Petra Diamonds Limited · LSE:PDL
Petra Diamonds — H1 FY2013 Earnings Presentation
35 slides from Petra Diamonds's earnings presentation, Feb 25, 2013
Slide 1: Interim Results (for the six months ended 31 December 2012)
LISTED PREMIUM Interim Results (for the six months ended 31 December 2012) 25 February 2013 The Finsch mine in South Africa
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: Petra Diamonds
Petra Diamonds • Exceptional growth profile to 5 million carats pa • Diversified portfolio of producing mines & exploration • Major, long life resource base of +300 million carats • High quality assets & management team • Sustainability at heart of Petra • Pure play exposure to diamond market (LSE:P
Slide 4: Proven Track Record – Continuous Growth
Proven Track Record – Continuous Growth - CAGR of 82%¹ - CAGR of 41%¹ US$ Mcts Finsch million contribution 2.65 Mcts² boosts EST ca. US$380m² revenue EST US$316.9m 2.2 Mcts +98% +44% Recovery in diamond prices & Major increase sale of 507 due to higher Decreased ct Cullinan volume Cullinan revenue H
Slide 5: H1 Highlights
H1 Highlights Unit H1 FY 2013 H1 FY 2012 Variance FY 2012 Sales Revenue (incl. Fissures) US$M 156.3 101.4 +54% 316.9 Diamonds sold Carats 1,066,662 678,772 +57% 2,084,429 Production Total tonnes treated Tonnes 7,253,437 4,226,848 +72% 10,367,722 Total diamonds Carats 1,247,522 953,553 +31% 2,208,862
Slide 6: Overview
Overview Main Factors Affecting H1 Outlook for H2 • Labour unrest and ROM grade volatility at Cullinan • Production expected to be substantially higher in impacted production H2 further to: • Ramp up of Cullinan tailings programme • Lower sales due to seasonal timing of Petra • Increased production
Slide 7: Summary Results
Summary Results H1 FY 2013 H1 FY 2012 FY 2012 Revenue* 151.7 93.0 299.2 Mining and processing costs (112.0) (61.5) (198.3) Other direct income 1.5 1.3 9.5 Profit from mining activity* 41.2 32.8 110.4 Exploration expense (2.8) (0.8) (3.0) Corporate overhead (5.8) (4.9) (10.0) Adjusted EBITDA* 32.6 27
Slide 8: Balance Sheet Snapshot
Balance Sheet Snapshot 31 Dec 31 Dec 30 Jun 2012 2011 2012 (US$m) (US$m) (US$m) Cash and cash equivalents: Bank 38.2 45.1 47.3 Diamond debtors 1.6 Nil 22.1 Diamond inventories 45.4 38.1 24.5 Total 85.2 83.2 93.9 Loans and borrowings: Loans and borrowings (127.2)¹ (67.9) (69.2) BEE loans due to Petra
Slide 9: Operating Cashflow
Operating Cashflow H1 H1 FY 2013 FY 2012 FY 2012 (US$m) (US$m) (US$m) (Loss) / profit before tax (14.9) (31.8) 8.4 Adjusted for non cashflow items 39.1 53.5 76.3 Cash generated before working capital changes 24.2 21.7 84.7 Decrease / (increase) in net working capital 2.4 (23.0) (2.8) Cash generated
Slide 10: Diamond Market – Supply / Demand Fundamentals
Diamond Market – Supply / Demand Fundamentals • Only ~30 significant kimberlite mines in production; no major discoveries since 1990’s • Many major mines moving underground – lower tonnages + higher operating costs • Demand driven by urbanisation trend and growing middle classes • Consumption per ca
Slide 11: Rough Diamond Prices
Rough Diamond Prices • Rough market stabilised in July 2012; flat since then before prices firmed towards year end • Petra expects market to maintain firmer trend for H2 • Petra H1 prices mostly in line with guidance for FY 2013 • First tender of H2 achieved US$62.1 million on sale of 401,159 carats
Slide 12: Petra Production Profile
Petra Production Profile Profile runs the full spectrum, from high to low value, across all fancy colours 12
Slide 13: Objective – Accessing Undiluted Ore
Objective – Accessing Undiluted Ore • Current underground mining taking place in diluted, mature caves nearing end of lives Still need to amend word ‘depleted’ to • Expansion programmes to take next ‘cut’ by ‘mature’ below deepening and establishing new block caves in undiluted kimberlite • Grades t
Slide 14: Underground Development – A Snapshot
Underground Development – A Snapshot Installing steel brows in the new production tunnels Preparing a long hole drill rig Optimising orehandling 14
Slide 15: Finsch – Update
Finsch – Update H1 FY H1 FY Finsch Mining Schematic 2013 2012 Tonnes treated (Mt) 2.6 1.4 Current Mining Area Diamonds Block 4 Pillars recovered 670m (carats) 642,654 414,563 Block 5 710m Sub-Level Cave Rail-Veyor® Revenue (US$M) 65.9 28.3 780m South west Precursor Diamonds Block 5 825m sold (carats
Slide 16: Cullinan – Update
Cullinan – Update H1 FY H1 FY Cullinan Mining Schematic 2013 2012 Tonnes treated (Mt) 1.9 1.6 Current Infrastructure Men & Material Diamonds Shaft Planned Infrastructure Rock Shaft North Decline recovered (carats) 408,764 444,040 Loading Level AUC South and Current Shaft Bottom BAW Phase 1 BA5 Reven
Slide 17: Production & Revenue – FY 2012 vs FY 2019
Production & Revenue – FY 2012 vs FY 2019 Gross Production Gross Revenue FY 2012: 2.2 million carats FY 2012: US$316.9 million 39% 35% 43% 50% Cullinan Williamson 4% 2%3% 3% 3% Koffiefontein 6% 6% 6% Kimberley Underground FY 2019: c.5 million carats(1) FY 2019: c.US$1 billion(1) Fissure Mines Finsch
Slide 18: Conclusion
Conclusion Rising Production Rising Margins Rising Prices? • Organic growth to ca. 5 million • Grades to rise ca. 50% once • Supply/demand deficit forecast due carats based on existing portfolio expansion plans access undiluted to continued strong emerging ore markets growth • Brownfield expansions
Slide 19: Sustainability Highlights
Sustainability Highlights Safety Community health The Mwadui clinic at Williamson services 400-600 people per month 1.2 1 Safety of employees is top priority for management 0.8 Formation of Board level 0.6 HSSE Committee in FY 2012 0.4 0.2 Petra striving for zero harm across its operations 0 FY FY F
Slide 20: Appendix
Employees at the Williamson mine Appendix
Slide 21: Capital Structure
Capital Structure High Quality Shareholder Base 22 Feb 2013 Share Price & Volume (1 year) Al Rajhi Holdings W.W.L. 13.1% Saad Investments Company Ltd/AWAL Bank 12.0% JP Morgan Asset Management Holdings Inc. 7.8% The Capital Group Companies, Inc. 5.8% Prudential plc group of companies* 5.1% Listing L
Slide 22: The Petra Board
The Petra Board Adonis Pouroulis (42) Johan Dippenaar (55) David Abery (50) Jim Davidson (67) Non-Executive Chairman CEO Finance Director Technical Director Successful mining entrepreneur One of South Africa’s most successful Extensive experience as Chief Financial Acknowledged world authority on Fo
Slide 23: Focus on Africa – source of ~60% of world’s diamonds by value
Focus on Africa – source of ~60% of world’s diamonds by value • Multi-mine portfolio provides flexibility in terms of operational performance • Disposal process underway for non-core Fissure Mines (Helam, Sedibeng, Star) Focus on kimberlite KX36 discovery & surrounding area 23
Slide 24: An Exceptional Growth Path
An Exceptional Growth Path Petra has acquired five non-core diamond mines from De Beers: July 2007 July 2008 February 2009 May 2010 September 2011 Koffiefontein Cullinan Williamson Kimberley UG Finsch 74% Petra; 26% BEE 74% Petra; 26% BEE 75% Petra; 25% 76% Petra; 24% BEE 76% Petra; 24% BEE Governme
Slide 25: H1 FY 2012 – Operations
H1 FY 2012 – Operations Operation Finsch Cullinan Koffiefontein Kimberley Williamson Underground H1 FY 2013 H1 FY 2012 H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY 2013 H1 FY 2013 2012 2013 2012 2013 2012 2012 Tonnes treated (Mt) 2,6 1.4 1.9 1.6 0.8 0.8 0.4 0.3 1.5 0.06 Diamonds recovered (carats) 642,
Slide 26: Petra Rough Diamond Prices
Petra Rough Diamond Prices H1 FY 2013 FY 2013 FY 2012 FY 2011 Actual Guidance Actual Actual Mine Average Average Average Average (US$/ct) (US$/ct) (US$/ct) (US$/ct) Finsch 122 129 138 n/a Cullinan 134 129 128 148 Koffiefontein 435 475 487 564 Kimberley Underground 260 300 320 333 Williamson 248 220
Slide 27: Cullinan – Large Stones
Cullinan – Large Stones Petra takeover History of +100 & +200 carat stone recoveries in July 2008 27
Slide 28: Expansion Plan – Key Deliverables
Expansion Plan – Key Deliverables Expansion Plan – to take production to 1.9 Mcta (1.6 Finsch Mining Schematic Mctpa ROM & 1.3 Mcta tailings) • Mining currently taking place in Block 4 at 630m – FY 2013 Current Mining Area Change in scope for FY 2013 to Block 4 Pillars FY 2016: 670m • SW Precursor r
Slide 29: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan – to take production to ca. 2.4 Mctpa by Cullinan Mining Schematic FY 2019 (2.0 Mctpa ROM & 0.4 Mctpa tailings) • Shaft deepening contractor commenced work on site – FY Current Infrastructure 2012 Men & Material Shaft Planned Infrastructure Rock Shaft
Slide 30: Williamson – Overview
Williamson – Overview Expansion Plan – Key Components Williamson Kimberlite Pipe Schematic • Company successfully recommenced production at 1km Williamson further to the N enhanced rebuild of plant – Q4 FY 2012 • Re-crush circuit in plant, which will lead to an improved LOM Pit Shell grade, will com
Slide 31: Koffiefontein – Overview
Koffiefontein – Overview Expansion Plan – to take Koffiefontein Kimberlite Pipe Schematic production to ca. 100,000 ctpa by FY 2016 (90,000 ctpa ROM & 10,000 ctpa tailings) • Planned reduction in ROM tonnes supplemented by ore from Ebenhaezer open pit (~5ha) • Installing new sub-level cave between 5
Slide 32: Kimberley Underground – Overview
Kimberley Underground – Overview Expansion Plan – to maintain annual production Kimberley Underground Kimberlite Pipes Schematic of ca. 135,000 ctpa • Construction and commissioning of main plant (40,000 tpm) at BULTFONTEIN Wesselton – complete • Substantial stockpile of ore at each plant built up (
Slide 33: Fully Financed Capex Profile
Fully Financed Capex Profile • Nov 2012: new debt facilities completed of ca. US$249.5m with Absa, RMB (FNB) and IFC • An increase by ca. US$111m from ca. US$138m and optimisation of Petra’s prior debt structures Lender Type Size Interest Rate Repayment Absa & Amortising term facility US$94.8 JIBAR
Slide 34: Capex Profile (as per August 2012 guidance)
Capex Profile (as per August 2012 guidance) Financial Year 2013 2014 2015 2016 2017 2018 2019 Operation Finsch ROM tonnes treated 2.8 2.8 3.2 3.5 3.5 3.5 3.5 Tailings tonnes treated 2.8 3.5 3.5 3.5 3.0 3.0 3.0 Expansion Capex (ZARm) 449.8 665.7 377.8 221.9 321.1 168.2 93.0 Sustaining Capex (ZARm) 93
Slide 35: Further enquiries: Petra Diamonds
Employees at the Williamson mine Further enquiries: Petra Diamonds Cathy Malins cathym@petradiamonds.com +44 20 7494 8203 www.petradiamonds.com