Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (January 2023)
40 slides from Petra Diamonds's investor presentation, Jan 17, 2023
Slide 1: Investor Update January 2023
Investor Update January 2023
Slide 2: Disclaimer
Disclaimer • This presentation contains certain forward-looking statements, which are subject to the risk factors and uncertainties associated with the diamond mining industry. • Whilst Petra believes the expectations set out in this presentation are reasonable in light of the information currently
Slide 3: Petra is the largest independent diamond producer with strong sustainability credentials
Petra is the largest independent diamond producer with strong sustainability credentials 3.4 Mcts $585.2m $264.9m $90.8m FY 22 Production FY 22 Sales FY 22 Adj. EBITDA Consolidated net debt1 • Proven leadership and new operating model which has transformed Cullinan Mine Finsch performance Stake acqu
Slide 4: Our purpose: creating abundance from rarity
Our purpose: creating abundance from rarity We believe that Earth’s rare and precious legacy can, through responsible mining, create abundant outcomes for our people, communities, investors, customers and all other stakeholders, giving expression to life’s special moments Abundance for our people in
Slide 5: Petra today
Petra today Transformation led by proven management team Resilient, cash generative operations Enhancing stakeholder returns Third largest global resource supports further growth potential Diversified portfolio with delivery of high-value blue, Strong operational cash pink and large white diamonds g
Slide 6: Safety remains our number one priority
Safety remains our number one priority H1 2023 LTIFR in line with previous year1 1.4 90 1.2 80 70 1 60 0.8 LTIFR 50 LTI 0.6 40 30 0.4 20 0.2 10 0 0 H1 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 LTI's 45 45 44 81 54 27 27 32 35 25 16 19 25 14 7 LTIFR 0.62 0.71 0.67 1.2
Slide 7: H1 FY 2023 Operating and FY 2022 Financial Results
H1 FY 2023 Operating and FY 2022 Financial Results1,2 Safety (LTIFR) Ore processed (Mt) Diamonds produced (kcts) Revenue (US$m) 6% higher HoH Down 4% HoH down 21% HoH down 20% HoH Latest half year 1.50 operating results as 0.18 1.8 264.7 0.19 5.6 5.4 announced on 1.4 16 January 212.1 2023 H1 FY22 H1
Slide 8: The number of producing diamond mines globally continues to contract
The number of producing diamond mines globally continues to contract Supply in 20231 expected to be c.117 Mcts compared to a peak of 150 Mcts in 2017 Planned closures and new mines • The Argyle mine in Australia closed in Udachniy Jubilee Zarnitsa November 2020, having peaked at 20Mcts Komsomolsky A
Slide 9: Limited production growth to underpin prices
Limited production growth to underpin prices1 Demand outstripping structural decline in supply Global diamond jewellery retail sales (US$bn) Supply Demand (conservative scenario) 151 145 145 128 130 138 120 China China China 126 113 China China China 107 US US US US US US 2009 2010 2011 2012 2013 20
Slide 10: Product mix supporting pricing despite recent weakness
Product mix supporting pricing despite recent weakness Pricing holding up despite economic uncertainties1 Petra’s av. price split by run-of-mine (ROM) and Exceptional Stones1,2 250 $200 US$/ct $180 200 $160 182 $140 150 $120 $100 Index 100 $80 $60 50 $40 $20 0 $- H1 H2 H1 H2 H1 H1 / FY 2021 H2 / FY
Slide 11: Diamond mining and sustainability
Diamond mining and sustainability Diamonds are a consumer product and Petra recognises its ethical and social responsibilities Examples of Petra’s stakeholder beneficiaries 59% 5,265 3 of our 4 14% Of procurement spend Petra employees Mines are the primary SA mines owned by historically with local s
Slide 12: Diamond mining is well regulated, with a relatively small environmental footprint
Diamond mining is well regulated, with a relatively small environmental footprint Petra’s environmental footprint The relatively small environmental footprint of Petra’s underground mines • GHG: electricity ~15% of on-mine costs in SA. Eskom uses mainly fossil fuels, but restrictions on self-generat
Slide 13: Group Sustainability Framework aspects and focus areas
Group Sustainability Framework aspects and focus areas Valuing our Respecting our Driving shared value Delivering reliable PEOPLE PLANET PARTNERSHIPS PRODUCTION • Safety • Climate change • Stakeholder engagement • Mineral resources management • Health, hygiene & wellness • Water Management • Communi
Slide 14: Environmental and social performance FY 2022
Environmental and social performance FY 2022 Women in the workforce flat Staff turnover +2% Training spend +5% % % US$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 15: Williamson Tailings Storage Facility (TSF) breach
Williamson Tailings Storage Facility (TSF) breach1 Background Environment / remediation • Breach occurred early on 7 November 2022 when subsidence resulted • 12.8 million cubic meters of water and tailings material were released in water cresting the east wall of the facility from the TSF • No loss
Slide 16: Williamson precautionary measures completed to date
Williamson precautionary measures completed to date1 Spill way containment 60m long, 8m wide, 2m high SD3 Breached Wall Closure 200m long, 15m wide, 8m high Ng’wang’holo containment Filtration drain stage 60m long, 8m wide, 2m high 200m long, 15m wide, 5m high Kabondo containment 150m long, 8m wide,
Slide 17: Williamson relief and restoration programme
Williamson relief and restoration programme Humanitarian and Information Restoration plan Implementation transitional relief Stakeholder engagement Humanitarian and Assets inventory Valuation Compensation transitional relief Eligibility and entitlement Restore living standards framework Socio-econom
Slide 18: Governance - Board of Directors
Governance - Board of Directors A relatively new Board reflecting the reset of Petra’s business Board Stats as at 1 Jan 2023 40% Female Peter Hill Richard Duffy Jacques Breytenbach Varda Shine Bernard Pryor Non-Executive Chairman Chief Executive Finance Director Senior Independent NED Independent NE
Slide 19: 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 20: Our operations
Need to replace since employee has left Our operations Employees at Cullinan Mine
Slide 21: Cullinan Mine
Cullinan Mine 4.5m 36.2 cpht $170/ct $322.4m 147.2 FY22 ROM Tonnes FY22 ROM Grade FY22 Av. price FY22 Revenue Gross Resource (Mcts) Cullinan Mine is one of the world’s most It is renowned as a source of very rare and highly celebrated diamond mines. It is the source of valuable Type II blue diamonds
Slide 22: Cullinan Mine expansion project underway
Cullinan Mine expansion project underway Dumps Plant Shaft C-Cut Block (western side) • Sole source of Cullinan Mine tonnes until CC1E contributes from FY Open pit to 189 metres below surface 2024 1903-1932 • Known to contain high value Type II stones • Convergence in southern part of Tunnel 41 in S
Slide 23: Finsch
Finsch 2.7m 46.7 cpht $118/ct $165.7m 36.4 FY22 ROM Tonnes FY22 ROM Grade FY22 Av. price FY22 Revenue Gross Resource (Mcts) The Finsch kimberlite was originally discovered Finsch is known for highly commercial goods of +5 in 1960 and the mine was opened in 1967. Open carats and is rich in gem qualit
Slide 24: Finsch ore supplied from Upper Block 5 SLC since 2019
Finsch ore supplied from Upper Block 5 SLC since 2019 Current mine plan production from 4- level Upper Block 5 SLC; steady state since FY 2019 1961 - 1990 Open pit to 423m below surface Waste ingress contributed to a grade drop of 13% in FY 2022 • Mitigation steps include a ‘grade and 61 Level draw’
Slide 25: Williamson
Williamson 3.6m 6.4 cpht $384/ct $75.9m 37.7 FY22 ROM Tonnes FY22 ROM Grade FY22 Av. price FY22 Revenue Gross Resource (Mcts) The Williamson mine was discovered in 1940 Williamson is renowned for ‘bubblegum’ pink and is based on the Mwadui kimberlite. At diamonds, including the Williamson Pink, whic
Slide 26: Koffiefontein
Koffiefontein 0.5m 7.6cpht $581/ct $21.5m 5.2 22 ROM Tonnes FY22 ROM Grade FY22 Av. price FY22 Revenue Gross Resource (Mcts) The Koffiefontein kimberlite was first It is a low grade mine, but the average value of its discovered in 1870, with diggings on diamond production is very high. The mine prod
Slide 27: Operational focus for FY 2023
Operational focus for FY 2023 Across all mines • Sustainability Framework being integrated • Continuous improvement on cost efficiency and cash generation Cullinan CullinanMine Mine Finsch Finsch • Commencing reopening of Tunnel 36 • Monitoring and managing waste ingress • Assessing the opening of T
Slide 28: Financial overview
Financial overview At 25.75cts, this stone is the largest of the Letlapa Tala Collection of five blue diamonds from the Cullinan Mine, that sold as a collective for $40.4 million in November 2020
Slide 29: Focused on right-sizing the balance sheet
Focused on right-sizing the balance sheet Evolution of gross debt Pre-restructuring September 2021 December 2021 June 2022 December 2022 (Dec. 2020) Total cash balance: Total cash balance: Total cash balance: Total cash balance: Total cash balance: US$106m US$226m US$272m US$288.2m US$146.6m Chart T
Slide 30: Strengthening of the capital structure
Strengthening of the capital structure • Current capex projects to be internally funded • Committed to further reduction in gross debt levels • Opportunities to improve on our 2L debt structure • Maintain leverage below 1.5x • Disciplined capital allocation to maximise value generation • Generate su
Slide 31: Reduction in gross debt and new dividend policy
Reduction in gross debt and new dividend policy Gross debt reduced through successful tender offer for 2L 2026 Loan Notes • Tender offer of Sept/Oct 2022 repurchased US$144.6m of loan notes • Reduced gross debt to US$235.8m and strengthened capital structure • Reduced interest payments by some US$14
Slide 32: 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 existing operations projects to extend life of • Assess orebodies either in including capital projects existi
Slide 33: Petra's transformation underpins sustainable growth
Petra’s transformation underpins sustainable growth New operating model focused on cash generation Embedding sustainability • Maximising value from existing operations • Group sustainability framework being operationalised in • Stable operations benefitting from improved diamond 2022 market fundamen
Slide 34: Appendix
Appendix The Finsch mine in South Africa
Slide 35: FY 2023-25 Analyst Guidance - Group
FY 2023-25 Analyst Guidance - Group $m FY23E FY24E FY25E Total carats recovered, Mcts 2.75 – 2.85 3.0 – 3.3 3.6 – 3.9 Cash on-mine costs and G&A, $1,2 300 – 320 300 – 320 300 – 320 Expansion capex, $1,2 115 – 125 125 – 135 115 – 120 Sustaining capex, $1,2 33 – 36 30 – 32 26 – 28 Note 1: O
Slide 36: Impact of ZAR/USD movement on Petra
Impact of ZAR/USD movement on Petra Exchange rate volatility over the past 30 months: USD • ZAR weakness in FY2022 impacted by global sentiment and inflationary fears • ZAR strength / USD weakness experienced over the past 30 months • FY 2022 closing exchange rate (US$1:ZAR16.27) ca. 14% weaker comp
Slide 37: Cost breakdown – fixed (77%) and variable (23%)
Cost breakdown – fixed (77%) and variable (23%) 37
Slide 38: Capital structure – equity
Capital structure – equity Listing LSE: PDL Shares in issue 194,201,785 Major shareholders % of voting rights1 Vontobel Holding AG 17.83 Azvalor Asset Management SGIIC SA 10.10 Monarch Alternative Capital 8.27 Bank of America Corporation 6.54 The Terris Fund, SPC 5.51 Franklin Templeton Investment M
Slide 39: 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 39
Slide 40: 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
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