Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Shareholder Meeting (December 2009)
36 slides from Petra Diamonds's shareholder meeting presentation, Dec 17, 2009
Slide 1: AGM & Analyst Presentation
AGM & Analyst Presentation 17 December 2009
Slide 2: Important Notice
Important Notice These Presentation Materials do not constitute or form part of any invitation, offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities in the Company nor shall they or any part of them form the basis of or be relied upon in any manner
Slide 3: Petra Diamonds – Investment Case
Petra Diamonds – Investment Case • An important producer of rough diamonds, with one of the world’s largest diamond resources (262 million carats gross / 119 million carats attrib.) attrib ) - (195 million carats attrib. post exercise of Cullinan option) • The only significant diamond producer to of
Slide 4: Diamond Market Overview
Diamond Market Overview • Diamond supply is in decline - most important diamond mines are past their production peak • No new major discoveries for many years - no new major sources of production to come • Prices achieved at Petra’s tenders have risen substantially since market lows of early ‘09 • L
Slide 5: Petra: A Unique Growth Story
Petra: A Unique Growth Story Majors: Anglos / Private Diversified Diversified State-owned State owned Pure diamond equities with significant production: Diamond Producer Diamond Producer & Diamond Producer Retail Stores Diversified production portfolio All assets in expansion phase Substantial S b t
Slide 6: Production Portfolio
Production Portfolio Williamson Production South Africa • Cullinan • Koffiefontein • Kimberley Underground* • Helam • Fissures • Sedibeng Geographically focused portfolio • Star in stable and low low-risk risk countries Tanzania • Williamson * Acquisition to complete imminently 6
Slide 7: Mines + Assets + Infrastructure
Mines + Assets + Infrastructure Petra has acquired four of the world’s important diamond mines July 2007 July 2008 November 2008 Completion due soon Koffiefontein Cullinan Williamson Kimberley UG 7
Slide 8: The Petra Advantage
The Petra Advantage • Substantially improving mine performance by: • Treating g each mine as a core asset • Driving down operating costs to one of the lowest in the industry • Improving efficiencies & right-sizing operations • E Empoweringi operational ti l tteams • Generating g ROI through g cost e
Slide 9: Iconic Mines – Writing The History Of Diamonds
Iconic Mines – Writing The History Of Diamonds The Cullinan The Golden Jubilee The Oppenheimer 3,106 carats rough 755 carats rough, 253.7 carats rough The Taylor Burton Largest gem diamond 546 polished Perfect yellow diamond 241 carats rough, ever discovered Cullinan mine Dutoitspan Mine, Kimberley
Slide 10: Petra Gems – Delivering Earnings Upside
Petra Gems – Delivering Earnings Upside • Petra’s mines regularly produce ‘specials’, providing substantial upside on forecast revenue • Cullinan • 39 carat rough blue diamond – sold for US$8.8m • 26 carat rough blue diamond – cut and polished to 7 carats (pictured) – sold for US$9.4m • 507 carat wh
Slide 11: Cullinan
Cullinan Ownership 37% Petra / 37% Al Rajhi / 26% BEE partners (PDCC) – option to take Petra ownership to 74% Mining g type Block oc cave ca e mining g FY 09: 1.99 mt (888,595 carats) FY 10: 2.2 mt (957,000 carats) Production* substantial ggrowth to 4 mt ((2.2 mcts), ) pplus 4 mt tailings (0.4 mcts)
Slide 12: Cullinan Expansion
Cullinan Expansion Accessing C-Cut / Tailings production • 133m carat C-Cut resource, ROM grade 55cpht • C-cut production 4 mtpa (2.2m ctpa) from 2019 • Phase 1 – 2019 to 2030 • g – 17m carat Tailings resource (165mt), grade 10cpht • Tailings production 4 mtpa (0.4 mct pa) from 2014 * Company foreca
Slide 13: Koffiefontein
Koffiefontein Ownership 70% Petra / 30% BEE partners Mining type Front cave mining FY 09: 0.9 mt (52,089 carats) Production* FY 10: 1.0 mt (76,000 carats) expected growth to 1.2 mt (104,000 ctpa) by 2017 ROM value* $ US$480 p per carat On-mine cost per tonne* R123 (US$15) per ROM tonne Mine life +21
Slide 14: Williamson
Williamson Ownership 75% Petra / 25% Government of Tanzania Mining type Open pit mining FY09 bulk sampling 1 5mt delivering 84 1.5mt 84,486 486 carats (5 (5.7cpht) 7cpht) Production post upgrade* 10 mtpa / 600,000 ctpa ROM value* US$200 per carat On-mine cost per tonne* US$7.30 per ROM tonne Mine li
Slide 15: Kimberley Underground – Completion Expected Soon
Kimberley Underground – Completion Expected Soon Ownership 74% Petra / 26% BEE Partners Mining type Block cave mining Forecast production* 1mtpa (180,000 carats) from year two ROM value* US$170 – US$200 per carat On-mine cost per tonne tonne* R100 (US$12) per ROM tonne Mine life +12 years • Acquisit
Slide 16: Path To Over Million Carats
Path To Over 3 Million Carats Petra Diamond Production Profile (gross) 4,000,000 Fissures 3,500,000 Kimberley Koffiefontein 3,000,000 Williamson 2,500,000 Cullinan Carats Produced 2,000,000 1,500,000 , , 1,000,000 500,000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Financial Year 16
Slide 17: Tender Results - Update
Tender Results - Update Diamond prices (US$ per carat) Historical Hi t i l FY2009 FY2010 L t t tender Latest t d average (up to Nov ‘09) Cullinan 92¹ 66 74 125³ Koffiefontein 484² 252 378 7964 Williamson n/a 126 140 176 Fissures 210² 186 150 1605 Notes: 1. 6 months to December 2008 2. Average FY 200
Slide 18: Cullinan Pre and Post Option Exercise
Cullinan Pre and Post Option Exercise Structure Pre Option Structure Post Option (exercisable by 18 Dec 2009) • US$80m loan (originally US$95m) from Al Rajhi to CIHL (Cullinan • Consideration: issue to Al Rajhi of 36m shares (agreed value for option of JV vehicle), 8% interest, repayable Dec 2011. O
Slide 19: Cullinan Option – Consolidated Ownership
Cullinan Option – Consolidated Ownership • Increase Cullinan attributable resources: from Cullinan Ownership 75.7mct to 151.4mct 80% 74% Cullinan Ownershiip (%) 70% 60% 50% • Increase Cullinan attributable production:¹ from 50% 40% 37% >320,000ct to >650,000ct 30% 20% 10% • Continuingg Al Rajhi j su
Slide 20: US$120m (£72.7m) Placing
US$120m (£72.7m) Placing Objectives: to increase ownership in Cullinan from 37% to 74%, deliver growth by expanding production and strengthen balance sheet • Completion of US$120m Placing (net ~US$114m) 3 December 2009 • First tranche shares started trading on AIM 4 December 2009 • S Second d tranch
Slide 21: Strengthening the Balance Sheet
Strengthening the Balance Sheet • Placing strengthens the balance sheet by reducing debt • Broadens Petra’s shareholder register to increase liquidity Group cash and debt: GROUP CASH New funds (US$m) Pre raising net of costs Post raising Cash 5.0 30.0 35.0* GROUP DEBT Pre raising New funds Post rais
Slide 22: Capital Structure
Capital Structure Post raising & Current Cullinan Option Saad Investments Company Limited 44.0% 23.0% Al Rajhi Holdings W.W.L. 9.0% 18.1% JP Morgan Asset Management UK Limited 9 6% 9.6% 9 3% 9.3% Scottish Widows Investment Partnership 0.0% 6.2% Capital Group International, Inc. 0.0% 6.2% Directors 8
Slide 23: Conclusion
Conclusion • Track record: Petra’s operational success is proven on each major asset • Major assets & resources: high quality gem diamond output • Upside: increased liquidity, strengthened balance sheet & capital structure • Growth story: uniquely expanding production in a rising diamond market • Re
Slide 24: Appendix
Appendix 24
Slide 25: The Petra Board
The Petra Board Adonis Pouroulis Johan Dippenaar David Abery Jim Davidson Chairman CEO Finance Director Technical Director Successful mining entrepreneur One of South Africa’s most Extensive experience as Chief Acknowledged world authority successful diamond Financial Officer in South on kimberlite
Slide 26: Reserves And Resources
Reserves And Resources A ib bl carat b Attributable base Total carat base Fissures - 4.5 Fissures - 4.7 Kimberley - 5.2 Kimberley - 6.9 69 Koffiefontein - 4.2 Koffiefontein - 5.9 Williamson a so - 30.0 Williamson - 40.1 Cullinan - 75.7 Cullinan - 204.6 119 million carats 262 million carats 26
Slide 27: Diamond Market – World Consumption
Diamond Market – World Consumption Diamonds in Jew ellery - 2009 Diamonds in Jew ellery - after 2015 Rest of world 18% Rest of world Italy 14% Italy Hong Kong 4% 2% 2% USA Hong Kong USA 40% Taiwan 2% 35% 2% Taiwan India 2% India 11% 7% Japan 9% Gulf Japan China 9% 11% Gulf Measured in Polished China
Slide 28: Long Term Demand Outlook
Long Term Demand Outlook • Diamond jewellery has traditionally represented only a small Regional Focus on Diamond Jewellery percentage of total jewellery sales in China/India Diamonds Other Jewellery • Diamonds currently represent just 10-12% of total jewellery 100% sales in these countries 75% 70%
Slide 29: Group Production and Sales Summary
Group Production and Sales Summary Year ended Year ended Unit Change 30 June 2009 30 June 2008 Production Diamonds produced Carats 492,349 126,478 289% (attributable) Diamonds produced Carats 1,099,367 200,287 449% (gross, 100% Cullinan*) Sales Revenue (attributable) US$M 69.3 76.9 -10.9% Revenue (g
Slide 30: Production Ramp Up & CAPEX Profile
Production Ramp Up & CAPEX Profile Financial Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Operation Area Cullinan BAW/BB1E/AUC Gap Fillers AUC South BAW Phase 1 C‐Cut Phase 1 Total Tonnes (Mt) 2.200 2.400 2.400 2.400 2.426 2.680 2.845 3.145 3.150 4.000 Total Carats (Mcts) 0.957 1.117 1.239
Slide 31: Cullinan – Key Objective
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 1921 1923 1925 1927 1929 1931 1950 1952 1954 1956 1958 1960 1962 1964 1966 Cullinan – Key Objective 1968 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 +100 & +200 Carat Stones Recovered At Cullinan Diamond Mi
Slide 32: Kimberley Underground Orebodies
Kimberley Underground Orebodies 32
Slide 33: Fissures (Helam, Sedibeng, Star)
Fissures (Helam, Sedibeng, Star) Ownership Sedibeng: Petra 74.5%/BEE 25.5% Helam & Star: Petra 100% Helam: Full shrinkage overhand stoping Mining type Sedibeng: Full shrinkage overhand stoping Star: Open stope underhand FY09 p production 71,274 , carats ROM values* US$180 per carat On-mine cost per
Slide 34: Block Caving Schematic
Block Caving Schematic ve PetraDiamonds
Slide 35: Block Caving – Side View
Block Caving – Side View VIRGIN KIMBERLITE PIPE HIGH G STRESS DRAWPOINTS UNDERCUT LEVEL PRODUCTION LEVEL WINCH HAULAGE 35
Slide 36: Petra Diamonds
Petra Diamonds Cathy Roberts cathyr@petradiamonds.com +44 20 7318 0452 www.petradiamonds.com