Petra Diamonds Limited · LSE:PDL
Petra Diamonds — FY2015 Earnings Presentation
44 slides from Petra Diamonds's earnings presentation, Sep 18, 2015
Slide 1: FY 2015 Preliminary Results
Underground development continues apace at Cullinan FY 2015 Preliminary Results (12 Months to 30 June 2015) 18 September 2015
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. T
Slide 3: FY 2015 – Shaping our Future
FY 2015 – Shaping our Future Continued production growth Development programmes on track • Record levels of 3.2 Mcts and 17.1 Mt in FY 2015 Expansion programmes on track • Solid start to FY 2016 – grades in line at Finsch and Cullinan • First significant input of undiluted ore expected from H2 FY 20
Slide 4: FY 2015 – Key Performance Indicators
FY 2015 – Key Performance Indicators Production Revenue Safety Mcts US$M LTIFR 3.5 500 1.2 3.0 450 400 1 2.5 350 0.8 2.0 300 250 0.6 1.5 200 150 0.4 1.0 100 0.2 0.5 50 0.0 0 0 FY FY FY FY FY FY FY FY FY FY FY FY 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2015 +2% to 3.2 Mcts -10% to $425
Slide 5: FY 2015 – Key Performance Indicators
FY 2015 – Key Performance Indicators Profit from Mining Activities¹ EBITDA² Operating Cashflow³ US$M US$M US$M 250 200 200 180 180 200 160 160 140 140 150 120 120 100 100 100 80 80 60 60 50 40 40 20 20 0 0 0 FY FY FY FY FY FY FY FY FY FY FY FY 2012 2013 2014 2015 2012 2013 2014 2015 2012 2013 2014 2
Slide 6: Robust Financial Position
Robust Financial Position Cash Net debt Bank facilities undrawn US$m US$m US$m 180 200 300 160 180 160 250 140 120 140 200 120 100 100 150 80 166.6 171.7 255.1 80 60 60 124.9 100 40 40 50 20 34.0 20 37.5 0 0 0 30/06/14 30/06/15 30/06/14 30/06/15 30/06/14 30/06/15 +390% to $166.6 +37% to $171.7m +580
Slide 7: FY 2015 – Operations Results
FY 2015 – Operations Results Production by mine Revenue by mine Production Split - Carats Tailings Finsch / Other 23% 28% 29% Cullinan 43% 6% Williamson 65% 2% Koffiefontein 15% 71% 4% Kimberley ROM Underground 10% 4% Unit FY 2015 FY 2014 Variance Sales Revenue US$M 425.0 471.8 -10% Diamonds sold Ca
Slide 8: Operating Costs
Operating Costs Petra’s focus on cost control and the weaker ZAR helped to mitigate inflationary pressures FY2015 Group On-mine Cash Cost Breakdown Group On-mine Cash Cost: FY 2014 vs FY 2015 -150 -170 7% -190 13% -210 36% -230 -249 -11 +18 -1 -253 -250 -3 -2 -6 -270 44% -290 CPI Labour Fx Electrici
Slide 9: FY 2015 – Summary of Results
FY 2015 – Summary of Results FY 2015 FY 2014 (US$m) (US$m) Revenue¹ 425.0 471.8 Adjusted mining and processing costs¹ (272.7) (277.4) Other direct income 2.2 6.7 Profit from mining activities1 154.5 201.1 Exploration expense (5.6) (2.8) Corporate overhead (9.6) (10.6) Adjusted EBITDA1 139.3 187.7 De
Slide 10: HSSE Highlights
HSSE Highlights Health & Safety • Continued improvement in LTIFR • Mines recorded 3 months LTI free – 1st time in Petra history • Fatality post Year end at Tailings Treatment Plant at Cullinan – investigation and findings have been shared with Group; Petra will continue to strive daily for zero harm
Slide 11: Diamond Market – Overview
Diamond Market – Overview Supply Demand • Supply constraints: Global rough diamond production • US recovery: economy continues to improve; very strong decreased 4% to 125 Mcts worth $14.5bn in 2014 diamond buying culture (ca. 40% of world demand); retail (average $116/ct) demand currently performing
Slide 12: Rough Diamond Pricing
Rough Diamond Pricing FY 2015 Market: Petra Sales – Pricing and Timing • Market experienced challenging conditions in FY 2015, • Petra sells via method of competitive tender – pricing due to liquidity / profitability issues in the midstream of subject to pure market movements; experienced the pipeli
Slide 13: Impact Of Strong US Dollar
Impact Of Strong US Dollar • Strong USD puts pressure on pricing of USD denominated commodities • Substantial weakness in ZAR significantly increases ZAR cashflows in South Africa • Major portion of Petra operating costs incurred in South Africa • Chart below shows rough diamond prices (PLPHROAI Ind
Slide 14: Moving into Undiluted Ore
Moving into Undiluted Ore • Caving is a safe and proven mechanised mining method; provides access to higher volumes of ore than other methods • Current underground mining taking place in diluted, mature caves nearing end of lives • Expansion programmes to take next ‘cut’ by deepening and establishin
Slide 15: Growth & Margin Expansion
Growth & Margin Expansion Operating margins expected to rise from ca. 36% to +50% by FY 2019 • Group tonnage throughput to remain flat, but increase in ROM grades to lead to ca. 60% growth in production • Lower value tailings to reduce from 29% in FY 2015 to 4% of carat production by FY 2019 Split o
Slide 16: Finsch – Development Programme
Finsch – Development Programme Expansion Plan FY 2015 Development : 4,217 metres; Raiseboring: 376 metres; Kimberlite: 1,038 metres • Expansion plan to take production to c. 2.0 Mctpa (ROM) by FY 2018 • Sub level cave – development of 3 out of 4 levels complete • New Block 5 Block Cave to be install
Slide 17: Finsch Development Snapshot
Finsch Development Snapshot SLC ore handling installation infrastructure in progress Simba M4C in operation Installation of the Apron Feeder Bulkhead The new bulk sample plant 17
Slide 18: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan FY 2015: Development: 4,282 metres; Raiseboring: 614 metres; Kimberlite: 2,285 metres • Expansion plan to take production to c. 2.4 Mcts by FY 2019 (2.2 ROM & 0.2 tailings) • C-Cut Phase 1: new block cave being established on the western side of the or
Slide 19: Cullinan Development Snapshot
Cullinan Development Snapshot Drilling Undercut holing – Tunnel 21 Undercut secondary support ‘Blue’ development – rock sealing ‘Blue’ development – secondary support Conveyor Level South 19
Slide 20: Cullinan Development Snapshot
Cullinan Development Snapshot Crusher South 1 – chamber Crusher South 1 – pre-assembly Crusher South 1 - construction Production Tip South 1 Shaft 3 raisebore Shaft 3 lining 20
Slide 21: New Cullinan Plant
New Cullinan Plant Expected benefits of the CDM Plant Existing Cullinan Plant • Footprint decreases from ca. 26 to ca. 5 hectares • Expected reduction in number of conveyor belts from 151 (ca. 15km) to 22 (ca. 3km) • Increase of ca. 6 – 8% in revenue per tonne • Ca. 10% increase in grade due to incr
Slide 22: Optimising Recoveries at Cullinan – The Prize
Optimising Recoveries at Cullinan – The Prize • Cullinan is a world-class orebody, renowned for the regular production of large, top quality diamonds • Source of the 3,106ct Cullinan diamond (cut to form the centrepiece stones of the British Crown Jewels) and many of the world’s most famous and spec
Slide 23: Growth and Margin Expansion
Growth and Margin Expansion FY 2019 • Petra to maintain a flat tonnage profile from FY 2016 onwards, but the replacement of production target of poor quality tonnes with better quality tonnes will grow production and increase the ca. 5.0 Mcts; revenue of ca. average value per carat US$1.0bn 6 30 100
Slide 24: Integrated Approach to Sustainability
Integrated Approach to Sustainability Safety Performance 1.2 Safety of 1 employees is top priority 0.8 Petra strives for 0.6 continuous improvement 0.4 0.2 LTIFR compares favourably with 0 international FY FY FY FY FY FY underground mines 2010 2011 2012 2013 2014 2015 Petra’s LTIFR Rate Heath and Sa
Slide 25: Appendix
The Koffiefontein mine, South Africa Appendix
Slide 26: Capital Structure
Capital Structure Share Price (1 year to 15 Sep 15) High Quality Share Register % ISC (as at 15 September 2015) vs FTSE 250 & FTSE 350 Mining T. Rowe Price¹ 14.3% BlackRock Investment (UK) Limited 10.0% Al Rajhi Holdings W.W.L. 5.1% ² Kames Capital 3.1% Directors 2.7% 1. T. Rowe Price holds 72,900,3
Slide 27: FY 2015 – Operations Results
FY 2015 – Operations Results Operation Finsch Cullinan Koffiefontein Kimberley UG Williamson (74%¹ Petra; 26% BEE) (74%¹ Petra; 26% BEE) (70%¹ & 2 Petra; 30% BEE) (74%¹ Petra; 26% BEE) (75% Petra; 25% Government of Tanzania) ROM Production Tonnes treated (t) 3,016,385 2,910,195 2,513,004 2,546,383 3
Slide 28: Production and Revenue – FY 2015 vs FY 2019
Production and Revenue – FY 2015 vs FY 2019 Gross Production Gross Revenue FY 2015 actual: 3.2 million carats FY 2015 actual: US$425.0 million 23% 28% Finsch 43% 6% Cullinan 65% 2% Williamson 4% 15% Koffiefontein Kimberley 10% Underground 4% FY 2019: c.5 million carats1 FY 2019: c.US$1.0 billion1 30
Slide 29: Focus on Africa
Focus on Africa • Five producing mines (four in South Africa and one in Tanzania), plus exploration in Botswana • Diversified portfolio is key to managing production risk across the Group Africa is source of ca. 60% of world’s diamonds by value 29
Slide 30: An Exceptional Growth Path
An Exceptional Growth Path • Petra acquired five diamond mines from De Beers (four in South Africa, one in Tanzania) July 2007 July 2008 February 2009 May 2010 September 2011 Koffiefontein Cullinan Williamson Kimberley UG Finsch 70% Petra¹; 30% BEE 74%¹ Petra; 26% BEE 75% Petra¹; 25% 74% Petra¹; 26%
Slide 31: 2015 Resource Statement (30 June 2015)
2015 Resource Statement (30 June 2015) • World-class Resource base of 308.7 million carats¹ worth ca. US$54.3 billion² Gross Resources (Mcts) 100 49.1 50 195.4 38.1 6.7 6.4 - Cullinan Finsch Williamson Koffiefontein Kimberley Underground Gross In Situ Value (US$bn)² 11.4 4.4 2.6 1.9 34.0 - Cullinan
Slide 32: Iconic Diamonds From Iconic Mines
Iconic Diamonds From Iconic Mines The Greater Star of The Williamson Pink Africa 55ct rough; 24ct polished; Largest polished yield gifted to Princess Elizabeth from the Cullinan at on her engagement 530ct; sits in the Royal Williamson, 1947 Sceptre Cullinan, 1905 The Cullinan Heritage 507.5 carats r
Slide 33: Petra Production Profile
Petra Production Profile • The production profile of a kimberlite is highly consistent when the mine is in steady state production; Petra experienced volatility in product mix in FY 2015 due to the reliance on the heavily diluted old mining areas at its underground operations • Ever growing volumes
Slide 34: Exceptional Diamonds
Exceptional Diamonds • Petra classifies ‘exceptional diamonds’ as stones that sell for +$5 million each • Exceptional diamonds contributed on average $21 million pa from FY 2009 to FY 2015 • Average increased to ca. $36 million pa in FY 2014 and FY 2015 • Company business model is not reliant on exc
Slide 35: Finsch – Production Plan
Finsch – Production Plan • ROM tonnages to rise ca. 16%, but ROM carat production to rise ca. 56% due to higher grade • Positive impact on average value per carat as tailings production winds down Tonnes treated and grades Carat production and average diamond values¹ 3.0 140 6.0 70 Million carats $/
Slide 36: Cullinan – Production Plan
Cullinan – Production Plan • ROM tonnages to rise 48%, but ROM carat production expected to rise 180% • Steady state grade projection increased from ca. 50 cpht to ca. 55 cpht due to new Cullinan plant Tonnes treated and grades Carat production and average diamond values 3.0 200 60 Million carats 7.
Slide 37: Koffiefontein – Development Programme
Koffiefontein – Development Programme Expansion Plan – to take Koffiefontein Kimberlite Pipe Schematic production to c. 100,000 ctpa by FY 2017 • SLC to be mined over 3 levels from 560 mL to 600 mL • Production commenced from first tunnels of SLC on 560 mL – end FY 2015 • ROM production supplemented
Slide 38: Kimberley Underground – Development Programme
Kimberley Underground – Development Programme Expansion Plan – planned Kimberley Underground Kimberlite Pipes Schematic production of ca. 170,000 ctpa by FY 2016 • Planned ROM tonnes treated of ca. 1.2 Mtpa – from FY 2015 • Planned grade of 13 – 15 cpht from FY 2016 • Scope refinement of underground
Slide 39: Williamson – Development Programme
Williamson – Development Programme Expansion Plan – to take Williamson Kimberlite Pipe Schematic production to c. 350,000 ctpa by FY 2018 1km • Plant modifications N (additional crusher circuit, 2 autogenous mills) to commence – FY 2016 LOM Pit Shell • Commissioning of crusher – FY 2016 205m • Commi
Slide 40: Loans and Borrowings Movement
Loans and Borrowings Movement (US$ million) 200 100 - -100 -200 -300 -400 -159 +141 -9 +98 -267 -300 +142 +26 -327 -500 -600 30-Jun-14 Operating WC changes BEE re-fi Capex Bond notes Repayment of Other1 30-Jun-15 profit bank debt 1. ‘Other’ includes effect of exchange rate fluctuations on loans and
Slide 41: Debt Facilities
Debt Facilities Bank loans and borrowing (excl FX lines) Lender Type Size Interest Rate Repayment US$M1 Absa & RMB Amortising term facility 66 3M JIBAR + 3.5% 3 semi-annual payments from Mar 2018 (FNB) IFC Amortising term facility 35 3M LIBOR + 4.0% 3 semi-annual payments from Mar 2018 Absa & RMB Re
Slide 42: Leverage Ratios
Leverage Ratios 2015 2014 Net debt1 US$m 171.7 124.9 Gearing2 (%) 28 20 Adjusted EBITDA3 US$m 139.3 187.7 EBITDA margin4 (%) 33 40 Net debt: EBITDA5 x 1.2 0.7 EBITDA net interest cover6 x 6.6 15.9 Operating cashflow7 US$m 141.3 181.2 1. Net debt is the US$ loan notes and bank loans and borrowings ne
Slide 43: Capex Profile
Capex Profile 1. All Capex numbers are stated in FY 2016 money terms (except for FY 2015 actuals). 2. Depreciation on mining assets for FY 2016 guided at c. $52 million. 3. As in prior guidance, capital estimates above do not include any capitalised borrowing costs. Guidance is to assume majority of
Slide 44: Further enquiries
The Koffiefontein mine, South Africa Further enquiries: Petra Diamonds Cathy Malins cathy.malins@petradiamonds.com +44 20 7494 8203 www.petradiamonds.com