Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (February 2017)
40 slides from Petra Diamonds's investor presentation, February 2017
Slide 1: Corporate Presentation – Driving Forward
Corporate Presentation February 2017 Driving Forward
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: Focus on Africa
Focus on Africa • Five producing mines (four in South Africa and one in Tanzania), plus exploration in Botswana and South Africa • Diversified portfolio is key to managing production risk across the Group Petra Diamonds Limited: February 2017 3
Slide 4: Discover Petra…
Discover Petra… Revenue Adjusted EBITDA …a leading independent diamond miner with a US$m US$m diversified portfolio and high quality team 600 200 188 472 431 164 425 392 128 139 400 317 Petra expansion plans expected to: 277 100 90 116 200 • Improve grades 154 49 0 0 • Improve product mix FY12 FY13
Slide 5: H1 FY 2017 – driving forward to FY 2019
H1 FY 2017 – driving forward to FY 2019 H1 FY 2017 FY 2019 21% 51% 5% 41% 40% Production 1% by mine Finsch 22% Cullinan 11% Williamson 2% 6% Koffiefontein 20% Kimberley Ekapa 33% Revenue 43% Mining 36% by mine 14% 11% 12% 17% 6% 8% Unit H1 FY 2017 H1 FY 2016 Variance FY 20161 SALES Revenue US$m 228.
Slide 6: Growth and Margin Expansion
Growth and Margin Expansion Petra to maintain a fairly flat tonnage profile from FY 2017 onwards, but the replacement of poor quality tonnes with better quality tonnes will significantly grow production and increase the average value per carat FY 2019 production target of ca. 5.3 Mcts; revenue of ca
Slide 7: Growth and Margin Expansion
Growth and Margin Expansion Adjusted EBITDA margin expected to rise from ca. 38% in FY 2016 to +50% by FY 2019 • Increase in ROM grades and increase in tonnage throughput (mainly due to Kimberley Mines transaction) to lead to ca. 43% growth in production • Lower value tailings carat production to re
Slide 8: Financial Position
Financial Position Unit 31 Dec 2016 30 June 2016 31 Dec 2015 Closing exchange rate used for conversion R13.73:US$1 R14.68:US$1 R15.46/US$1 Cash at bank US$m 47.2 48.7 42.1 US$ loan notes (including accrued interest) US$m 302.1 302.0 302.1 Bank loans and borrowings US$m 210.5 131.5 63.9 Net debt US$m
Slide 9: Diamond Market – Overview
Diamond Market – Overview Supply Demand • Supply constraints: Global rough diamond production • US recovery: economy continues to improve; very strong rose 2% to 127 Mcts worth $13.9bn in 2015 (average diamond buying culture (ca. 45% of world demand); retail $109/ct) demand currently performing well
Slide 10: Diamond Market – Overview
Diamond Market – Overview FY 2016 Market FY 2017 Outlook • Petra pricing down ca. 6% for Year • Market conditions will depend on continued supply discipline from • H1: Market experienced challenging conditions in H1 2016 – the major producers, as well as a stable retail market, particularly Petra pr
Slide 11: Moving to Undiluted Ore
Moving to 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 establishing
Slide 12: Finsch – Development Programme
Finsch – Development Programme Expansion Plan FY 2016 Development: Waste: 2,484 metres; Raiseboring: 99 metres; Kimberlite: 2,969 metres • Expansion plan to take production to ca. 2.0 Mctpa (ROM) by FY 2018 • Sub level cave - tunnelling in host rock complete - 6/11 tunnels in production – 1st level
Slide 13: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan FY 2016 Development: Waste: 1,911 metres; Raiseboring: 838 metres; Kimberlite: 2,837 metres • Expansion plan to take production to ca. 2.2 Mcts by FY 2019 (2.0 ROM & 0.2 tailings) • C-Cut Phase 1: new block cave being established on the western side of
Slide 14: Sustainability
Sustainability Health and Safety • Achievements: Improving LTIFR (0.25 for H1 FY 2017); Finsch won two MineSAFE Awards • Challenges: Petra’s mining method and operations are inherently safe but there is an ever present risk of accidents • Intensification of safety initiatives and new control procedu
Slide 15: Appendix
x< = = 5 ioe BS 2]
Slide 16: Capital Structure
Capital Structure Share Price (1 year to 1 Feb 2017) vs As at 1 February 2017 Number FTSE 250 & FTSE 350 Mining of voting % ISC rights I PDL I FTSE 250 I FTSE 350 Mining BlackRock, Inc. 85,628,014 16.2% T. Rowe Price 57,956,911 10.9% Standard Life Investments 39,638,469 7.5% Templeton Global Advisor
Slide 17: The Petra Board & Senior Management
The Petra Board & Senior Management Jacques Breytenbach Chief Financial Officer Assumed role in June 2016, having held Adonis Pouroulis Johan Dippenaar Jim Davidson position of Finance Manager – Operations Non-Executive Chairman CEO Technical Director at Petra since 2006 Leads financial management o
Slide 18: World Diamond Mines
World Diamond Mines Petra Diamonds Limited: February 2017 18
Slide 19: An Exceptional Growth Plan
An Exceptional Growth Plan July 2007 July 2008 February 2009 Koffiefontein Cullinan Williamson Petra has acquired six non-core diamond mining operations from De Beers Petra approach: • Flat management structures 70% Petra¹; 30% BEE 74%¹ Petra; 26% BEE 75% Petra¹; 25% Government of Tanzania • Focus o
Slide 20: Petra’s Place in the Market: One of the World’s Largest Diamond Resources
Petra’s Place in the Market: One of the World’s Largest Diamond Resources • Based on FY 2016 production, Petra accounted for: Major producers • 2.9% of world supply by volume (De Beers, ALROSA, Rio Tinto) 25% • 3.1% by value Mid-tier quoted • World-class resource of 312.2 Mcts, ranking 3rd by size p
Slide 21: 2016 Resource Statement (30 June 2016)
2016 Resource Statement (30 June 2016) World-class Resource base of 312.2 million carats¹ worth ca. US$48.6 billion² Gross Resources (Mcts) 100 49.1 50 40.4 194.2 9.0 6.7 - Cullinan Finsch Williamson Operations3 Kimberley Operations Koffiefontein Gross In Situ Value (US$bn)² 15.5 24.5 4.4 3.1 1.2 -
Slide 22: Petra Production Profile
Petra Production Profile • Production profile of a kimberlite is highly consistent when the mine is in steady state production • Ever growing volumes across the full diamond spectrum (from lowest to highest value) • Growing trend for mass luxury supported by strong pricing performance in smaller / 2
Slide 23: Exceptional Diamonds
Exceptional Diamonds • Petra classifies ‘exceptional diamonds’ as stones that sell for +$5 million each • Exceptional diamonds contributed on average $23 million pa from FY 2009 to FY 2016 • Average increased to ca. $36 million pa in FY 2014 to FY 2016 • First tender of FY 2017 included sale of a 13
Slide 24: 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 25: The Most Highly Concentrated Form of Wealth
The Most Highly Concentrated Form of Wealth Examples of recent polished diamond sales at auction The 14.62ct The 12.03ct Blue Oppenheimer Moon of Blue diamond Josephine diamond Sold for $57.7m $3.9m per carat, Sold for $48.4m 18 May 2016 $4.0m per carat, 12 November 2015 The 24.18ct The 15.38ct Cull
Slide 26: The Diamond Market in 2015
The Diamond Market in 2015 • Global diamond jewellery sales +2% in local currency but -2% in USD: ca. $79 billion Share of World Polished Diamond Consumption in Value (US$ PWP) Diamond Jewellery Value, Growth by Geography (US$bn) Source: De Beers Diamond Insight Report 2016 Petra Diamonds Limited: F
Slide 27: DPA Advertising Campaign: Wild and Kind
DPA Advertising Campaign: Wild and Kind • Diamond Producers Association aims to encourage best “The opportunity exists for diamonds to practice and sustainability across the industry and to protect represent the rare, precious and real the integrity of the diamond connections that Millennials crave.
Slide 28: FY 2016 Operational Results
FY 2016 Operational Results Kimberley Ekapa Finsch Cullinan Koffiefontein Williamson Mining FY FY FY FY FY FY FY FY FY FY 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 ROM PRODUCTION Tonnes Treated (t) 3,547,798 3,016,385 2,302,892 2,513,004 681,344 341,783 721,513 1,196,269 4,003,180 4,056,638
Slide 29: FY 2016 - Operating Costs
FY 2016 - Operating Costs Petra’s focus on cost control and the weaker ZAR helped to mitigate inflationary pressures FY 2016 On-mine cash cost breakdown (South Africa operations) 9% Group on-mine US$ cash costs decreased 3% due to: 15% • Increase in tonnes treated (7% increase) 39% • Inflationary in
Slide 30: Finsch Development Snapshot
Finsch Development Snapshot Long hole drilling, 70 Level SLC kimberlite Tipping blasted ore through rockbreaker Access development tunnel UG conveyor used to transport broken ore Installation of the Apron Feeder Bulkhead The new bulk sample plant Petra Diamonds Limited: February 2017 30
Slide 31: Cullinan Development Snapshot
Cullinan Development Snapshot Rock breaker south extraction Long hole drilling draw point North production conveyor 2 Conveyor Planning Crusher installation Silo loading Box Petra Diamonds Limited: February 2017 31
Slide 32: Cullinan Mill Plant Project
Cullinan Mill Plant Project Run of Mine Silo & Recycle Silo Main Sub Station Recovery & HPGR & XRL Buildings • Increase in diamond liberation and gentler process likely to result in less breakage • Saving of ca. ZAR20 – 25/t in processing costs • Strong standalone economics Payback of ca. 3 years
Slide 33: Koffiefontein – Development Programme
Koffiefontein – Development Programme Expansion Plan Koffiefontein Kimberlite Pipe Schematic Expansion Plan – to take production to ca. 95,000 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 • 52L Western
Slide 34: Kimberley Underground – Development Programme
Kimberley Underground – Development Programme Expansion Plan Kimberley Underground Kimberlite Pipes Schematic Expansion Plan – planned underground production of ca. 215,000 ctpa from FY 2019 • Underground ore to be treated at Central Treatment Plant – from FY 2017 • Planned grade of 13 – 14 cpht – f
Slide 35: Williamson – Development Programme
Williamson – Development Programme Expansion Plan Williamson Kimberlite Pipe Schematic Expansion Plan – to take production to ca. 325,000 ctpa by FY 2018 • Plant modifications (additional crusher circuit, 2 autogenous mills) commenced – FY 2016 • Commissioning of crusher – FY 2016 • Commissioning of
Slide 36: Debt Facilities
Debt Facilities • Bank facilities (excl. FX lines) as at 31 Dec 2016: ca. $268 million • Bank debt facilities undrawn and available to the Group as at 31 Dec 2016: $57 million • Debt includes US$300 million senior secured second lien notes issued May 2015 Lender Type Size Size Utilised at Interest R
Slide 37: Bank Debt Facilities – Covenants
Bank Debt Facilities – Covenants Distribution Maintenance Covenants Covenants 12 months to 12 months to 12 months to 12 months to 12 months to Covenant 30 June 2016 30 June 2016 31 Dec 2016 30 June 2017 31 Dec 2017 All periods and thereafter Actual Required ratio Required ratio Required ratio Requir
Slide 38: Leverage Ratios
Leverage Ratios 30 June 2016 30 June 2015 IFRS Net debt¹ USDm 375.8 160.5 Consolidated net debt (for bank debt covenant measurement) USDm 464.6 256.1 Gearing² % 69 26 Adjusted EBITDA³ USDm 164.3 139.3 EBITDA margin4 % 39 33 Consolidated net debt: EBITDA5 x 2.8 1.8 EBITDA net interest cover6 x 4.3 7.
Slide 39: Capex Profile – FY 2017 to FY 2019
Capex Profile – FY 2017 to FY 2019 1. All Capex numbers are stated in FY 2017 money terms (ZAR14:$1 where applicable) 2. Depreciation on mining assets for FY 2017 guided at ca. US$70 – 75 million at ZAR14:$1 3. As in prior guidance, capital estimates above do not include any capitalised borrowing co
Slide 40: Thank You
Thank You Further enquiries: Investor Relations investorrelations@petradiamonds.com +44 20 7494 8203 www.petradiamonds.com
Petra Diamonds — Investor Presentation (February 2017) on 6ix