cullinan Mine, Finsch and Koffiefontein) and one open pit mine in Tanzania (Williamson). The Koffiefontein mine is currently on care and maintenance in preparation for closure.

 

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 30 September 2023

 


Unit

As at 30 September

2023

As at 30 June

2023

As at 31 December

2022

As at 30 September

2022

Cash at bank - (including restricted amounts)¹

US$m

74.3

61.8

146.6

154.0

Diamond debtors

US$m

33.0

8.9

4.3

4.2

Diamond inventories2,3,4

US$m

Carats

51.8

479,430

65.9

715,222

59.9

540,153

76.3

692,219

2026 US$336.7m loan notes4

US$m

254.6

247.5

241.7

235.8

Bank loans and borrowings5

US$m

45.0

-

-

-

Consolidated Net Debt6

US$m

192.4

176.8

90.8

77.6

Bank facilities undrawn and available5

US$m

7.9

53.1

58.8

55.1

Note:  The following exchange rates have been used for this announcement: average for 3M FY 2024 US$1: ZAR18.65 (FY 2023: US$1: ZAR17.77); closing rate as at 30 September 2023 US$1: ZAR18.92 (30 June 2023: ZAR18.83, 31 December 2022: US$1: ZAR17.00, and September 2022: ZAR18.15).

 

Notes:

1.     The Group's cash balances comprise unrestricted balances of US$56.5 million (30 June 2023: US$44.1 million), and restricted balances of US$17.8 million (30 June 2023: US$17.0 million).

2.     Recorded at the lower of cost and net realisable value.

3.     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 earlier discussions, the GoT confirmed that the blocked parcel was partially sold during FY 2023 and so this parcel was excluded from diamond inventories in the Group's FY 2023 accounts and expensed to other direct mining expense with the calculated fair value proceeds of US$12.4 million for the blocked parcel recognised as other direct mining income and trade and other receivables as at 30 June 2023. During these 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.

4.     Post period-end, the Company completed Tender 2 with the sale of 207,792 carats from Cullinan Mine and Finsch, yielding US$22.2 million.   

5.     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$254.6 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$54.4 million of accrued interest and is stated net of unamortised transaction costs capitalised of US$9.5 million.

6.     Bank loans and borrowings represent the Group's ZAR1 billion revolving credit facility (RCF). During Q1 FY 2024, as a result of the deferment of the June 2023 diamond tender, the Group drew down ZAR850 million (US$44.9 million) on the RCF.

7.     Consolidated Net Debt is bank loans and borrowings plus loan notes, less cash and diamond debtors.

 



 

Mine-by-mine tables:

 

 

Cullinan Mine - South Africa


 

Unit

FY 2024

FY 2023

Q1

Q4

Var.

Q1

Var.

12 months

Sales








Revenue

US$m

51.1

30.9

+65%

56.9

-10%

181,5

Diamonds sold

Carats

519,362

327,429

+59%

267,728

+94%

1,306,457

Average price per carat

US$

98

94

+4%

212

-54%

139



 






ROM Production


 






Tonnes treated

Tonnes

1,137,436

1,120,346

+2%

1,110,912

+2%

4,376,595

Diamonds produced

Carats

318,261

323,535

-2%

368,796

-14%

1,343,191

Grade1

Cpht

28.0

28.9

-3%

33.2

-16%

30.7



 






Tailings Production


 






Tonnes treated

Tonnes

91,008

102,193

-11%

77,572

+17%

352,375

Diamonds produced

Carats

44,618

27,644

+61%

26,790

+67%

142,654

Grade1

Cpht

49.0

27.1

+81%

34.5

+42%

40.5

 


 






Total Production


 






Tonnes treated

Tonnes

1,228,443

1,222,539

+0

1,188,484

+3%

4,728,970

Diamonds produced

Carats

362,879

351,179

+3%

395,586

-8%

1,485,846

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


 

Unit

FY 2024

FY 2023

Q1

Q4

Var.

Q1

Var.

12 months

Sales








Revenue

US$m

38.9

19.0

+105%

23.4

+66%

93.4

Diamonds sold

Carats

375,214

234,195

+60%

177,285

+112%

848,236

Average price per carat

US$

104

81

+28%

132

-22%

110



 






ROM Production


 






Tonnes treated

Tonnes

544,140

706,497

-23%

572,976

-5%

2,431,261

Diamonds produced

Carats

259,864

268,839

-3%

260,217

-0%

1,033,602

Grade1

Cpht

47.8

38.1

+26%

45.4

+5%

42.5



 






Tailings Production


 






Tonnes treated

Tonnes

-

-

-

17,305

-100%

47,502

Diamonds produced

Carats

-

-

-

3,160

-100%

6,562

Grade1

Cpht

-

-

-

18.3

-100%

13.8

 


 






Total Production


 






Tonnes treated

Tonnes

544,140

706,497

-23%

590,281

-8%

2,478,764

Diamonds produced

Carats

259,864

268,839

-3%

263,377

-1%

1,040,164

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.

 



 

 

Williamson - Tanzania


 

Unit

FY 2024

FY 2023

Q1

Q4

Var.

Q1

Var.

12 months

Sales








Revenue

US$m

7.7

-

+100%

21.1

-64%

49.1

Diamonds sold

Carats

37,856

-

+100%

71,295

-47%

175,124

Average price per carat

US$

203

-

+100%

297

-32%

280



 



 



ROM Production


 



 



Tonnes treated

Tonnes

1,035,911

-

+100%

1,309,359

-21%

1,829,376

Diamonds produced

Carats

73,896

-

+100%

100,750

-27%

140,516

Grade1

Cpht

7.1

-

+100%

7.7

-7%

7.7



 



 



Total Production


 



 



Tonnes treated

Tonnes

1,035,911

-

+100%

1,309,359

-21%

1,829,376

Diamonds produced

Carats

73,896

-

+100%

100,750

-27%

140,516

 

 

 

Capital expenditure breakdown

US$m

Q1 FY 2024

FY 2023

 

 

Extension

Stay-in-Business

Total

Total

Cullinan Mine

13.1

2.4

15.5

52.8

Finsch

7.1

2.7

9.8

43.2

Williamson

-

4.7

4.7

19.3

Total

20.2

9.8

30.0

115.3

 

 

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