Petra Diamonds Limited · LSE:PDL
Petra Diamonds — H1 2009 Earnings Presentation
30 slides from Petra Diamonds's earnings presentation, Feb 23, 2009
Slide 1: Interims Results
Interims Results 23 Februaryy 2009
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: Building a world-class diamond group
Building a world-class diamond group • A unique growth profile – outside of De Beers, Petra has established one of the world’s largest diamond resources (265 million carats - value US$27.3 billion as at September 2008 Resource Statement)) • World famous mines renowned for production of large, high v
Slide 4: The Petra Board
The Petra Board Adonis Pouroulis Johan Dippenaar David Abery Jim Davidson Chairman CEO Finance Director Technical Director Successful mining entrepreneur One of South Africa’s most Extensive experience as Chief Acknowledged world authority successful diamond Financial Officer in South on kimberlite
Slide 5: Fast building a major diamond group
Fast building a major diamond group FISSURES + EXPLORATION 5
Slide 6: Fast building a major diamond group
Fast building a major diamond group CULLINAN KIMBERLEY KOFFIEFONTEIN WILLIAMSON UNDERGROUND FISSURES + EXPLORATION 6
Slide 7: Reserves and resources
Reserves and resources Attributable carat base Total carat base Fissures - 4.7 Fissures - 4.8 48 Kimberley - 4.8 Kimberley - 6.4 Koffiefontein - 42 4.2 Koffiefontein - 6.0 60 Williamson - 30.1 Williamson - 40.2 Cullinan - 76.9 Cullinan - 207.9 207 9 121 million carats 265 million carats US$13.7 bill
Slide 8: Challenging times
Challenging times • Lack of liquidity Bank debt in diamond cutting centres (US$m) squeezing the diamond pipeline • Economic uncertainty affecting consumer confidence • Debt levels in cutting centres high • Polished inventory overhang – very selective stocking • Negative impact on pricing
Slide 9: A unique 'commodity'
A unique ‘commodity’ History has shown the enduring value of diamonds • Hard asset / traditional store of wealth • move from debt / risk / currencies / financial trading into hard asset classes • investment grade diamonds are new “concentrated form of gold” (NY Times Jan 09) • easily transportable t
Slide 10: Fundamentals for recovery
Fundamentals for recovery • True scarcity - continued lack of new discoveries • Majors production was falling before the credit crunch hit global markets • Majors now cutting production further to support prices • 25 million carats could be cut from ~160 million carats/year (RBC Capital Markets) – P
Slide 11: Petra strategy
Petra strategy • Cut exploration budget • exploration activity dramatically scaled down and budget cut by US$25m to US$500k • Focus on cash flow • Petra is focused on cash generative diamond activity – objective to maximise value and returns at major producing assets • Culture of cost control • grou
Slide 12: Interim Results for six months to 31 December 2008
Interim Results for six months to 31 December 2008 12
Slide 13: Highlights for the period
Highlights for the period Operational and financial highlights • Gross revenue from rough diamond sales for the Period: US$47.3million, a 49% increase on the six months to 31 December 2007: US$31.7 million. Group attributable revenue from rough diamond sales for the Period: US$33.8 $ million (31 Dec
Slide 14: Highlights for the period: current trading
Highlights for the period Current trading • Acquisition of the Williamson diamond mine in Tanzania completed 19 February 2009 (ownership effective from 10 November 2008) • Now the full operator of six diamond mines in South Africa (5) and Tanzania (1) • Two exceptional blue diamonds recovered at Cul
Slide 15: Summary results – key numbers
Summary results – key numbers 6 months to 6 months to December ’08 December ‘07 US$M US$M Revenue 33.8 32.1 On-mine gross profit* 10.2 15.5 Exploration p * ((13.2)) ((1.0)) G&A * (3.3) (4.4) Adjusted EBITDA ** (6.3) 10.1 Depreciation/amortisation p ((8.7)) ((5.8)) Impairment charges (75.2) - Tax cre
Slide 16: Impairment charges
Impairment charges The impairment charge of US$75.2 million is comprised of; US$M • Withdrawal from Luangue 37.0 • Withdrawal from Alto Cuilo 6.0 (write down of interest in Moyoweno) • Impairment p of Helam mine based on IAS36 review 12.9 • Impairment of Star mine based on IAS36 review 10.8 • Impair
Slide 17: Cash and debt
Cash and debt 31 December ’08 31 December ‘07 US$M US$M Cash at bank 10.5 59.0 Group p debt 75.4 21.9 • Cash movement due to acquisition consideration of Cullinan / Williamson and exploration spend now curtailed; South African mines cash positive for the Period • At current diamond prices, Petra exp
Slide 18: Production
Production PetraDiamonds
Slide 19: Production portfolio
Production portfolio Production South Africa • Cullinan • Koffiefontein • Kimberley Underground* • Helam • Sedibeng • Star Tanzania • Williamson * Acquisition to complete soon 19
Slide 20: Cullinan mine – overview
Cullinan mine – overview • 16 July 2008: Cullinan acquired by Petra Diamonds Cullinan Consortium • World-class resource of 208 million carats (including tailings) • Historic producer of spectacular diamonds, including ‘The Cullinan’, the world’s largest diamond ever (3,106 carats) • Only significant
Slide 21: Iconic gems
Iconic gems Heart of Eternity The Niarchos • 27.64 carats polished • 426.50 carats uncut • 1909 • 128.25 polished • 1954 The Premier Rose The Golden Jubilee The Blue Heart • 353.90 carats rough • 755.50 carats rough • 30.82 30 82 carats t polished li h d • 137.02 137 02 polished • 545.65 polished •
Slide 22: Current operations
Current operations • Currently mining the B-Cut; >20 year mine life • Production running significantly ahead of expectations; 900,000 - 950,000 carats target to end June 2009 • Major changes underway to processing of ore with emphasis on recovery of ‘specials’, particularly diamonds larger than 100
Slide 23: Cullinan cross-section
Cullinan cross-section ‘B-Cut’ • The C-Cut - a world-class diamond resource (133 carats) • Tailings – a 16.8 million carat resource
Slide 24: Recent Cullinan 'specials'
Recent Cullinan ‘specials’ 26.54 26 54 carat white diamond - sold for US$1.6 million 116 caratt champagne h Remarkable R k bl 26 26.58 58 bl blue di diamond d diamond yet to be marketed and sold - sold for US$250,000 39.19 carat blue diamond - sold for US$8 US$8.8 8 million 24
Slide 25: Koffiefontein
Koffiefontein • Average value per carat of US$318 (6 months to Dec ‘08) – still very high in comparison to world average • Regular recovery of ‘specials’, including pinks • Excellent achievement in containment of operating costs • Plant now ready to receive increased tonnages – potential from underg
Slide 26: Kimberley Underground
Kimberley Underground • Acquisition expected to complete by June 2009 • Custom-made plants being constructed in-house • Diamond recoveries and sales will commence mid 2009 – substantial stockpile will be in place • Historic producer of spectacular gems, such as The Oppenheimer: (253.7 carat rough);
Slide 27: Williamson
Williamson • Agreement to acquire 75% stake in Williamson mine for US$10m from De Beers • Major diamond resource of 40 million carats • Open pit mine to depth of 90 metres – largest kimberlite ever to be mined economically (146ha) • Renowned for large high value diamonds & fancy pink diamonds (e.g.
Slide 28: Corporate profile
Corporate profile Major Shareholders % Listing AIM: PDL Saad 44.0 Offices Corporate Jersey JP Morgan 96 9.6 R Representative t ti L d London Al Rajhi 9.0 Shares in Issue 184 million Management 6.1 Fully diluted 203 million 12 month high/low 146p – 29.75p Share Price Chart Share price @ 20 Feb 2009 2
Slide 29: 2009 – Growing through the downturn
2009 – Growing through the downturn • Continue to build cash-positive production • Relinquish capital intensive exploration projects • Petra culture to maintain rigorous cost control • Recent acquisitions q p provide solid p platform for further g growth – increasing g operational cash flows • Robus
Slide 30: Growing through the downturn
Growing through the downturn Enquiries Cathy Malins Email cathym@petradiamonds.com Telephone :+44 20 7318 0452 Website www.petradiamonds.com