Petra Diamonds Limited · LSE:PDL
Petra Diamonds — GMP Indaba Presentation February 2014
38 slides from Petra Diamonds's conference presentation, February 2014
Slide 1: Petra Diamonds – Unearthing Value in Diamonds
An exceptional 29.6 carat Cullinan blue recovered January 2014 Petra Diamonds – Unearthing Value in Diamonds February 2014
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: Investment Case
Investment Case How to best translate strong commodity prices to share price performance? • Maximise world-class resource base of +300m carats • Continue to deliver on expansion plans across portfolio • On track for 5 Mctpa / ca. US$1bn¹ revenue by FY 2019 • Targeting free cashflow (after Capex) ~FY
Slide 4: An Exceptional Growth Path
An Exceptional Growth Path Petra has acquired five non-core diamond mines from De Beers (four in South Africa, one in Tanzania): July 2007 July 2008 February 2009 May 2010 September 2011 Koffiefontein Cullinan Williamson Kimberley UG Finsch 74% Petra¹; 26% BEE 74%¹ Petra; 26% BEE 75% Petra¹; 25% 74%
Slide 5: Roadmap to 5 million Carats pa
Roadmap to 5 million Carats pa • Growth profile is solely organic and brownfields – expansion programmes to open up new mining areas • Fully financed using debt, treasury and operating cashflows 1000 6.0 Carat production (million carats) 5.0 4.0 2013 production US$m of 2.67 Mcts 500 3.0 2.0 2007 pro
Slide 6: H1 FY 2014 Trading Update
H1 FY 2014 Trading Update Unit H1 FY 2014 H1 FY 2013 Variance FY 2013 Sales Revenue US$m 185.5 156.3 +19% 402.7 Diamonds sold Carats 1,417,694 1,066,662 +33% 2,539,844 Production ROM diamonds Carats 1,140,479 995,521 +15% 2,038,115 Tailings & alluvial diamonds Carats 495,237 252,001 +97% 630,190 Tot
Slide 7: Diamond Market Overview
Diamond Market Overview • Limited supply: only ~30 significant kimberlite mines in production; no major discoveries since 1990’s • Major mines maturing: past production peak; moving underground = lower tonnages + higher operating costs • Late cycle credentials: demand driven by urbanisation trend an
Slide 8: Petra Production Profile
Petra Production Profile • Kimberlite production profile (diamond quality and size ranges) remains highly constant over time • Petra offers consistent assortments thereby ensuring measurable outcomes to client base • Mainstay of Petra production is commercial, mass market goods • Petra expects stron
Slide 9: Regular Production of Specials
Regular Production of Specials • ca. US$1m stones are fairly regular and considered run of mine The exceptional 25.5ct Cullinan Type IIb blue stone sold for US$16.9m in April 2013 • +US$5m stones are considered exceptional – average contribution to revenue of ca. US$16m pa over last five years 126ct
Slide 10: Current Rough Diamond Market
Current Rough Diamond Market • Weaker Q1, but market firmed up towards end of H1 • Solid seasonal sales, indicators of increasing global economic confidence and cautious optimism from Petra client base provides positive basis for restocking in pipeline • Petra expects firmer market conditions to con
Slide 11: Expansion Programmes Snapshot
Expansion Programmes Snapshot Underground development Tailings retreatment Optimising orehandling Plant refinements 11
Slide 12: Moving into Undiluted Ore
Moving into 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 establishin
Slide 13: Finsch – Development Programme
Finsch – Development Programme Expansion Plan – to take 2,311 development metres and 165 raiseboring metres in FY 2013 production to c.1.8 Mctpa by FY 2016 and c.2.0 Mctpa from FY 2017 Dedicated conveyor ore-handling system • Mining currently taking place in Block 4 at 630m – FY 2014 Current Mining
Slide 14: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan – to take 4,147 development metres and 626 raiseboring metres in FY 2013 production to c. 2.2 Mctpa by FY 2019 (2.0 Mctpa ROM & 0.2 Mctpa tailings) • Commenced rehabilitation of Current Infrastructure Men & Material BA5 areas at 645m to create Shaft Pl
Slide 15: Fully Financed Capex Profile
Fully Financed Capex Profile Debt Facilities Increasing Operating Cashflow Group debt facilities of ca. FY 2013 adjusted operating US$222 million¹ in place with cashflow² of US$132.8 million As at 31 December 2013: Absa, RMB/FNB and IFC • Net debt of US$118.1 million • Cash: US$27.5 million • Diamon
Slide 16: Production and Revenue – FY 2013 vs FY 2019
Production and Revenue – FY 2013 vs FY 2019 Gross Production Gross Revenue FY 2013 actual: 2.67 million carats FY 2013 actual: US$402.7 million 33% 33% 41% 53% Cullinan Williamson 6% 10% Koffiefontein 4% 1% 8% 4% 3%4% Kimberley Underground Fissure Mines FY 2019: ca. 5 million carats¹ FY 2019: ca. US
Slide 17: Outlook
Outlook Rising Production Rising Margins Rising Prices? • Firmly on track for 3.0 million • Grades expected to rise ca. 50% • Petra expects firmer market carats in FY 2014 once expansion plans access conditions to continue in H2 undiluted ore 2014 • Organic growth to ca. 5 million • Carat production
Slide 18: Integrated Approach to Sustainability
Integrated Approach to Sustainability Safety 1.2 1 Safety of employees is top 0.8 priority for management 0.6 Petra striving for 0.4 zero harm across its operations 0.2 Left: Petra’s LTIFR 0 Rate FY 2010 FY 2011 FY 2012 FY 2013 H1 FY 2014 Striving for the highest standards Investing in communities F
Slide 19: Appendix
The Cullinan mine in South Africa Appendix
Slide 20: Capital Structure
Capital Structure High Quality Share Register % ISC Share Price (1 year) (as at 23 January 2014) Al Rajhi Holdings W.W.L. 13.1% Saad Investments Company Ltd / AWAL Bank 11.9% T. Rowe Price 10.2% JP Morgan Asset Management Holdings Inc. 7.8% Listing LSE: PDL BlackRock Investment (UK) Limited 7.3% Ave
Slide 21: The Petra Board
The Petra Board Adonis Pouroulis (43) Johan Dippenaar (56) David Abery (51) Jim Davidson (68) Non-Executive Chairman CEO Finance Director Technical Director Successful mining entrepreneur One of South Africa’s most successful Extensive experience as Chief Financial Acknowledged world authority on Fo
Slide 22: FY 2013 – Key Performance Indicators
FY 2013 – Key Performance Indicators Revenue Profit from Mining Activity¹ Adjusted EBITDA² Adjusted operating cashflow³ US$M US$402.7m US$M US$136.8m US$M US$122.4m US$132.8m +27% +34% +36% US$M +57% 450 160 140 150 400 140 120 130 350 120 100 110 300 100 90 250 80 80 70 200 60 60 50 150 40 40 30 10
Slide 23: FY 2013 – Summary of Financial Results
FY 2013 – Summary of Financial Results FY 2013 FY 2012 (US$m) (US$m) Revenue 402.7 316.9 Adjusted mining and processing costs¹ (270.3) (222.6) Other direct income 6.2 9.0 Profit from mining activity1 138.6 103.3 Exploration expense (4.8) (3.0) Corporate overhead (11.4) (10.0) Adjusted EBITDA1 122.4
Slide 24: FY 2013 – Operations Results
FY 2013 – Operations Results Operation Finsch Cullinan Koffiefontein Kimberley UG Williamson (74%¹ Petra; 26% BEE) (74%¹ Petra; 26% BEE) (74%¹ & 2 Petra; 26% BEE) (74%¹ Petra; 26% BEE) (75% Petra; 25% Government of Tanzania) Total Production Tonnes treated (Mt) 5,210,546 3,861,012 4,080,893 3,172,67
Slide 25: Focus on Africa
Focus on Africa • Six producing mines (five in South Africa and one in Tanzania), plus exploration in Botswana • Diversified portfolio is key to managing production risk across the Group Africa is source of ca. 60% of world’s diamonds by value 25
Slide 26: World-class Resource Base
World-class Resource Base • Largest resource base outside the majors (Alrosa, De Beers, Rio Tinto) • Group resource base of 309.6 million carats worth ~US$55.0 billion¹ (at 30 June 2013) • Solid foundation for sustainable, long-term mining operations Gross Resources (Mcts) 200.8 100 50.9 50 39.4 7.2
Slide 27: Falling Supply
Falling Supply • Production fell 28% from 2005 (177 Mcts; Zim 0.2 Mcts) to 2012 (128 Mcts; Zim: 12.1 Mcts) • Success rate for finding an economic diamondiferous kimberlite is estimated to be ca. 1% • No Tier 1 discoveries for 20 years, despite US$ billions spent on exploration in 1990s • Long lead t
Slide 28: Growing Demand
Growing Demand Number of middle class households, millions • Demand growth driven by urbanisation and growing middle classes in emerging markets • Additional 1.3bn people to attain middle income status by 2030; 2.6bn by 2050 (HSBC ‘Consumer in 2050’ report) • China starting to follow US trend – mass
Slide 29: Rare Diamonds Continue to Break Records
Rare Diamonds Continue to Break Records 12 November 2013: The Orange, at 14.8cts the largest known fancy-vivid orange diamond, sold for US$36 million, or US$2.4 million per carat; being the highest price per carat on record for any diamond (South Africa – date unconfirmed) 7 October 2013: The 118.3c
Slide 30: Iconic Gems from Iconic Mines
Iconic Gems 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 507.55 carats roug
Slide 31: Consistent Production of Specials
31 2013 Date of acquisition 2011 2009 2007 2005 2003 2001 1999 1997 1995 +100 & +200 carat stones Recovered at Cullinan Diamond Mine 1993 1991 1989 1987 1985 1983 1981 1979 1977 1975 1973 1971 Consistent Production of Specials +200 1968 1966 +100 1964 1962 1960 1958 1956 1954 1952 1950 1931 1929 192
Slide 32: Kimberley Underground – Development Programme
Kimberley Underground – Development Programme Expansion Plan – to Kimberley Underground Kimberlite Pipes Schematic maintain annual production of c. 130,000 ctpa • Construction and commissioning of plants at both Joint Shaft and BULTFONTEIN Wesselton Shaft – completed in FY 2013 • Substantial stockpi
Slide 33: Koffiefontein – Development Programme
Koffiefontein – Development Programme Expansion Plan – to take Koffiefontein Kimberlite Pipe Schematic production to c. 105,000 ctpa by FY 2017 • ROM production supplemented by ore from Ebenhaezer open pit (~5ha) – FY 2014 to FY 2016 • Installation of SLC from 560m to 580m – FY 2014 to FY 2015 • SLC
Slide 34: Williamson – Development Programme
Williamson – Development Programme Expansion Plan – to take Williamson Kimberlite Pipe Schematic production to c. 300,000 ctpa by FY 2017 • Production resumed further 1km to the enhanced rebuild of N plant – Q4 FY 2012 • Successful ramp-up of production to 2.7 Mt – FY 2013 LOM Pit Shell • Re-crush c
Slide 35: Debt Facilities
Debt Facilities • Nov 2012: new debt facilities put in place of ca. US$222 million with Absa, RMB (FNB) and IFC • An increase and optimisation of Petra’s prior debt structures (previously ca. US$138 million ) Lender Type Size Interest Rate Repayment Absa & Amortising term facility US$81.0 JIBAR + 4.
Slide 36: Capex Profile
Capex Profile Financial Year 2013A 2014F 2015F 2016F 2017F 2018F 2019F Operation Finsch ROM tonnes treated (Mt) 2.6 2.8 2.9 3.2 3.2 3.2 3.2 Tailings tonnes treated (Mt) 2.6 2.6 3.0 3.0 3.0 3.0 3.0 Expansion Capex (ZARm) 296.1 512.3 422.2 346.9 467.9 403.0 354.3 Sustaining Capex (ZARm) 93.7 132.7 115
Slide 37: South Africa and Tanzania
South Africa and Tanzania South Africa Tanzania Corporate tax 28% 30% Diamond royalty Formula based on profitability of 5% of turnover mining operation; 0.5% up to 7% of turnover Rough diamond export levy 5%, certain exemptions apply; n/a Petra sells all SA goods in Joburg State Diamond Trader Petra
Slide 38: Further enquiries: Petra Diamonds
The Cullinan mine in South Africa Further enquiries: Petra Diamonds Cathy Malins cathy.malins@petradiamonds.com +44 20 7494 8203 www.petradiamonds.com
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