Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (July 2023)
40 slides from Petra Diamonds's investor presentation, Jul 18, 2023
Slide 1: Investor update presentation
Investor update presentation 18 July 2023
Slide 2: Disclaimer
Disclaimer BY ATTENDING THE MEETING WHERE THIS PRESENTATION IS MADE, OR BY READING THE PRESENTATION SLIDES, YOU ACKNOWLEDGE AND AGREE TO COMPLY WITH THE FOLLOWING RESTRICTIONS. This presentation (the "Presentation") has been prepared and issued by and is the sole responsibility of Petra Diamonds Ltd
Slide 3: Petra is the leading independent natural diamond miner
Petra is the leading independent natural diamond miner 2.7Mcts $328.4m $191.4m 0.47x LTM1 Production LTM1 Sales LTM2 Adj. EBITDA Consolidated net debt/adjusted EBITDA2 We primarily supply the jewellery industry with gem-quality natural diamonds safely and to the highest ethical standards 1 Cullinan
Slide 4: A unique and high-quality long-life asset base
A unique and high-quality long-life asset base High value product Selection of high value stones recently sold from Cullinan Mine and Williamson • The Cullinan Mine is renowned for very rare and highly valuable Type IIb blue diamonds and high-quality Type IIa white diamonds • Williamson is likely to
Slide 5: A substantial increase in production from FY23
A substantial increase in production from FY23 Production Guidance, Mcts 4.2 4.2 Expected Group production to FY26 4.0 4.00 4.0 Cullinan Mine 3.8 3.70 3.8 • Development underway on CC1-E 3.70 and C-Cut extension projects at 3.6 3.6 Cullinan Mine 3.60 3.35 3.4 3.40 3.4 3.20 Finsch 3.2 3.2 3.24 • Deve
Slide 6: Pursuing a value driven growth strategy
Pursuing a value driven growth strategy 1 2 3 BROWNFIELD INORGANIC AND CURRENT ORGANIC CORPORATE OPPORTUNITIES OPERATIONS EXPANSION PROJECTS • Maximise value from • Develop further expansion • Assess orebodies either in existing operations projects to extend life of or near production including capi
Slide 7: Product mix geared to supportive fundamentals
Product mix geared to supportive fundamentals Natural diamond supply has peaked1 (Mcts) Middle-class to increase by 700m people by 20302 4.5 40 4.0 35 151 3.5 30 US$ trillion 3.0 Spending (right) 25 Billion 128 130 138 2.5 120 2.0 20 122 1.5 15 126 1.0 10 Population (left) 5 107 0.5 0.0 0 2020 2030
Slide 8: Recent softness in pricing expected to be temporary
Recent softness in pricing expected to be temporary Pricing resilient despite economic uncertainties1 Petra’s av. price split by run-of-mine (ROM) and Exceptional Stones1,2,3 250 $200 US$/ct $180 200 $160 Index (US$, rebased to 100) $140 169 $120 150 $100 $80 100 $60 $40 $20 50 $- H1 / FY 2021 H2 /
Slide 9: 15 years of progress on sustainability
15 years of progress on sustainability Since 2008, Petra has managed and disclosed its performance on the most material ESG issues Download our most recent Sustainability Report (2022) The major milestones on our sustainability journey to date: 2008 2013 2017 2019 Petra produces its first Petra comm
Slide 10: Diamond mining and sustainability
Diamond mining and sustainability Diamonds are a consumer product and Petra recognises its ethical and social responsibilities Examples of Petra’s stakeholder beneficiaries 59% 5,265 2 of our 3 14% Of procurement spend Petra employees Operating mines are the SA mines owned by historically with local
Slide 11: Diamond mining has a relatively small environmental footprint
Diamond mining has a relatively small environmental footprint The relatively small environmental footprint of Petra’s underground mines • GHG: energy requirements are relatively low, with electricity representing ~15% of on-mine costs in South Africa • Chemical: no harmful chemicals involved in ore
Slide 12: Implementing a well-structured Sustainability Framework
Implementing a well-structured Sustainability Framework Operationalisation of our Sustainability Framework underway Recent developments KPIs embedded into business objectives 1. New ‘Purpose’ defined and approved by Board Valuing our 2. Petra Culture Code created in consultation with employees and e
Slide 13: Capital allocation & dividend policies
Capital allocation & dividend policies Capital allocation policy 1st order allocation 2nd order allocation Discretionary allocation Operational and social license to operate Mine expansion at Cullinan Mine and Finsch Special dividends Optimum stay in business capital Further brownfield expansion Opp
Slide 14: FY 2024-26 Group Guidance Summary
FY 2024-26 Group Guidance Summary1,2 US$m FY24E FY25E FY26E Total carats recovered, Mcts 2.9 – 3.2 3.4 – 3.7 3.7 – 4.0 Cash on-mine costs and G&A 270 - 290 270 - 290 280 – 300 Extension capex 124 - 135 109 – 125 85 – 92 Sustaining capex 31 – 36 24 – 28 24 – 28 Koffiefontein placed on C&M in F
Slide 15: Why invest?
Why invest? 1 Substantial production growth - Production to increase by up to 1Mcts in FY25 with an additional 300kcts in FY26 2 Buoyant diamond market - Diamond supply has peaked, and growth is limited to 1-2% p.a. - Luxury goods sector remains resilient and expected to grow in 2023, with some shor
Slide 16: Financial performance
Financial performance The plant at Cullinan Mine
Slide 17: H1 FY 2023 financial highlights
H1 FY 2023 financial highlights1 US$m H1 FY 2023 H1 FY 2022 Revenue Revenue 212.1 264.7 • Revenue of US$212.1 million, including US$1.4 million from Petra’s realised profit Contribution from Exceptional Stones 0.0 77.9 share from partnership stones Contribution from profit share agreement 1.4 0.0 •
Slide 18: Balance sheet snapshot
Balance sheet snapshot US$m (unless otherwise stated) As at As at As at As at 30 June 2023 31 December 2022 30 June 2022 31 December 2021 Cash at bank (including restricted amounts) 61.8 146.6 288.2 272.3 Diamond debtors 8.9 4.3 37.4 0.4 Diamond inventories1,2 (US$m) 65.9 59.9 52.7 79.6 (Carats) 715
Slide 19: Successful deleveraging has led to a reduction in gross debt
Successful deleveraging has led to a reduction in gross debt 400 US$m Disciplined capital allocation to maximise value generation • Current capex projects to be internally funded 200 • Committed to further reduction in gross debt levels • Opportunities to improve on our 2L debt structure 0 -40.6 • M
Slide 20: H1 FY23 on-mine costs in line with expectations
H1 FY23 on-mine costs in line with expectations1 Group Diamond technical, Adjusted Williamson inventory and support and mining and tailings facility – Total mining On-mine cash Diamond stockpile marketing processing remediation and processing costs1 royalties movement costs2 costs costs3 Depreciatio
Slide 21: Our operations
Need to replace since employee has left Our operations Employees at Cullinan Mine
Slide 22: Safety remains our number one priority
Safety remains our number one priority Underground employees conducting mini risk assessment LTI and LTIFR1 1.4 90 1.2 80 70 1 60 LTIFR 0.8 LTI 50 0.6 40 30 0.4 20 0.2 10 0 0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 LTI's 45 45 44 81 54 27 27 32 35 25 16 19 25 15 17
Slide 23: Latest operating and financial highlights
Latest operating and financial highlights1 Total tonnes treated Diamonds produced (Mcts) Average price (US$/ct) Revenue2 (US$m) Latest full year (Mt) operating results as announced on 18 July 2023 165 11.6 3.35 584.1 140 9.1 2.67 328.4 FY22 FY23 FY22 FY23 FY22 FY23 FY22 FY23 Adjusted EBITDA CAPEX (U
Slide 24: Cullinan Mine
Cullinan Mine 4.4m 30.7cpht $139/ct $181.5m 147.2 Gross Resource (Mcts) FY23 ROM Tonnes FY23 ROM Grade FY23 Av. price FY23 Revenue as at 30 June 2022 Cullinan Mine is one of the world’s most famous Renowned for very rare and highly valuable Type IIb blue diamond mines diamonds and high-quality Type
Slide 25: Cullinan Mine, current and future potential
Cullinan Mine, current and future potential Dumps Plant Shaft Current mining Development projects (underway) C-Cut C-Cut extension (T46 & T50 and C-Cut • Regular producer of high value Centre) Type II stones • 2.3Mcts commencing from end- FY2024 and will extend C-Cut New Shaft • Block cave mining to
Slide 26: Finsch
Finsch 2.4m 42.5 cpht $110/ct $93.4m 36.4 Gross Resource (Mcts) FY23 ROM Tonnes FY23 ROM Grade FY23 Av. price FY23 Revenue as at 30 June 2022 Finsch was discovered in 1960 and the mine was Finsch is renowned for highly commercial goods of +5 carats opened in 1967 and is rich in gem quality smaller d
Slide 27: Finsch: further extension opportunities
Finsch: further extension opportunities Current Production 4-level Upper Block 5 SLC Development projects (underway) Recent improvements to production Lower Block 5 3-Level 90L SLC have resulted from: • c.9.7 Mcts production from late • Recruitment of personnel to key FY2024 until FY2031 positions •
Slide 28: Williamson
Williamson 1.8m 7.7 cpht $280/ct $49.1m 37.7 Gross Resource (Mcts) FY23 ROM Tonnes FY23 ROM Grade FY23 Av. price FY23 Revenue as at 30 June 2022 The Williamson kimberlite was discovered in 1940 Williamson is renowned for ‘bubblegum’ pink diamonds, including the Williamson Pink, which is considered o
Slide 29: Appendix
Appendix The Finsch mine in South Africa
Slide 30: Governance - Board of Directors
Governance - Board of Directors A relatively new Board reflecting the reset of Petra’s business Board Stats as at 1 July 2023 40% Female Peter Hill Richard Duffy Jacques Breytenbach Varda Shine Bernard Pryor Non-Executive Chairman Chief Executive Finance Director Senior Independent NED Independent N
Slide 31: Governance framework is impact and outcome driven
Governance framework is impact and outcome driven Purpose, Strategy and Values Board governance Financial governance - Board structure - Planning and budget - Memorandum of incorporation and Bye-Laws - Operational performance - Board Evaluation - Asset reliability - Succession planning and rotation
Slide 32: Capital structure
Capital structure Listing LSE:PDL Corporate bond Shares in issue 194,201,785 Size1 US$247.3m Market Cap at GBp72 GBP140m (USD183m equivalent) Coupon 9.75% cash Maturity March 2026 Last 12 month share price (GBp) Major shareholders % of voting rights2 Vontobel Holding AG 17.83 The Terris Fund, SPC 10
Slide 33: Block caving simplified
Block caving simplified Draw bells Production level is created below; draw points are set up and a fan is drilled above each one; ore starts to ‘cave’ under its own weight and is removed from draw points with loaders Investor Update - Jul 2023 33
Slide 34: Sub-level caving overview
Sub-level caving overview A cave where most of the recovered rock is drilled, charged and blasted The face must continuously advance: • To disturb the column above • To manage the damaged brows Performance is highly dependent on: • Extraction sequencing and disciplined following of it • Drill and bl
Slide 35: Impact of ZAR/USD movement on Petra
Impact of ZAR/USD movement on Petra Exchange rate volatility: 80-90% of operating costs are ZAR denominated USD • ZAR weakness impacted by global sentiment and inflationary fears USD • FY 2023 closing exchange rate (US$1:ZAR18.83) ca. 16% weaker compared to FY 2022 USD (US$1:ZAR16.27) Increase / dec
Slide 36: Cost breakdown – fixed (77%) and variable (23%)
Cost breakdown – fixed (77%) and variable (23%) Investor Update - Jul 2023 36
Slide 37: Environmental and social performance FY 2022
Environmental and social performance FY 2022 Women in the workforce flat Staff turnover +2% Training spend +5% % % US$m 9.5 92% (FY 21: 100%) 10.8 Of full-time bursaries held by HDSA3 9.6 9.8 20.0 20.0 students 8.1 8.1 6.6 5.8 5.8 6.1 19.0 19.0 44% (FY 21: 44%) Female mining Leadership 18.0 Developm
Slide 38: The number of producing diamond mines globally continues to contract
The number of producing diamond mines globally continues to contract Planned closures and new mines • Major mines accounting for 15% of supply (Ekati, Diavik, Nyurbinskaya and Almazy-Anabara) expected to be depleted by the end of the decade Udachniy Jubilee Zarnitsa Komsomolsky • Smaller Koffiefonte
Slide 39: Value of LGD as % of equivalent natural diamond
Laboratory-grown gem diamonds continue to diverge as a separate product category with a lower price point LGDs and natural diamonds can together grow the overall diamond Pricing divergence continues for larger categories2 market, but they are two distinct product categories 100% • Production capacit
Slide 40: Considerations beyond pricing and value
Considerations beyond pricing and value Laboratory-grown diamonds are manufactured within Natural diamonds were formed billions of years ago and each weeks one is unique and rare • Two manufacturing processes exist (‘Chemical Vapour • Diamond-bearing kimberlites are very uncommon - of 6,800 Depositi