Petra Diamonds Limited · LSE:PDL
Petra Diamonds — H1 FY2017 Earnings Presentation
42 slides from Petra Diamonds's earnings presentation, Feb 20, 2017
Slide 1: H1 FY 2017 Interim Results
H1 FY 2017 Interim Results Six Months to 31 December 2016 20 February 2017 Driving Forward
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: H1 FY 2017 – Driving Forward
H1 FY 2017 – Driving Forward Continued production growth • Production +24% to 2 Mcts; 10Mt treated • FY 2019 target of ca. 5.3 Mcts remains on track Expansion programmes on track • SLC at Finsch and new Cullinan C-Cut block cave on track to deliver ca. 1Mt each in FY 2017 • Commissioning of new Cull
Slide 4: H1 FY 2017 - KPIs
Key: H1 FY 2017 - KPIs H2 H1 PRODUCTION REVENUE SAFETY Guidance Million carats US$ (million) LTIFR c.4.4 – 4.6 Mcts 4.0 3.7 500 430.9 0.30 3.5 0.29 3.0 400 0.28 2.5 2.1 300 276.9 0.27 2.0 200 0.26 0.29 1.5 1.0 2.0 0.25 1.6 100 228.5 0.5 154.0 0.24 0.25 0.0 0 0.23 FY 2016 H1 FY 2017 FY 2016 H1 FY 201
Slide 5: H1 FY 2017 - KPIs
Key: H1 FY 2017 - KPIs H2 H1 EBITDA1 OPERATING CASHFLOW CAPEX2 US$ (million) US$ (million) US$ (million) 180 164.3 200 177.3 350 295.8 160 300 140 150 120 250 115.8 200 156.0 100 100 131.7 80 150 60 100 40 87.1 50 86.4 50 139.8 134.9 20 48.5 45.6 0 0 0 FY 2016 H1 FY 2017 FY 2016 H1 FY 2017 FY 2016 H
Slide 6: Financial Position
Financial Position Unit 31 Dec 2016 30 June 2016 31 Dec 2015 Closing exchange rate used for conversion R13.73:US$1 R14.68:US$1 R15.46/US$1 Cash at bank US$m 49.0 48.7 42.1 US$ loan notes (including accrued interest) US$m 302.1 302.0 302.1 Bank loans and borrowings US$m 210.5 131.5 63.9 Net debt US$m
Slide 7: H1 FY 2017 – driving forward to FY 2019
H1 FY 2017 – driving forward to FY 2019 H1 FY 2017 FY 2019 21% 51% 5% 41% 40% Production 1% by mine Finsch 22% Cullinan 11% Williamson 2% 6% Koffiefontein 20% Kimberley Ekapa 33% Revenue 43% Mining 36% by mine 14% 11% 12% 17% 6% 8% Unit H1 FY 2017 H1 FY 2016 Variance FY 20161 SALES Revenue US$m 228.
Slide 8: Operating Costs
Operating Costs • Petra’s focus on cost control helped maintain on- H1 FY 2017 On-mine cash cost breakdown (SA operations) mine cash operating costs in line with expectations, despite ongoing inflationary pressures. • On-mine cash cost increased 17%, mainly due to: • Increased volumes treated, predo
Slide 9: H1 FY 2017 – Summary of Results
H1 FY 2017 – Summary of Results 6 months to 31 6 months to 31 Year ended 30 June December 2016 December 2015 2016 (“H1 FY 2017”) (“H1 FY 2016”) (“FY 2016”) US$ million US$ million US$ million Revenue 228.5 154.0 430.9 Adjusted mining and processing costs (137.7) (99.6) (257.7) Other direct income 1.
Slide 10: Growth and Margin Expansion
Growth and Margin Expansion Petra to maintain a fairly flat tonnage profile from FY 2017 onwards, but the replacement of poor quality tonnes with better quality tonnes will significantly grow production and increase the average value per carat FY 2019 production target of ca. 5.3 Mcts; revenue of ca
Slide 11: Growth and Margin Expansion
Growth and Margin Expansion Adjusted EBITDA margin expected to rise from ca. 38% in FY 2016 to +50% by FY 2019 • Increase in ROM grades together with an increase in tonnage throughput (mainly due to Kimberley Mines transaction) to lead to ca. 43% growth in production • Lower value tailings carat pro
Slide 12: Diamond Market – Overview
Diamond Market – Overview Supply Demand • Supply constraints: Global rough diamond production • US recovery: economy continues to improve; very strong rose 2% to 127 Mcts worth $13.9bn in 2015 (average diamond buying culture (ca. 45% of world demand); retail $109/ct) demand currently performing well
Slide 13: Diamond Market – Overview
Diamond Market – Overview H1 FY 2017 Market Conditions Outlook • H1 FY 2017 saw steady market conditions, with pricing on a • Signs of stabilisation in rough diamond market evident with steady like for like basis generally on par with H2 FY 2016 demand across majority of size ranges, except in the s
Slide 14: Moving to Undiluted Ore
Moving to 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 establishing
Slide 15: Finsch – Development Programme
Finsch – Development Programme Expansion Plan FY 2016 Development: Waste: 2,484 metres; Raiseboring: 99 metres; Kimberlite: 2,969 metres • Expansion plan to take production to ca. 2.0 Mctpa (ROM) by FY 2018 • Sub level cave - tunnelling in host rock complete - 6/11 tunnels in production – 1st level
Slide 16: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan FY 2016 Development: Waste: 1,911 metres; Raiseboring: 838 metres; Kimberlite: 2,837 metres • Expansion plan to take production to ca. 2.2 Mcts by FY 2019 (2.0 ROM & 0.2 tailings) • C-Cut Phase 1: new block cave being established on the western side of
Slide 17: Sustainability
Sustainability Health and Safety • Achievements: Improving LTIFR (0.25 for H1 FY 2017); Finsch won two MineSAFE Awards • Challenges: Petra’s mining method and operations are inherently safe but there is an ever present risk of accidents • Intensification of safety initiatives and new control procedu
Slide 18: Appendix
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Slide 19: Capital Structure
Capital Structure Share Price (1 year to 14 Feb 2017) vs As at 14 February 2017 Number FTSE 250 & FTSE 350 Mining of voting % ISC rights I PDL I FTSE 250 I FTSE 350 Mining BlackRock, Inc. 85,628,014 16.2% T. Rowe Price 57,956,911 10.9% Standard Life Investments 39,638,469 7.5% Templeton Global Advis
Slide 20: The Petra Board & Senior Management
The Petra Board & Senior Management Jacques Breytenbach Chief Financial Officer Assumed role in June 2016, having held Adonis Pouroulis Johan Dippenaar Jim Davidson position of Finance Manager – Operations Non-Executive Chairman CEO Technical Director at Petra since 2006 Leads financial management o
Slide 21: World Diamond Mines
World Diamond Mines Petra Diamonds Limited: H1 FY 2017 Interim Results 21
Slide 22: Focus on Africa
Focus on Africa • Five producing mines (four in South Africa and one in Tanzania), plus exploration in Botswana and South Africa • Diversified portfolio is key to managing production risk across the Group Petra Diamonds Limited: H1 FY 2017 Interim Results 22
Slide 23: An Exceptional Growth Plan
An Exceptional Growth Plan July 2007 July 2008 February 2009 Koffiefontein Cullinan Williamson Petra has acquired six non-core diamond mining operations from De Beers Petra approach: • Flat management structures 70% Petra¹; 30% BEE 74%¹ Petra; 26% BEE 75% Petra¹; 25% Government of Tanzania • Focus o
Slide 24: Petra’s Place in the Market: One of the World’s Largest Diamond Resources
Petra’s Place in the Market: One of the World’s Largest Diamond Resources • Based on FY 2016 production, Petra accounted for: Major producers • 2.9% of world supply by volume (De Beers, ALROSA, Rio Tinto) 25% • 3.1% by value Mid-tier quoted • World-class resource of 312.2 Mcts, ranking 3rd by size p
Slide 25: 2016 Resource Statement (30 June 2016)
2016 Resource Statement (30 June 2016) World-class Resource base of 312.2 million carats¹ worth ca. US$48.6 billion² Gross Resources (Mcts) 100 49.1 50 40.4 194.2 9.0 6.7 - Cullinan Finsch Williamson Operations3 Kimberley Operations Koffiefontein Gross In Situ Value (US$bn)² 15.5 24.5 4.4 3.1 1.2 -
Slide 26: Petra Production Profile
Petra Production Profile • Production profile of a kimberlite is highly consistent when the mine is in steady state production • Ever growing volumes across the full diamond spectrum (from lowest to highest value) • Growing trend for mass luxury supported by strong pricing performance in smaller / 2
Slide 27: Exceptional Diamonds
Exceptional Diamonds • Petra classifies ‘exceptional diamonds’ as stones that sell for +US$5 million each • Exceptional diamonds contributed on average US$23 million pa from FY 2009 to FY 2016 • Average increased to ca. US$36 million pa in FY 2014 to FY 2016 • First tender of FY 2017 included sale o
Slide 28: 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 29: The Most Highly Concentrated Form of Wealth
The Most Highly Concentrated Form of Wealth Examples of recent polished diamond sales at auction The 14.62ct The 12.03ct Blue Oppenheimer Moon of Blue diamond Josephine diamond Sold for US$57.7m US$3.9m per carat, Sold for US$48.4m 18 May 2016 US$4.0m per carat, 12 November 2015 The 24.18ct The 15.3
Slide 30: The Diamond Market in 2015
The Diamond Market in 2015 • Global diamond jewellery sales +2% in local currency but -2% in US$: ca. US$79 billion Share of World Polished Diamond Consumption in Value (US$ PWP) Diamond Jewellery Value, Growth by Geography (US$bn) Source: De Beers Diamond Insight Report 2016 Petra Diamonds Limited:
Slide 31: DPA Advertising Campaign: Wild and Kind
DPA Advertising Campaign: Wild and Kind • Diamond Producers Association aims to encourage best “The opportunity exists for diamonds to practice and sustainability across the industry and to protect represent the rare, precious and real the integrity of the diamond connections that Millennials crave.
Slide 32: H1 FY 2017 Operational Results
H1 FY 2017 Operational Results Kimberley Ekapa Finsch Cullinan Koffiefontein Williamson Mining2 H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY H1 FY 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 ROM PRODUCTION Tonnes Treated (t) 1,498,449 1,656,256 1,039,417 1,180,399 359,044 289,217 209,
Slide 33: Finsch Development Snapshot
Finsch Development Snapshot Long hole drilling, 70 Level SLC kimberlite Tipping blasted ore through rockbreaker Access development tunnel UG conveyor used to transport broken ore Installation of the Apron Feeder Bulkhead The new bulk sample plant Petra Diamonds Limited: H1 FY 2017 Interim Results 33
Slide 34: Cullinan Development Snapshot
Cullinan Development Snapshot Rock breaker south extraction Long hole drilling draw point North production conveyor 2 Conveyor Planning Crusher installation Silo loading Box Petra Diamonds Limited: H1 FY 2017 Interim Results 34
Slide 35: Cullinan Mill Plant Project
Cullinan Mill Plant Project Run of Mine Silo & Recycle Silo Main Sub Station Recovery & HPGR & XRL Buildings • Increase in diamond liberation and gentler process likely to result in less breakage • Saving of ca. ZAR20 – 25/t in processing costs • Strong standalone economics Payback of ca. 3 years
Slide 36: Koffiefontein – Development Programme
Koffiefontein – Development Programme Expansion Plan Koffiefontein Kimberlite Pipe Schematic Expansion Plan – to take production to ca. 95,000 ctpa by FY 2017 • SLC to be mined over 3 levels from 560 mL to 600 mL • Production commenced from first tunnels of SLC on 560 mL – end FY 2015 • 52L Western
Slide 37: Kimberley Underground – Development Programme
Kimberley Underground – Development Programme Expansion Plan Kimberley Underground Kimberlite Pipes Schematic Expansion Plan – planned underground production of ca. 215,000 ctpa from FY 2019 • Underground ore to be treated at Central Treatment Plant – from FY 2017 • Planned grade of 13 – 14 cpht – f
Slide 38: Williamson – Development Programme
Williamson – Development Programme Expansion Plan Williamson Kimberlite Pipe Schematic Expansion Plan – to take production to ca. 325,000 ctpa by FY 2018 • Plant modifications (additional crusher circuit, 2 autogenous mills) commenced – FY 2016 • Commissioning of crusher – FY 2016 • Commissioning of
Slide 39: Debt Facilities
Debt Facilities • Bank facilities (excl. FX lines) as at 31 Dec 2016: ca. US$268 million • Bank debt facilities undrawn and available to the Group as at 31 Dec 2016: US$57 million • US$300 million senior secured second lien notes issued May 2015 Lender Type Size Size Utilised at Interest Rate Repaym
Slide 40: Bank Debt Facilities – Covenants
Bank Debt Facilities – Covenants Distribution Maintenance Covenants Covenants 12 months to 12 months to 12 months to 12 months to Covenant 31 Dec 2016 31 Dec 2016 30 June 2017 31 Dec 2017 and All periods thereafter Actual Required ratio Required ratio Required ratio Required ratio Net Debt1 to 2.7x
Slide 41: Capex Profile – FY 2017 to FY 2019
Capex Profile – FY 2017 to FY 2019 1. All Capex numbers are stated in FY 2017 money terms (ZAR14:$1 where applicable) 2. Depreciation on mining assets for FY 2017 guided at ca. US$70 – 75 million at ZAR14:$1 3. As in prior guidance, capital estimates above do not include any capitalised borrowing co
Slide 42: Thank You
Thank You Further enquiries: Investor Relations investorrelations@petradiamonds.com +44 20 7494 8203 www.petradiamonds.com