Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (February 2020)
46 slides from Petra Diamonds's investor presentation, February 2020
Slide 1: Foundations for the future
Foundations for the future Petra Diamonds Limited Corporate Update – February 2020
Slide 2: Important Notice
Important Notice These Presentation Materials are being supplied to you by Petra Diamonds Limited (the “Company”) solely for your information and use at this presentation. These Presentation Materials may contain information that is confidential, legally privileged or otherwise protected by law. The
Slide 3: Petra Overview
PetraDiamonds Petra Overview
Slide 4: One of the World's Top Independent Diamond Producers
One of the World’s Top 5 Independent Diamond Producers Assets moving to steady Company entering phase of state production FCF generation Cullinan Finsch 74% Petra; 26% BEE 74% Petra; 26% BEE Block cave / Sub-level cave Sub-level cave / Block cave Mine Plan to 2030 Mine Plan to 2030 Williamson Koffie
Slide 5: Relentless Focus on Zero Harm
Relentless Focus on Zero Harm Steady improvement in safety performance over +10 year period • Safety is our most important personal and organisational value • Board safety pledge (right) shows importance of leading from the top • From FY 2009 to H1 FY2020: LTIFR -65% and LTIs -82% MILLION MANHOURS W
Slide 6: Transitioning to Steady State Operations
Transitioning to Steady State Operations Completion of heavy capital intensive phase 10 year capital investment programme and 3 year outlook US$ 350 300 250 200 150 100 50 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 • Petra has completed major capital expansion programmes acro
Slide 7: Consistent Operational Delivery against Market Expectations
Consistent Operational Delivery against Market Expectations H1 FY 2020 saw the highest ROM tonnes and carats in Petra’s history ROM tonnes treated 8000 000 H1 FY 2020 7000 000 6000 000 • Production +3% to 2.07 Mcts 5000 000 4000 000 • On track to meet or exceed guidance of ca. 3.8 3000 000 Mcts for
Slide 8: Generation of Free Cash Flow to reduce Leverage
Generation of Free Cash Flow to reduce Leverage Project 2022 expected to start delivering benefits from H2 FY 2020 • Initial target of $150-200 million¹ free cash flow over three year period² • Implementation underway at all mines and at Group level; the majority of the value driver ideas generated
Slide 9: Project 2022 in Action at Cullinan
Project 2022 in Action at Cullinan Project 2022 Initiatives Delivering at Cullinan aim at increasing production The ore is Simplified Cullinan process flow diagram 5 milled to liberate the 6 Rough diamonds diamonds are separated out from the ore 1 4 Draw point from the The ore is then block cave hoi
Slide 10: Project 2022 in Action at Cullinan
Project 2022 in Action at Cullinan Improvements are mainly focused on addressing the bottlenecks on site The ore is milled to Simplified Cullinan process flow diagram 5 liberate the 6 Rough diamonds diamonds are separated out from the ore 1 4 Draw point from the The ore is then block cave hoisted to
Slide 11: Project 2022 in Action at Cullinan: mining ideas
Project 2022 in Action at Cullinan Specific ideas within mining are being implemented Area Idea Shrink shift change: Increase the number of productive hours on Loading the loaders by changing the blasting time and ensuring that shift handovers happen efficiently Weekend loading: Appoint a contractor
Slide 12: Project 2022 in Action at Cullinan: plant ideas
Project 2022 in Action at Cullinan The mining ideas are complemented by a set of ideas in the plant Area Idea Optimisation and redesign of high-pressure grinding roll crushers: Refurbish and redesign the rolls so that they crush Recycle recycled material more effectively and reduce the recycle load
Slide 13: Project 2022 in Action
Project 2022 in Action P22 is working to change the behaviours of all employees across site Petra Diamonds Limited: Investor Presentation 13
Slide 14: Evolution of Management Structures
Evolution of Management Structures Flatter management structure sees operations report directly to the CEO • Upon appointment of new CEO in April 2019: • Executive Committee above to drive delivery of our strategy • Organisational design review completed, with aim to maximise efficiency of our opera
Slide 15: Balance Sheet Snapshot
Balance Sheet Snapshot • Bank facilities of R1.5 billion fully undrawn and available (FX movement causes USD value to fluctuate) • South African Lender Group consented to a waiver of the EBITDA related covenant ratios associated with Petra’s banking facilities for the December 2019 measurement perio
Slide 16: Operations Update
7 PetraDiamonds Operations Update
Slide 17: Mine Contribution Split
Mine Contribution Split Cullinan became key revenue contributor to Group in H1 FY 2020 Production by mine Revenue by mine 2% 11% 20% 32% H1 FY 2020 H1 FY 2020¹ 44% 2.1 million carats $193.9 million 8% 43% Finsch 42% Cullinan Koffiefontein Williamson 2% 10% 20% FY 2019 FY 2019 37% 45% 3.9 million car
Slide 18: Cullinan
Cullinan Steady state production from C-Cut Phase 1 and CC1E to be reached in FY 2020 • Undercut ring blasting commenced FY 2015 • Production levels established at 839m and shaft to 934m commissioned – FY 2016 • New plant with throughput capacity of 4.0 Mt ROM and 2.0 Mt tailings – commissioned Q1 F
Slide 19: Cullinan: C-Cut Progression
Cullinan C-Cut Progression C-Cut CC1E 16 ha at 839 mL The last 3 draw-bells of 107 planned were slotted in December 2019 • Draw-bell installation scheduled to be completed at the end of January 2020 with a total of 107 draw- bells • Cave maturity will follow the draw-bell opening sequence with draw-
Slide 20: Finsch
Finsch Steady state production from Block 5 SLC to be reached in H2 FY 2020 • Block 5 SLC production commenced from first tunnels on 70L – FY 2016 • Production on 75L commenced in Q3 FY 2018; all tunnels in production in Q3 FY 2019 • Construction of ground handling infrastructure completed in Q1 FY
Slide 21: Finsch: Block 5 SLC Progression
Finsch continued Block 5 SLC Progression 70 Level 73 Level 70 Level 75 Level 78 Level 73 Level 75 Level 78 Level Petra Diamonds Limited: Investor Presentation 21
Slide 22: Koffiefontein
Koffiefontein Steady state production from SLC was reached in FY 2019 • Production commenced from 56 Level SLC – FY 2015 • Ground handling system commissioned – Q3 FY 2018 • Production from 60L commenced – Q2 FY 2019 • SLC Production Ramp Up – FY 2017 – 0.6 Mt – FY 2018 – 0.7 Mt – FY 2019 – 1.0 Mt –
Slide 23: Williamson
Williamson Steady state production achieved in FY 2018 MUDSTONE • New mill plant commissioned H2 FY 2017 GB2 • FY 2019 – best production results since 1977 SIL_GB – FY 2019 – 5.0 Mt ROM / 0.4 Mt alluvial NF_RVK RVK – FY 2019 – 399 Kcts / $93.0 Mt BVK – FY 2020 – 5.0 Mt ROM EST BVK – H1 FY 2020 – 2.6
Slide 24: Diamond Market Overview
” PetraDiamonds Diamond Market Overview
Slide 25: Global Production
Global Production Only 30 significant kimberlite mines in production today • Market downturn could lead to an acceleration of closures or cancellation of expansion plans 25 Petra Diamonds Limited: Investor Presentation
Slide 26: Favourable Long-term Market Fundamentals
Favourable Long-term Market Fundamentals The supply side outlook continues to contract • Rough diamond production fell 2% to 148.4 Mcts in 2018 with a value of $14.5bn (2017: $14.1bn) • Argyle mine to close in 2020; produced around 10% of world supply in 2018 and only major source of pink diamonds g
Slide 27: Rough Diamond Prices
Rough Diamond Prices Short term headwinds affecting pricing H1 FY 2020 Market Performance (Jul to Dec 2019) H1 FY 2020 FY 2019 H1 FY 2019 Rough Diamond Prices US$/ct US$/ct US$/ct • The first tender in H1 FY 2020 saw like-for-like prices down ca. 4% over Q4 FY 2019, with October seeing some Cullinan
Slide 28: Support of Diamond Market via DPA
Support of Diamond Market via DPA The DPA aims to actively influence consumer demand for diamonds Global consumer demand grew 2% in 2018 to $76bn¹ Dispelling myths about our industry • China (+4.7%) and the US (+4.5%) were the fastest growing regions Generic marketing • Budget of +$70m for 2019; pri
Slide 29: Positive Outlook for Luxury Jewellery Market
Positive Outlook for Luxury Jewellery Market LVMH acquisition of Tiffany signals confidence in jewellery sales potential • LVMH acquires Tiffany for $16.2bn – largest deal ever in Luxury Goods Sales Growth in 2019 - ex currency movement the luxury goods space Jewellery +9.0 • Personal luxury goods m
Slide 30: Responsible Mining
4 PetraDiamonds Responsible Mining
Slide 31: Positioned to make a Difference
Positioned to make a Difference The diamond mining industry generates $16 billion in net positive socioeconomic and environmental benefits Petra Diamonds Limited: Investor Presentation 31
Slide 32: Our Contribution in FY 2019
Our Contribution in FY 2019 Driving sustainable development in our local communities Our Values Petra Diamonds Limited: Investor Presentation 32
Slide 33: Shaping a Sustainable Business
Shaping a Sustainable Business By developing our assets responsibly, we unlock value for all stakeholders Our People • Extensive education, training and development from school pupils to staff 1 and wider community members • Ca. $6.6m training spend in FY 2019 Occupational Health • 100% of employees
Slide 34: Playing a Positive Role within our Communities
Playing a Positive Role within our Communities Petra constructed the Lethabong Day Centre within Petra constructed the Multi Sports Facilities for use Petra constructed an expansion of the Onverwacht the Onverwacht school grounds, with 3 classrooms by 3 local primary schools, using labourers from th
Slide 35: Outlook
” PetraDiamonds Outlook
Slide 36: Outlook
Outlook Focus on the execution of Project 2022 to reduce leverage against the backdrop of a challenging diamond market 3 Year Succession Plan implemented and Evolution of Board and Senior Management organisational design review completed Consistent operational delivery against Operations running ahe
Slide 37: Appendix
7 PetraDiamonds Appendix
Slide 38: Capital Structure
Capital Structure Share Price (1 year to 27 January 2020) Major Shareholders as at 27 January 2020 % Voting rights Standard Life Aberdeen plc 15.2% M&G Plc 10.2% Cobas Asset Management 5.0% Lazard Asset Management 4.9% Directors 2.0% Listing LSE: PDL Petra Diamonds Corporate Bond Average daily tradi
Slide 39: Board of Directors
Board of Directors Adonis Pouroulis Richard Duffy Jacques Breytenbach Tony Lowrie Dr Patrick Bartlett Non-Executive Chairman Chief Executive Finance Director Senior Independent Independent Non-Executive Appointed April 2019 Non-Executive Director Director Nomination Committee Audit & Risk Committee
Slide 40: A Unique Portfolio
A Unique Portfolio Consistent producers of world-class diamonds with exceptional heritage The Star of Josephine The Cullinan Heritage 25.5ct blue diamond The Blue Moon of Josephine 26.6ct rough, 7.0ct polished 507.5ct rough, 104ct polished sold for $16.9m ($663k/ct) 29.6ct rough, 12.0ct polished sol
Slide 41: FY 2019 vs. FY 2018 Operational Results
FY 2019 vs. FY 2018 Operational Results Finsch Cullinan Koffiefontein Williamson FY FY FY FY FY FY FY FY Unit 2019 2018 2019 2018 2019 2018 2019 2018 ROM PRODUCTION Tonnes treated Tonnes 3,073,479 3,084,395 4,119,406 3,741,086 1,000,726 649,259 5,082,319 4,659,563 Grade cpht 56.1 62.5 38.6 35.9 6.4
Slide 42: Bank Debt Facilities – Covenants
Bank Debt Facilities – Covenants Bank debt facilities undrawn and available to the Group as at 31 December 2019 of R1.5 billion (ca. $107.2 million), in addition to diamond debtors of $12.8 million and cash at bank of $53.6 million Maintenance Covenants Distribution Covenants 12 months to 12 months
Slide 43: Debt Facilities
Debt Facilities Utilised at Commitment fee Size Size US$M1 Interest Rate Lender Type 30 June 2019 on undrawn Repayment ZARM facilities US$M1 ZAR Revolving 1M JIBAR + Absa & Nedbank 1,000 71 0 1.35%2 October 2021 credit facility 5.0%2 Absa & RMB ZAR Working SA Prime – Subject to 500 36 0 0.85% (FNB)
Slide 44: Analyst Guidance FY 2020 – Group Capex Profile
Analyst Guidance FY 2020 – Group Capex Profile 1 All Capex numbers stated in FY 2020 money terms (ZAR14.0/US$1 where applicable) 2 Depreciation on mining assets for FY 2020 guided at ca. US$85-90 million at R14.0/US$1 Petra Diamonds Limited: Investor Presentation 44
Slide 45: Tailings Residue Deposit Management in line with Best Practice
Tailings Residue Deposit Management in line with Best Practice • In South Africa risk-based mandatory Codes of Practices (“COP”)1 are available for all residue deposits at our mines as required by, and according to set guidelines from the Department of Mineral Resources (DMR), Mine Health and Safety
Slide 46: Thank you
Thank you Further enquiries: investorrelations@petradiamonds.com +44 20 74948203 www.petradiamonds.com
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