Petra Diamonds Limited · LSE:PDL
Petra Diamonds — H1 FY2012 Earnings Presentation
29 slides from Petra Diamonds's earnings presentation, February 2012
Slide 1: Interim Results (6 Months to 31 December 2011)
Interim Results (6 Months to 31 December 2011) February 2012
Slide 2: Important Notice
Important Notice These Presentation Materials do not constitute or form part of any invitation, offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities in the Company nor shall they or any part of them form the basis of or be relied upon in any manner
Slide 3: Overview
Overview Main Factors Affecting H1 Positive Outlook for H2 • A weaker diamond market – rough diamond prices • Diamond market stabilised end November fell from July highs, causing revenue to be • Prices were slightly stronger at Petra’s 1st tender in ~US$23.0m lower (as previously stated in Main 2012
Slide 4: Summary Results
Summary Results 6 months to 31 6 months to 31 Year ended 30 December 2011 December 2010 June 2011 (US$m) (US$m) (US$m) Revenue 101.4 90.0 220.6 Mining and processing costs (72.1) (66.8) (146.9) Other direct income 1.4 1.3 2.7 Profit from mining activity* 30.7 24.5 76.4 Exploration expense (0.8) (0.4
Slide 5: Highlights
Highlights Operations: • Production up 64% to 953,553 carats (H1 FY 2011: 582,102 carats) • Cash operating unit costs well controlled despite inflationary pressures • Capex of US$56.7 million (H1 FY 2011 US$47.7 million) Corporate: • Successful step-up from AIM to the Main Market of the London Stock
Slide 6: Operating Cashflow
Operating Cashflow H1 H1 FY 2012 FY 2011 FY 2011 (US$m) (US$m) (US$m) (Loss) / profit before tax (31.8) 26.8 64.4 Adjusted for non cashflow items 53.5 (5.9) 3.6 Cash generated before working capital changes 21.7 20.9 68.0 Increase in net working capital (23.0) (8.1) (15.8) Cash (utilised in) / gener
Slide 7: Balance Sheet Snapshot
Balance Sheet Snapshot 31 Dec 2011 31 Dec 2010 (US$m) (US$m) Cash and cash equivalents: Bank 45.1 20.8 Diamond inventories 38.1 20.2 Total 83.2 41.0 Loans, borrowings and deferred consideration: IFC / RMB Debt Facilities (ca. US$83m in total)* (70.5) (54.1) RMB Debt Facility (ca. US$48m in total)**
Slide 8: H1 FY 2012 – Operations
H1 FY 2012 – Operations Operation Cullinan Finsch Koffiefontein Kimberley Fissures Williamson Underground H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 2012 2011 Total Production Tonnes treated (Mt) 1,595,461 1,450,150 1,432
Slide 9: Production & Revenue – H1 2011 vs H1 2012
Production & Revenue – H1 2011 vs H1 2012 Diamonds Sold Gross Revenue H1 2011: 584,234 carats H1 2011: US$90 million 7% 9% 3% 6% 6% 1% 19% Cullinan Williamson 64% 2% Koffiefontein 83% Kimberley Underground H1 2012: 678,772 carats H1 2012: US$101.4 million Fissure Mines Finsch 28% 32% 49% 56% 8% 5% 4
Slide 10: Diamond Market Fundamentals
Diamond Market Fundamentals • Many of the world’s major diamond mines are in decline and cannot maintain previous output • No new important discoveries since the finds in Canada in the early 1990’s • Petra’s strategy is to focus on extending lives of existing major kimberlite mines • Strong demand d
Slide 11: Late Cycle Play
Late Cycle Play Per capita consumption of key commodities: China relative to the US “steady state” And ever increasing corporate activity…. • Anglo American – to buy Oppenheimer’s stake in De Beers; presentation notes “highly attractive industry fundamentals with late cycle exposure” • Alrosa - no f
Slide 12: Diamond Market Performance – 2011
Diamond Market Performance – 2011 Consumer Demand Forecasts 2011 & 2016 (US$ PWP) Global Demand Growth • De Beers estimates global diamond jewellery market RoW 18% 2011 grew by +11% – 13% Turkey 2% USA 38% • Major US market grew by ~8% Gulf 7% • China (+~30%) and India (+10% – 15%) continued Hong Ko
Slide 13: Rough Diamond Prices
Rough Diamond Prices • Global economic uncertainty caused prices to fall from Petra Average Rough Diamond Prices* June 2011 highs H1 FY 2012 Original FY 2011 FY 2010 • Rand weakness partially offset lower pricing during the guidance FY Mine Actual Actual Actual Period (South African production) 2012
Slide 14: Cullinan – Development Programme Update
Cullinan – Development Programme Update Expansion Plan – to deliver 2.0 Mctpa ROM & 0.4 Mctpa Cullinan Mining Schematic tailings by FY 2019 • South Decline to establish production at 830m and then on to bottom of new shaft at Current Infrastructure Men & Material 930m – end FY 2012 Shaft Planned Inf
Slide 15: Finsch – Development Programme Update
Finsch – Development Programme Update Expansion Plan – to deliver production of 1.6 Mctpa ROM Finsch Mining Schematic & 0.3 Mctpa tailings by FY 2018 • Mining currently taking place Vent Production in Block 4 at 630m – FY Shaft Shaft 2012 • Treatment of Pre 1979 Tailings – until FY 2015 Precursor SL
Slide 16: Production & Revenue – FY 2011 & Estimated FY 2019
Production & Revenue – FY 2011 & Estimated FY 2019 Gross Production Gross Revenue Fissures 0.08 Fissures 21.8 Kimberley 0.06 Koffiefontein 0.05 Kimberley 18.2 Williamson 0.03 Cullinan 0.9 Koffiefontein 30.8 Cullinan 140.2 Williamson 9.5 FY 2011: 1.1 million carats FY 2011: US$221 million Finsch 419
Slide 17: Outlook
Outlook Operations • H2 production expected to be significantly higher than H1, mainly due to inclusion of Finsch production for full 6 month period • All expansion programmes on target to deliver +2 Mctpa in FY 2012 & +5 Mctpa by FY 2019 • Focus remains on: • cost control and increased production i
Slide 18: Expected FTSE Index Ranking
Expected FTSE Index Ranking (as at 23 Feb 2012) Index review scheduled for 7 March; changes to Index implemented Monday 19 March 2012 FTSE All Share FTSE 350 Mining Index Mkt Cap Size Rank Name Mkt Cap (mm) Size Rank Name (mm)(1) 231 Home Retail Group £846 1 BHP Billiton £123,693 2 Rio Tinto £72,307
Slide 19: Thank You
Finsch mine, South Africa Thank You
Slide 20: Discover Petra Diamonds
Discover Petra Diamonds • London’s largest quoted pure diamond mining group – ‘LSE: PDL’ • Provides direct exposure to the positive long term fundamentals of the diamond market • December 2011 – stepped up from AIM to the Main Market of the London Stock Exchange • March 2012 – expected to enter the
Slide 21: Capital Structure
Capital Structure High Quality Shareholder Base 24 Feb 2012 Share Price Chart (1 year) Al Rajhi Holdings W.W.L. 13.3% Saad Investments Company Ltd/AWAL Bank 12.1% JP Morgan Asset Management Holdings Inc. 7.9% Capital Group International, Inc. 7.3% Scottish Widows Investment Partnership 5.0% T. Rowe
Slide 22: An Exceptional Growth Path
An Exceptional Growth Path July 2007 July 2008 November 2008 May 2010 September 2011 Koffiefontein Cullinan Williamson Kimberley UG Finsch 74% Petra 74% Petra 75% Petra 74% Petra 74% Petra 26% BEE Partners 26% BEE Partners 25% Government of 26% BEE Partners 26% BEE Partners Tanzania Front Cave Block
Slide 23: Aim Of Expansion Programmes – Undiluted Ore
Aim Of Expansion Programmes – Undiluted Ore Schematic - block cave mining method Virgin kimberlite ore • Current mining at underground pipe mines taking place in diluted mature caves and low grade remnants • Expansion programmes will open up fresh block caves, delivering undiluted ore in higher grad
Slide 24: Williamson – Mining Overview
Williamson – Mining Overview Expansion Plan – Key Components Williamson Kimberlite Pipe Schematic • Stockpile (due to pit shaping activities) of ca. 900,000 t 1km (>50,000 cts) N • Enhanced rebuild of existing plant (3 Mtpa) completed – expected to be fully operational April 2012 LOM Pit Shell • Sta
Slide 25: Koffiefontein – Mining Overview
Koffiefontein – Mining Overview Expansion Plan – Key Koffiefontein Kimberlite Pipe Schematic Components • Installing new sub-level cave at 560m to 600m Level – FY 2013 • Installing new block cave at 690m Level – FY 2016 • Tailings programme now ramped up with Petra processing +0.5 Mtpa 25
Slide 26: Kimberley Underground – Mining Overview
Kimberley Underground – Mining Overview Expansion Plan – Key Components Kimberley Underground Kimberlite Pipes Schematic • Temporary mobile pan plant put in place at Wesselton – Q2 FY 2012 • Introduction of scrubber and apron feeder to Joint Shaft plant expected to address bottleneck – Q3 FY 2012 •
Slide 27: Capex Profile
Capex Profile (as published Sep 2011; an updated profile will be published later this year) Financial Year 2012 2013 2014 2015 2016 2017 2018 2019 Operation Area Finsch Existing Block 4 (630 meter Level) - Block 4 pillars - SLC Block 4 precursor - SLC 770 meter Level - Block 5 880 meter Level Develo
Slide 28: Sustainability – Our Commitment
Sustainability – Our Commitment Cullinan Agricultural Hub Mwadui Primary School – owned and operated by Williamson and provides free education to 460 learners Conservation work at Cullinan including Rhino de-horning Portable skills workshop at Koffiefontein – Boiler making The Williamson Nursery, wi
Slide 29: Petra Diamonds Cathy Malins
Petra Diamonds Cathy Malins cathym@petradiamonds.com +44 20 7318 0452 www.petradiamonds.com