Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (February 2019)
42 slides from Petra Diamonds's investor presentation, February 2019
Slide 1: Investor Presentation: Introduction & H1 FY 2019 Update
Investor Presentation Introduction & H1 FY 2019 Update February 2019
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: Entering a New Phase
Entering a New Phase Putting capital programmes to work Future focus on maximising free cashflow • Ever increasing footprint across orebody • Apply learnings from past challenges • Multiple levels at SLCs • Ensure consistent production output • Ratio of blasted tonnes to column tonnes • Efficient op
Slide 4: Nearing End of +10 Year Heavy Capital Investment Phase
Nearing End of +10 Year Heavy Capital Investment Phase 1 1 Disposal of KEM JV completed in December 2018 FY 2006 to FY 2018 FY 2006 FY 20181 • Acquisition costs: $330 million Delivering growth in • Total production: 27.4 Mcts 0.175 Mcts Production 4.6 Mcts • Total revenue: $3.6 billion $21 million R
Slide 5: Focus on Africa
Focus on Africa • Four producing mines (three in South Africa and one in Tanzania) • Diversified portfolio key to managing production risk across the Group Petra Diamonds Limited: Investor Presentation 5
Slide 6: Safety is Our Number One Priority
Safety is Our Number One Priority Zero harm remains our goal • The health and safety of our workforce is our top priority • Our mines are certified OHSAS 18001:2007, the international safety management framework • Continuous risk assessment and management; all staff are trained in safety and undergo
Slide 7: Strategic Priorities
Strategic Priorities Health and Safety 1 • Targeting zero harm Driving operational efficiency with emphasis on value-over-volume 2 • Close focus on operational costs, productivity and ongoing plant optimisation (particularly at Cullinan) • Beneficial impact on production as new caves ramp up to full
Slide 8: Current Trading in H1 FY 2019
Current Trading in H1 FY 2019 On track to meet guidance of 3.8 – 4.0 Mcts for FY 2019 • 2,019,147 carats produced in H1 FY 2019 (up 10% vs. H1 FY 2018) • H1 revenue up 8% to US$207.1 million • Diamonds sold increased 15% to 1,736,357 carats • Capex of US$40.6 million in line with Petra’s declining c
Slide 9: H1 FY 2019 (six months to December 2018)
H1 FY 2019 (six months to 31 December 2018) H1 FY 2019 H1 FY 2018 Variance FY 2018¹ Sales Diamonds sold Carats 1,736,357 1,510,361 +8% 3,793,799 Revenue US$m 207.1 191.7 +15% 495.3 Production ROM tonnes Mt 6.4 6.0 +7% 12.1 Tailings & other2 tonnes Mt 1.0 0.7 +43% 1.6 Total tonnes treated Mt 7.4 6.8
Slide 10: Financial Position
Financial Position • SA bank debt settled after Year end as per one of the core objectives of the Rights Issue and remains available as at 31 Dec 2018 Unit 31 December 2018 30 September 2018 Closing exchange rate used for conversion R14.35:US$1 R14.14:US$1 Cash at bank US$m 92.8 111.1 Diamond debtor
Slide 11: Consolidated Net Debt (US$m)
….Targeting Leverage Reduction of ≤ 2x ND:EBITDA1 by FY 2020 2 Leverage ratio1 BEE debt Petra Net Debt 1000.0 Consolidated Net Debt (US$m) 2.8 3.9 5.0 3.6 2.7 500.0 633.7 615.7 510.5 445.7 375.8 88.8 104.9 109.3 85.9 85.9 0.0 FY 2016 FY 2017 H1 FY 2018 FY 2018 FY 2018 Pre-Rights Issue Post-Rights Is
Slide 12: Operations Overview
Operations Overview February 2019
Slide 13: Finsch – Development Programme
Finsch – Development Programme Highlights • SLC ramp up: • FY 2017 – 0.75 Mt • FY 2018 – 1.65 Mt • FY 2019 – 2.7 Mt • Total ROM throughput (from SLC and overburden) of 3.2 Mt – FY 2019 • Pre 79 Tailings treated – end FY 2019 Petra Diamonds Limited: Investor Presentation 13
Slide 14: Finsch SLC Schematic and Plan View
Finsch SLC Schematic and Plan View Block 4 63 Level CAVED ORE SLC 70 Level SLC 73 Level SLC 75 Level SLC 78 Level Petra Diamonds Limited: Investor Presentation 14
Slide 15: Cullinan – Development Programme
Cullinan – Development Programme Key Milestones • First blue development commenced – April 2014 • First rings in the undercut blasted – June 2015 • New production levels established at 839m and shaft to 934m commissioned – FY 2016 • Production from C-Cut Phase 1 Block Cave supplemented by CC1 East S
Slide 16: C-Cut Progression Over the Footprint
C-Cut Progression Over the Footprint • Historical records and focused sampling compiled over the mine’s +100 year history indicate that high-value Type II 16ha at 830mL white & blue stones occur in the western part of the orebody (C-Cut phase1) • Draw-bell installations are planned to be completed b
Slide 17: Cullinan Pricing and Cost Per Carat
Cullinan Pricing and Cost Per Carat Actual Sales Results: • Price variability similar to other mines producing high value single US$ per Half-Yearly Full Year stones Carat averages Averages H1 H2 FY • Frequency of high value stones FY 2010 87 193 139 can not be predicted FY 2011 120 177 148 • Only 2
Slide 18: Koffiefontein – Development Programme
Koffiefontein – Development Programme Key Milestones • Production commenced from first tunnels of SLC on 560 mL – FY 2015 • New ground handling system commissioned – Q3 FY 2018 Petra Diamonds Limited: Investor Presentation 18
Slide 19: Williamson – Development Programme
Williamson – Development Programme Highlights • New mill plant commissioned H2 FY 2017 • FY 2018 production – 341 kct (best production since 1977) • FY 2019 ROM throughput of ca. 4.7 Mt supplemented by alluvial production of ca. 0.4 Mt Open pit Mill plant Petra Diamonds Limited: Investor Presentatio
Slide 20: Diamond Market & Pricing Overview
Diamond Market & Pricing Overview February 2019
Slide 21: Diamond Market Fundamentals
Diamond Market Fundamentals Supply Demand • Supply constraints: Global rough diamond production • Global market: rose 2% to record high of $82bn in 2017 increased 19% to 150.9 Mcts in 2017 • Demand growth expected to be driven by: • Continuing overall declining trend: Rise in production • Growth in
Slide 22: Diamond Market and Prices
Diamond Market and Prices Petra Sales Timing H1 FY 2019 Market Performance • Demand for higher value stones remained strong in H1 FY 2019 • Demand for lower value small diamonds softened in Sept and Oct driven by a weakening in global markets and seasonal • Rough diamond market is seasonally stronge
Slide 23: Producing the Full Spectrum of Diamonds
Producing the Full Spectrum of Diamonds Mass market goods High end goods Ultra collectables Growth in middle classes Growth in HNWIs (+$5m) Exceptional diamonds The global middle class comprised ca. 3.2bn 3,617,550 people at the end of 2016 Brookings Forecasts 2,535,480 2,108,530 3.8 4.0 3.5 3.7 3.2
Slide 24: Corporate Social Responsibility
Corporate Social Responsibility February 2019
Slide 25: Sustainability – Providing Stable Employment
Sustainability – Providing Stable Employment • By investing its resources in its mines, Petra has put in place long-term, sustainable mine plans • When Petra acquired mines: +/- 2,500 employees • Today Petra employs more than 3,600 employees • And several thousand contractors during expansion progra
Slide 26: Sustainability
Sustainability Training and Development • Leadership Development Programme to encourage career progression • Ca. $9.5m spent on training & development programmes in FY 2018 Labour Relations • Labour relations are currently stable and three year agreement bodes well for a more stable environment duri
Slide 27: Generating Value for all Stakeholders
Generating Value for all Stakeholders Development of our People Contributing to our communities Local Economic Development Petra took part in the 9th Annual ITC Annual The Petra Foundation launched a new science Kimberley handover of artisanal mining permits Leadership for Women in Mining Conference
Slide 28: Focus on Developing our People
Focus on Developing our People • Petra increased its training spend to US$9.5 million in FY 2018 • Efforts start at grassroots level – improving education standards in local schools • Bursaries, scholarships and training offered to community members • Numerous Company programmes to develop our emplo
Slide 29: Focus on the Development of Women
Focus on the Development of Women Diversity is proven to result in improved decision making and better results • Petra has a number of Company initiatives aimed at encouraging and developing women at all levels of the business; in FY 2018 women represented: • 33% of engineering learnerships • 40% of
Slide 30: Minimising our Environmental Footprint
Minimising our Environmental Footprint • Diamond mining is energy and water intensive but it does not use any harmful chemicals – vegetation grows freely on our tailings dumps • Ongoing initiatives to reduce energy usage, including continual investigation of renewable energy sources • Continual redu
Slide 31: Appendix
” Appendix
Slide 32: Petra Board of Directors
Petra Board of Directors Adonis Pouroulis Johan Dippenaar Jacques Breytenbach Tony Lowrie Dr Patrick Bartlett Non-Executive Chairman CEO Finance Director Senior Independent Non- Independent Non-Executive Executive Director Director Mining entrepreneur whose Over 25 years’ experience in Assumed role
Slide 33: Capital Structure
Capital Structure Share Price (1 year to 31 January 2019) As at 27 December 2018 % voting rights BlackRock, Inc. 12.2% Standard Life Aberdeen plc 11.6% Prudential plc 5.3% T. Rowe Price 5.0% Cobas Asset Management 5.0% Directors 3.8% Listing LSE: PDL Average daily trading volume (shares) – (LTM) 2.9
Slide 34: Diamonds are rare…and getting rarer
Diamonds are rare…and getting rarer Only 30 significant kimberlite mines in production today Petra Diamonds Limited: Investor Presentation 34
Slide 35: FY 2018 vs FY 2017 Operational Results
FY 2018 vs FY 2017 Operational Results Finsch Cullinan Koffiefontein Williamson FY FY FY FY FY FY FY FY 2018 2017 2018 2017 2018 2017 2018 2017 ROM PRODUCTION Tonnes Treated (t) 3,084,395 3,212,169 3,741,086 1,882,911 649,259 667,821 4,659,563 3,667,781 Grade (cpht) 62.5 56.6 35.9 36.1 8.1 7.7 7.0 5
Slide 36: Operating Costs
Operating Costs FY 2018 On-mine cash cost breakdown • Future focus on the optimisation of asset portfolio to (South Africa operations) drive cost efficiencies • Absolute on-mine cash costs in line with expectations despite inflationary pressures 14% 5% • Group on-mine US$ cash costs +20% due to: • i
Slide 37: Impact of ZAR/USD Movement on Petra
Impact of ZAR/USD Movement on Petra • US$1:ZAR13.70 on 28 January 2018 • Increase / decrease of ZAR1 equates to: • ca. US$20m on EBITDA USD • ca. US$35m on FCF • Short term hedging strategy to manage volatility 70-80% • Collar style hedge on USD revenue converted to ZAR ZAR covering up to 50% of FY
Slide 38: Debt Facilities
Debt Facilities • Bank facilities (excl. FX lines) as at 31 Dec 2018: ca. $104.5 million • Bank debt facilities undrawn and available to the Group as at 31 Dec 2018: $104.5 million, in addition to cash at bank of $92.8 million • South African bank debt was settled shortly after Year end; remaining a
Slide 39: Bank Debt Facilities – Covenants
Bank Debt Facilities – Covenants Maintenance Covenants Distribution Covenants 12 months to 12 months to 12 months to Covenant 30 June 2018 31 Dec 2018 30 June 2019 All periods Required ratio Required ratio Required ratio Required ratio Consolidated Net Debt2 to ≤3.5x ≤3.5x ≤2.5x ≤2.0x Consolidated E
Slide 40: Capex Profile – FY 2019 & FY 2020
Capex Profile – FY 2019 & FY 2020 1. All Capex numbers stated in FY 2019 money terms (ZAR12.75/US$1 where applicable) 2. Depreciation on mining assets for FY 2019 guided at ca. US$90 million. Petra Diamonds Limited: Investor Presentation 40
Slide 41: The DPA - Sustaining Consumer Demand
The DPA - Sustaining Consumer Demand Diamond Producers Association comprises De Beers, ALROSA, Rio Tinto, Dominion, Petra, Lucara, Murowa – together ca. 72% of world supply by value The DPA seeks to actively influence sustainable consumer demand by: • Promoting the integrity of the diamond industry
Slide 42: Thank You
Thank You Further enquiries: Petra Diamonds investorrelations@petradiamonds.com +44 20 74948203 www.petradiamonds.com
Petra Diamonds — Investor Presentation (February 2019) on 6ix