Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Shareholder Meeting (November 2018)
45 slides from Petra Diamonds's shareholder meeting presentation, Nov 23, 2018
Slide 1: 2018 AGM: Entering a new phase
2018 AGM Entering a new phase 23 November 2018
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 • Four producing mines (three in South Africa and one in Tanzania) • Diversified portfolio is key to managing production risk across the Group Petra Diamonds Limited: 2018 AGM Presentation 3
Slide 4: 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 5: Board Appointments
Board Appointments Varda Shine • Former CEO of De Beers Trading Company – delivered record sales and profits • Holds seats on the Boards of Lonmin Plc, Mineral Development Company Botswana and Sarine Technologies • Governing Board member of the Diamond Empowerment Fund and a Trustee of the Teenage C
Slide 6: Current Trading in FY 2019
Current Trading in FY 2019 On track to achieve stated guidance of 3.8 – 4.0 Mcts for FY 2019 • 1,068,140 carats produced in Q1 FY 2019 ROM grades in FY 2019 in line with expectations • Cullinan has recorded a ROM grade of 40.5 cpht in Q1 FY 2019 and Finsch’s ROM grade was 65.2cpht Previously reporte
Slide 7: Strengthened Financial Position
Strengthened Financial Position… • SA bank debt settled after Year end as per one of the core objectives of the Rights Issue; remains available • No covenant measurement for June ‘18 Unit 30 June 2018 30 June 2017 Restated Closing exchange rate used for conversion R13.73:US$1 R13.05:US$1 Cash at ban
Slide 8: Consolidated Net Debt (US$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 9: 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 10: 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 11: 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 • LTIFR of
Slide 12: Nearing End of +10 Year Heavy Capital Investment Phase
Nearing End of +10 Year Heavy Capital Investment Phase 1. Binding Head of Agreement reached re. disposal of KEM JV in July 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: $3.
Slide 13: Entering a New Phase
Entering a New Phase Putting capital programmes to work Future focus on maximising free cashflow • Ever increasing footprint across orebody • Apply learnings from past challenges • Multiple levels at SLCs • Ensure consistent production output • Ratio of blasted tonnes to column tonnes • Efficient op
Slide 14: Solid operational performance
Solid operational performance 1. Refer to Petra Diamonds 2018 Annual Report for detailed notes regarding non IFRS adjusted disclosures. 2. Capex is Operational Capex, excluding capitalised borrowing costs. Petra Diamonds Limited: 2018 AGM Presentation 14
Slide 15: Q1 FY 2019 Production and Sales
Q1 FY 2019 Production and Sales Unit Q1 FY 2019¹ Q1 FY 2018¹ Variance FY 2018¹ Sales Diamonds sold Carats 626,541 586,571 +7% 3,793,799 Gross revenue US$M 80.2 65.8 +22% 495.3 Production ROM tonnes Mt 3.4 2.9 +17% 12.1 Tailings & other tonnes2 Mt 0.5 0.4 +25% 1.6 Total tonnes treated Mt 3.9 3.3 +18%
Slide 16: 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 17: Stable Diamond Market and Prices
Stable Diamond Market and Prices Petra Sales Timing FY 2018 Market Performance • Pricing saw usual seasonal weakness in July to October (down ca. 5%) and recovered ca. 1.5% in December 2017 • Positive momentum around the festive sellingseason led to pricing ca. +5% in Q3 FY 2018 • Rough diamond mark
Slide 18: Appendix
” PetraDiamonds Appendix
Slide 19: Capital Structure
Capital Structure Share Price (1 year to 21 November 2018) As at 21 November 2018 Percentage of voting rights held BlackRock Inc. 12.3% Standard Life Aberdeen plc 11.6% Prudential (incl. M&G Group Limited) 5.3% T. Rowe Price Associates Inc. 5.0% Cobas Asset Management, SCIIC, SA 5.0% Van Eck Associa
Slide 20: The Petra Board
The Petra Board Adonis Pouroulis Johan Dippenaar Jacques Non-Executive CEO Breytenbach Chairman Finance Director Successful mining entrepreneur One of South Africa’s most successful Founded Petra Diamonds in 1997 and diamond entrepreneurs with 27 years’ Over 20 years of mining experience, having flo
Slide 21: Diamonds are rare…and getting rarer
Diamonds are rare…and getting rarer Only 30 significant kimberlite mines in production today Petra Diamonds Limited: 2018 AGM Presentation 21
Slide 22: 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 23: Petra Production Profile
Petra Production Profile • Production profile of a kimberlite is highly consistent when the mine is in steady state production • Growing volumes across the full diamond spectrum (from lowest to highest value) • Growing trend for mass luxury supported by strong pricing performance in smaller / 2nd to
Slide 24: The Most Highly Concentrated Form of Wealth
The Most Highly Concentrated Form of Wealth Examples of recent polished coloured 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 $4.0m per carat, 12 November 2015 The 24.18ct The 59.
Slide 25: Iconic Diamonds From Iconic Mines
Iconic Diamonds From Iconic Mines The Greater Star of The Williamson Pink Africa 55ct rough; 24ct polished; Largest polished yield gifted to Princess Elizabeth from the Cullinan at on her engagement 530ct; sits in the Royal Williamson, 1947 Sceptre Cullinan, 1905 The Cullinan Heritage 507.5 carats r
Slide 26: Sustaining Consumer Demand – Today and Tomorrow
Sustaining Consumer Demand – Today and Tomorrow Diamond Producers Association comprises De Beers, ALROSA, Rio Tinto, Dominion, Petra, Lucara, Murowa – together ca. 72% of world supply by value The DPA seeks to actively influence sustainable consumer demand by: • Promoting the integrity of the diamon
Slide 27: FY 2018 – Summary of Results
FY 2018 – Summary of Results All results are shown adjusted for the pending disposal of KEM JV Restated FY 2018 FY 2017 (US$m) (US$m) Revenue 495.3 394.8 Adjusted mining and processing costs1 (291.4) (242.6) Other direct income 1.2 1.7 Profit from mining activities1 205.1 153.9 Exploration expense (
Slide 28: FY 2018 vs FY 2017 Operational Results
FY 2018 vs FY 2017 Operational Results Finsch Cullinan Koffiefontein Williamson KEM JV FY FY FY FY FY FY FY FY FY FY 2018 2017 2018 2017 2018 2017 2018 2017 2018 2017 ROM PRODUCTION Tonnes Treated (t) 3,084,395 3,212,169 3,741,086 1,882,911 649,259 667,821 4,659,563 3,667,781 768,776 597,025 Grade (
Slide 29: Operating Costs
Operating Costs FY 2018 On-mine cash cost breakdown • Future focus on the optimisation of asset portfolio to (South Africa operations) drive cost efficiencies • Absolute on-mine cash costs in line with expectations despite inflationary pressures 14% 5% • Group on-mine US$ cash costs +20% due to: • i
Slide 30: Impact of ZAR/USD Movement on Petra
Impact of ZAR/USD Movement on Petra • US$1:ZAR15.03 on 12 September 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 F
Slide 31: 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: 2018 AGM Presentation 31
Slide 32: 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: 2018 AGM Presentation 32
Slide 33: Cullinan’s Diamond Profile
Cullinan’s Diamond Profile FY 2018 • Source of the Cullinan, the largest gem diamond ever recovered (3,106 carats) • Record of producing Type II diamonds, including high value blue stones • All -55mm material only exposed to autogenous milling (comminution via attrition, not crushing) and all furthe
Slide 34: Price Variability at Cullinan
Price Variability at Cullinan • Cullinan exhibits pricing variability - average of US$144/ct from FY 2010 to 2018; 7,883,301 carats sold: • on an annual basis: high of US$185/ct and low of US$120/ct (FY 2018: US$125 per carat); • on a half yearly basis: high of US$247/ct and low of US$87/ct (FY 2018
Slide 35: Cullinan – Development Programme
Cullinan – Development Programme Highlights • C-Cut phase 1 & CC1E ramp up: • FY 2017 – 1.2 Mt • FY 2018 – 2.46 Mt • FY 2019 – 3.7 - 4 Mt (including 0.7 – 1 Mt sourced from CC1E & B Block) • Completion of shaft / plant interface – FY 2019 • Steady state production of 4 Mtpa from C-Cut Phase 1 and CC
Slide 36: Cullinan C-Cut Block Cave Plan View
Cullinan C-Cut Block Cave Plan View 16 ha at 830 mL • Access to larger footprint over time • More productive draw points • Extent of ore body provides further potential opportunities Draw bells completed by end of FY 2018 Petra Diamonds Limited: 2018 AGM Presentation 36
Slide 37: New Cullinan Plant – Process Flow Diagram
New Cullinan Plant – Process Flow Diagram -55m +12mm +9mm Key points 1) Maximum value extraction from ore ($/t) 2) Maximum $/hr revenue – -9mm Large stones & Type IIs 3) Reduced cost Key levers 1) Top cut-off size 2) Recirculating load 3) Bottom cut-off size 4) Discard size 5) Non aggressive milling
Slide 38: New Cullinan Plant – Simplified Process Flow Diagram
New Cullinan Plant – Simplified Process Flow Diagram Key levers Annual capacity of 6 Mtpa: B 1) Top cut-off size 4 Mtpa ROM and 2 Mtpa Tailings 2) Recirculating load 150 tonne 3) Bottom cut-off size 4) Discard size Jaw crusher 5) Non aggressive milling XRL 6) DMS yield 7) Increased cost to process F
Slide 39: Koffiefontein – Development Programme
Koffiefontein – Development Programme Highlights • Production commenced from first tunnels of SLC on 560 mL – FY 2015 • New ground handling system commissioned – Q3 FY 2018 Petra Diamonds Limited: 2018 AGM Presentation 39
Slide 40: 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: 2018 AGM Presentatio
Slide 41: Debt Facilities
Debt Facilities • Bank facilities (excl. FX lines) as at 30 June 2018: ca. $109.0 million • Bank debt facilities undrawn and available to the Group as at 30 June 2018: $2.3 million, in addition to cash at bank of $236.0 million • South African bank debt was settled shortly after Year end; remaining
Slide 42: 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 43: Leverage Ratios
Leverage Ratios 30 June 2018 30 June 2017 IFRS net debt¹ USDM 520.7 555.3 Consolidated net debt (for bank debt covenant measurement) USDM 531.6 618.5 Gearing² % 92 86 Adjusted EBITDA³ USDM 195.4 142.6 EBITDA margin4 % 39 36 Consolidated net debt: EBITDA5 x 2.7 3.9 EBITDA net interest cover6 x 2.7 2.
Slide 44: 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: 2018 AGM Presentation 44
Slide 45: Thank You
Thank You Further enquiries: Petra Diamonds Investor Relations investorrelations@petradiamonds.com +44 20 7494 8203 www.petradiamonds.com