Gem Diamonds Limited · LSE:GEMD
Gem Diamonds — FY2019 Earnings Presentation
27 slides from Gem Diamonds's earnings presentation, Mar 11, 2020
Slide 1: Delivering our strategy
GEM paMONDSI 2 Pee c i a B, at, ae : er Spey 3 % <2 y ae ptt to lige eS "sk dS Delivering our strategy FULL YEAR RESULTS 2019 11 MARCH 2020
Slide 2: Disclaimer
DISCLAIMER This presentation is confidential and is being made only to, and is only directed at, persons to whom this presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Informatio
Slide 3: 2019 Delivery
2019 DELIVERY Revenue EBITDA US$182 million US$41 million All Injury Frequency Rate Basic EPS (pre-exceptional items) Historical low 5.10 US cents 0.93 Business Transformation Cumulative to date Carats recovered US$55 million 113 974 US$ per carat achieved Cash flow per share US$1 637 US$0.40
Slide 4: Key Strategic Priorities
KEY STRATEGIC PRIORITIES UNEARTHING UNIQUE POSSIBILITIES EXTRACTING WORKING RESPONSIBLY PREPARING FOR MAXIMUM VALUE AND MAINTAINING OUR FUTURE FROM OPERATIONS SOCIAL LICENCE Driving business optimisation Promoting a culture of zero Advancing innovative by enhancing the efficiency of harm and respons
Slide 5: 2019 Diamond Market
2019 DIAMOND MARKET GLOBAL ECONOMIC DIAMOND MARKET GEM DIAMONDS’ BACKDROP MARKET POSITION Global economic growth Growth in diamond demand Impact on pricing of Letšeng's remains subdued in real terms from the US, large high-value diamonds China and India seen since mid-2019 Rising geopolitical tensio
Slide 6: Global Supply and Demand Forecast
GLOBAL SUPPLY AND DEMAND FORECAST Natural rough diamond supply and demand values, US$ billion (in real terms), 2000 – 30F, 2019 prices, constant exchange rates, optimistic and conservative scenarios Note: Natural rough diamond supply value corresponds to the value of natural rough diamond production
Slide 7: Letšeng Mining Lease
LETŠENG MINING LEASE • Mining Lease renewed in October 2019 - 10-year term up to 2029 - Exclusive option to renew for further 10 years up to 2039 • Work permits – increased from five to 60 • Royalty rate increased from 8% to 10% in line with the 2005 Mining and Minerals Act • Royalties may be remitt
Slide 8: Corporate Social Investment
CORPORATE SOCIAL INVESTMENT • Dedicated minimum M5 million per annum allocated to community projects • Ongoing CSI investments made over time, including: - Small and medium enterprise development o Wool and Mohair Project o Butha Buthe Vegetable Project o Dairy Project - Education o Tertiary educati
Slide 9: Zero Harm Remains a Priority
ZERO HARM REMAINS A PRIORITY • AIFR at historical low • Implemented a 10-point safety improvement plan at operations, including: - revamped behaviour based care campaign; - bowtie risk management training; and - improved vehicle safety management programme. • Focused safety leadership development th
Slide 10: Dam Safety Management
DAM SAFETY MANAGEMENT • Management systems comply with internationally accepted practices • Downstream construction method utilised • Rigorous monitoring and reporting programme in place • Downstream emergency warning system and evacuation procedures regularly tested • Disclosed details of facilitie
Slide 11: Letšeng Mine
LETŠENG MINE 2006 2019 Waste tonnes mined: nil Waste tonnes mined: 24.0mtpa Ore tonnes treated: 3.1mtpa Ore tonnes treated: 6.7mtpa Carats recovered: 54 677 Carats recovered: 113 974 Aerial view of Letšeng mine – 2004 Aerial view of Letšeng mine – 2018
Slide 12: Letšeng Operational Overview
LETŠENG OPERATIONAL OVERVIEW • Successful implementation of inter-ramp pit slope Ore tonnes treated (millions) steepening • Improved drill and blasting practices 2019 6.7 - Improved berm retention 2018 6.5 - Targeting diamond breakage reduction 2017 6.4 2016 6.6 • Enhancement of fleet management sys
Slide 13: Letšeng Mine Plan – Steeper Slopes
LETŠENG MINE PLAN – STEEPER SLOPES Profile 2017 MP 2019 MP Change Total waste 344m 249m (95m) Total carats 1.93m 1.95m 0.02m Total ore 108m 107m (1m) Main pipe 85m 80m (5m) Satellite pipe 23m 27m 4m • 5.8 million waste tonnes saved in 2019 due to inter-ramp pit slope steepening compared to the 2017
Slide 14: Sales and Marketing
SALES AND MARKETING • 2019 sales highlights: Average US$ per carat - 13.32ct pink diamond sold for a record 2019 1 637 US$656 934 per carat 2018 2 131 - 27 diamonds sold for >US$1 million each, 2017 1 930 generating revenue of US$68 million 2016 1 695 - 67 diamonds sold for >US$20 000 per carat 2015
Slide 15: Significant Diamond Recoveries in 2019
SIGNIFICANT DIAMOND RECOVERIES IN 2019 13.32ct pink (US$656 934/ct) 161.03ct (US$41 919/ct) 140.28ct (US$21 392/ct) 6.99ct pink (US$171 245/ct) 6.91ct pink (US$55 010/ct) 70.69ct (US$48 255/ct) 125.09ct (US$36 114/ct) 125.21ct (US$35 948/ct) 123.28ct (US$28 850/ct)
Slide 16: Greater Than 100 Carat Letšeng Recoveries
100 GREATER THAN 100 CARAT LETŠENG RECOVERIES 100 16 851 +100 CARAT DIAMONDS US$436 CARATS IN TOTAL RECOVERED SINCE MID- MILLION SOLD FOR AN AVERAGE OF 2006 IN SALES US$25 890 PER CARAT Lesotho Legend Lesotho Promise Letšeng Star Letšeng Legacy Leseli La Letšeng 910ct 603ct 550ct 493ct 478ct
Slide 17: Technology and Innovation
TECHNOLOGY AND INNOVATION Highlights • Completion and commissioning of the “diamonds within kimberlite” pilot plant at Letšeng • Enhanced electronic rough diamond tender platform operational Future focus areas • Continue the ramp-up and testing of the pilot plant to validate the early detection of d
Slide 18: Business Transformation
BUSINESS TRANSFORMATION • Implemented initiatives on track to deliver US$100 million by 2021 • US$55 million benefit achieved to date • Implementation of continuous improvement strategy commenced US$100 million implemented $34m $30m 13% 6% $22m $23m $20m 46% 35% $1m 2017A 2018A 2019A 2020E 2021E 202
Slide 19: Income Statement
INCOME STATEMENT % 1 US$ million 2019 2018 Variance Revenue 182.0 267.3 Royalty and selling costs (16.9) (22.9) Cost of sales (114.7) (146.7) Corporate expenses (9.4) (10.0) Underlying EBITDA from continuing operations 41.0 87.7 (53) Depreciation and mining asset amortisation (14.7) (8.5) Other inco
Slide 20: Letšeng Cost Analysis
LETŠENG COST ANALYSIS % 2019 2018 Variance Ore tonnes treated (millions) 6.7 6.5 Direct cash costs¹ 150.61 141.54 6 Plant 3 operator costs 20.40 24.18 (16) Operating Costs Pilot plant costs 0.45 - - Once-off maintenance costs - 2.82 - Sub-total 171.01 168.54 1 Business Transformation costs Mobile pl
Slide 21: Cost Discipline
COST DISCIPLINE Letšeng direct cash costs * Letšeng operating costs * Corporate costs 170 173 295 157 1.0 150 266 146 246 0.7 138 2.7 Maloti per tonne Maloti per tonne 213 211 215 2.2 1.0 US$ million 3.2 11.4 10.3 9.0 8.3 7.8 6.2 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015
Slide 22: Financial Position
FINANCIAL POSITION % US$ million 2019 2018 Variance Non-current assets 337.5 303.3 IFRS 16 Right of use assets 8.5 - Current assets 38.8 38.5 Income tax receivable 8.2 - Cash 11.3 50.8 Total assets 404.3 392.6 3 Equity attributable to the parent company 158.7 156.2 Non-controlling interest 85.4 72.1
Slide 23: Cash
CASH • Group cash of US$11 million • Net debt of US$10 million • Capital debt repayments of US$14 million during 2019 • US$19 million in tax payments • Three available facilities totalling US$70 million 94 2 73 58 19 14 8 70 10 51 5 4 3 11 Cash and Letšeng - Proceeds on Letšeng - Tax paid Net Financ
Slide 24: Letšeng 2020 Guidance
LETŠENG 2020 GUIDANCE 2020 Guidance Waste stripped (Mt) 23 - 25 Ore treated (Mt) 6.7 - 6.9 Satellite pipe ore contribution (Mt)¹ 2.5 - 2.6 Carats recovered (Kct) 118 - 122 Carats sold (Kct) 115 - 119 Direct cash costs (before waste) per tonne treated² (Maloti) 185 - 195 Operating costs per tonne tre
Slide 25: Contact Us
CONTACT US Gem Diamonds Limited Susan Wallace T: +44 (0) 203 043 0280 IR@gemdiamonds.com Celicourt Communications Joanna Parker/Mark Antelme T: +44 (0) 207 520 9565
Slide 26: Appendix A: Market Information
APPENDIX A: MARKET INFORMATION Share price performance peer comparison Gem Diamonds Limited is listed on the Main Board of the London (rebased to 100) Stock Exchange LSE: GEMD 200 Daily average trading volume across all platforms ▪ Gem Diamonds 163k (last six months) 150 Shares in issue 138 983 824
Slide 27: Gem Diamonds
GEM BAVONDS! | Gem Diamonds Limited 2nd Floor, Coastal Building, Wickham’s Cay II, PO Box 2221, Road Town, Tortola, British Virgin Islands, Registration number: 669758 www.gemdiamonds.com