Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Day (February 2022)
76 slides from Petra Diamonds's investor day presentation, Feb 22, 2022
Slide 1: Introducing the new Petra
Introducing the new Petra Investor Day 22 February 2022
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: Agenda and Format
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Agenda and Format 09:30 Introduction The Q&A will be managed at the end of the presentation 09:40 Interim results How to register questions: 09:50 Market backdrop In person: 10:05 Resetting P
Slide 4: Your hosts for today | Brief Introduction
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Your hosts for today | Brief Introduction Richard Duffy Jacques Breytenbach Juan Kemp Rupert Rowland-Clark Chief Executive Officer Chief Financial Officer Chief Technical Officer General Coun
Slide 5: Petra is a mid-tier, multi-asset diamond producer
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Petra is a mid-tier, multi-asset diamond producer with strong sustainability credentials in a transformative phase 3.3 Mcts $493.5m $200.3m $152.3m LTM Production LTM Revenue LTM Adj. EBITDA
Slide 6: Safety remains our number one priority
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Safety remains our number one priority Fatal Accidents FY 2010 – H1 FY 2022 10 4.5 years fatality free NUMBER OF FATAL INJURIES 9 8 7 6 6 5 4 3 2 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 Lost Time Injur
Slide 7: Resilience against COVID-19
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Resilience against COVID-19 We believe our mitigation interventions will continue to allow us to achieve our production and sales targets Robust procedures Rigorous screening Vaccination driv
Slide 8: Summary of Interim Results
Summary of Interim Results 6 months to 31 December 2021 The 39.34 carat blue diamond from the Cullinan mine sold for $40.2m ($1m per carat) in July 2021 – believed to be the highest price per carat on record for a rough diamond
Slide 9: H1 FY 2022 - strong improving trajectory
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix H1 FY 2022 - strong improving trajectory Tonnes US$m Mcts Key 3.7 1.46 1.50 228.8 H2 5.6 4.4 1.74 1.77 264.7 H1 178.1 FY21 H1 FY22 FY21 H1 FY22 FY21 H1 FY22 Ore processed up 27% Production up
Slide 10: H1 FY 2022 - summary of results
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix H1 FY 2022 - summary of results H1 FY 2022 H1 FY 2021 FY 2021 (US$m) (US$m) (US$m) Revenue 264.7 178.1 406.9 Solid operational performance Contribution from Exceptional Stones 77.9 40.4 62.0
Slide 11: H1 FY 2022 summary of results
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix H1 FY 2022 summary of results H1 FY 2022 H1 FY 2021 Restated FY 2021 (U$m) (US$m) (US$m) Revenue 264.7 178.1 406.9 Adjusted mining and processing costs¹ (109.8) (99.2) (276.1) Other direct in
Slide 12: Summary balance sheet
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Summary balance sheet 31 Dec 2021 31 Dec 2020 30 Jun 2021 (U$m) (US$m) (US$m) Cash at bank (including restricted amounts) 272.3 106.3 173.0 Diamond debtors 0.4 3.7 38.3 79.6 105.0 56.5 Diamon
Slide 13: Consolidated net debt movement in H1 FY 2022
Introduction Interims Market Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Consolidated net debt movement in H1 FY 2022 Operational FCF $122.4 million Investor Day 13
Slide 14: Market backdrop
I have updated the caption to provide context for using the image Market backdrop A still from the Natural Diamond Council’s generic marketing campaign, starring brand ambassador Ana de Armas, which was carried out in September 2021 in order to support the market as it moved into the festive selling
Slide 15: The number of producing diamond mines globally continues to contract
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix The number of producing diamond mines globally continues to contract Supply decreased 22% in 2020 to 107 Mcts (2019: 138 Mcts)¹ Udachniy Zarnitsa Jubilee Komsomolsky Aikhal Diavik Ek
Slide 16: Global exploration spend heavily suppressed
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Global exploration spend heavily suppressed Global Diamond Exploration Budget of US$274m in 2020, US$m $274m By company type By location By development stage Global diamond 2% 1% exp
Slide 17: Supply is expected to be almost flat over the next 10 years
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Supply is expected to be almost flat over the next 10 years, with very few new projects coming online Global diamond supply outlook 160.0 Major new projects have 140.0 not been 120.0
Slide 18: Diamonds and jewellery emerged as winning consumer categories
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Diamonds and jewellery emerged as winning consumer categories as the pandemic progressed • Increased disposable income for diamonds, due to lack of competition from categories such a
Slide 19: Lower supply vs higher demand cleared out excess inventories
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Lower supply vs higher demand cleared out excess inventories both upstream and midstream Upstream • Improved market conditions allowed for the release in 2021 of excess inventories a
Slide 20: Inflection point - supply / demand shortfall has begun to manifest
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Inflection point - the predicted supply / demand shortfall has begun to manifest Supply dropped structurally on depletions / lack of new mines, Pricing has recovered well as supply s
Slide 21: Lab-grown gem diamonds continue to diverge as a separate category
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Lab-grown gem diamonds continue to diverge as a separate product category with a lower price point LGDs and natural diamonds can together grow the overall Retail price discounts (LGD
Slide 22: The Natural Diamond Council plays an important role in stimulating demand
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix The Natural Diamond Council plays an important role in stimulating future demand Petra is one of the founder members of the NDC The NDC aims to advance the integrity of the modern 12
Slide 23: Resetting Petra
Resetting Petra 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 24: Project 2022 was initiated in 2019 to improve net FCF
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Project 2022 was initiated in 2019 to significantly improve net FCF and instill a culture of continuous improvement Position the Company to pursue Instil a Continuous Improvement fur
Slide 25: Project 2022 has delivered stellar results
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Project 2022 has delivered stellar results Project 2022 to date delivered $182 million net free cash flow and is on track to exceed $200 million by end June 2022, against target of $
Slide 26: We have been on a journey to refresh Petra's culture
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix We have been on a journey to refresh Petra’s culture Main elements of Petra’s culture reset Petra’s Inspirational Desired outcome Culture Operating Model (service delivery) Organisat
Slide 27: Our Operating Model
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Our Operating Model Petra is structured • Develop the Petra Diamonds • Governance and Compliance around service Strategy and overall delivery • Business performance • Organisational
Slide 28: Redesigned organisational structure
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Redesigned organisational structure Chief Executive Officer Richard Duffy Williamson Board * Post GOT FWA & Caspian MOU Chief Operating Officer Chief Technical Officer Chief Financia
Slide 29: Petra's integrated Risk and Assurance approach
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Petra’s integrated Risk and Assurance approach ‘Four Lines Defence’ model; internal & external assurance of effective Combined Assurance (CAM) risk controls and fully integrated with
Slide 30: Sustainability Framework
Sustainability Framework Refilwe Mafiri was appointed as Petra’s first female Mining Manager at the Finsch mine in June 2021
Slide 31: We are establishing a well-structured Sustainability Framework
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix We are establishing a well-structured Sustainability Framework Sustainability pillars are the main drivers for the Company to create shared value and PILLARS ensure a sustainable bus
Slide 32: Sustainability Framework development timeline
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Sustainability Framework development timeline Step 3 Identify targets and initiatives March 2022 – May 2022 Step 4 Finalise framework and Step 2 implement Finalise framework approach
Slide 33: Sustainability Framework underpinned by four pillars
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Sustainability Framework underpinned by four pillars This will inform balanced day-to-day decision making, while ensuring a sustainable long-term future for Petra Instilling an Inspi
Slide 34: Sustainability pillars and associated aspects
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Sustainability pillars and associated aspects Valuing our Respecting our Driving shared value Delivering reliable PEOPLE PLANET PARTNERSHIPS PRODUCTION • Safety • Climate change • St
Slide 35: Petra's Selected Sustainable Development Goals
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Petra’s Selected Sustainable Development Goals The following have been identified as the Group’s main SDGs, aligned with our pillars and aspects Promote inclusive Encourages more Foc
Slide 36: An illustration of how we will unpack our Sustainability Framework
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix An illustration of how we will unpack our Sustainability Framework PILLARS Planet ASPECTS Water management FOCUS AREAS Optimise water consumption Reduce potable water consumption TAR
Slide 37: Our Climate Change ambitions
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Our Climate Change ambitions We recognise the impacts of Climate Change and support the Paris Agreement and the Nationally Determined Contributions of the jurisdictions we operate in
Slide 38: Petra's ESG performance
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Petra’s ESG performance Women in the workforce Staff turnover Training spend 83% 20% 9.6% $5.8m HDSA² Leadership 9.5 Development Candidates 10.8 20.0 8.5 9.3 9.6 19.0 19.0 8.1 8.1 6.
Slide 39: Committed to transparent engagement and disclosures
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Petra remains committed to transparent engagement and disclosures as we continue on our sustainability journey Our sustainability disclosure journey: 2008 2013 2017 2019 Key sustaina
Slide 40: Operational Update
Operational Update A Load Haul Dumper preparing to offload ore into the ore pass feeding the primary crusher on 839L production level in the C-Cut Block Cave at Cullinan
Slide 41: Cullinan
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Cullinan 2.3m 36.5 cpht $119 $167.7m 149.8 H1FY22 $/ct H1FY22 ROM Tonnes H1FY22 ROM Grade H1FY22 Revenue Gross Resource (Mcts) $192 incl Exceptionals Cullinan is one of the world’s m
Slide 42: Cullinan Mine stabilised and optimised
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Cullinan Mine stabilised and optimised Dumps Plant Shaft C-Cut Block (western side) • Sole source of Cullinan tonnes until CC1E contributes from FY 2024 Open pit to 189 metres below
Slide 43: Cullinan presents long term opportunities
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Cullinan presents long term opportunities Dumps Plant Shaft Cullinan presents significant opportunities for mine plan extensions beyond 2031 (c.70 Mt to 1093m Level) • Add additional
Slide 44: Cullinan guidance
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Cullinan guidance FY 2022 Description Unit (Previous FY 2022E FY 2023E FY 2024E FY 2025E Guidance notes Guidance) 1. Real amounts stated in FY ROM tonnes Treated (Mt) 4.2 - 4.4 4.3 -
Slide 45: Finsch
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Finsch 1.4m 49.3 cpht $105 $65.7m 37.7 H1FY22 $/ct H1FY22 ROM Tonnes H1FY22 ROM Grade H1FY22 Revenue Gross Resource (Mcts) $97 incl low value goods The Finsch kimberlite was original
Slide 46: Finsch ore supplied from Upper Block 5 SLC since 2019
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix 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 surf
Slide 47: Finsch presents long term opportunities
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Finsch presents long term opportunities Finsch presents opportunities for mine plan extensions beyond 2030 (circa 24 Mt to 100 level) • Mining of area below lower block 5 • Mining of
Slide 48: Finsch guidance
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Finsch guidance FY 2022 Description Unit (Previous FY 2022E FY 2023E FY 2024E FY 2025E Guidance) Guidance notes ROM tonnes Treated (Mt) 2.75 - 2.85 2.75 - 2.80 2.9 - 3.0 2.9 - 3.0 3.
Slide 49: Williamson
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Williamson 1.4m 6.1 cpht $241 $20.2m 37.9 H1FY22 $/ct H1FY22 ROM Tonnes H1FY22 ROM Grade H1FY22 Revenue Gross Resource (Mcts) $760 incl Exceptionals The Williamson mine was discovere
Slide 50: Williamson's evolving ownership structure
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Williamson’s evolving ownership structure Current Ownership Framework Agreement (FWA) Caspian MOU (effective) becoming effective becoming effective • 75% Petra • 63% Petra • 31.5% +
Slide 51: Williamson presents long-term opportunities
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Williamson presents long-term opportunities 46.5 Mt Williamson to continue with current mine plan to 2030, as per SML (46.5 Mt) ± 112 Mt • Focus on achieving steady state and Crater
Slide 52: Williamson guidance
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Williamson guidance FY 2022 Description Unit (Previous FY 2022E FY 2023E FY 2024E FY 2025E Guidance notes Guidance) 1. Real amounts stated in ROM tonnes Treated (Mt) 3.6 - 4.0 3.6 -
Slide 53: Koffiefontein
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Koffiefontein 0.3m 7.1 cpht $538 $11.1m 5.2 H1FY22 ROM Tonnes H1FY22 ROM Grade H1FY22 $/ct H1FY22 Revenue Gross Resource (Mcts) The Koffiefontein kimberlite was first It is a low gra
Slide 54: Koffiefontein
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Koffiefontein • Koffiefontein’s current mine plan (56-60 level SLC) to deplete remaining reserves West Fissure 1892 - 1981 by FY 2025 Open pit to 240m below surface East Fissure • Bu
Slide 55: Koffiefontein guidance
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Koffiefontein guidance FY 2022 Description Unit (Previous FY 2022E FY 2023E FY 2024E FY 2025E Guidance notes Guidance) 1. Real amounts stated in FY ROM tonnes Treated (Mt) 0.72 - 0.7
Slide 56: Guidance summary
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Guidance summary $m FY22E FY23E FY24E FY25E Total carats recovered 3.3 – 3.6 3.3 – 3.6 3.3 – 3.6 3.6 – 3.9 Cash on-mine costs and G&A, $ 300 - 310 300 – 320 300 – 320 300 – 320 Expan
Slide 57: Our diamond marketing and sales process
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Our diamond marketing and sales process • South African goods are continuously prepared for sale (cleaned and sorted) at our facility in Kimberley • Petra typically sells all accumul
Slide 58: Record recovery of Exceptional Stones in H1 FY2022
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Finance Our Strategy Appendix Record recovery of Exceptional Stones in H1 FY2022 • Petra’s mines produce some of the most beautiful and rare diamonds in the world • Validation of strategy to position new block ca
Slide 59: Financial Framework
Financial Framework Marketing Manager Greg Stephenson examining the Letlapa Tala Collection in Antwerp
Slide 60: Petra has been right-sizing its balance sheet
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Petra has been right-sizing its balance sheet Capital structure evolution Pre-Restructuring September 2021 December 2021 Forecast (Dec. 2020) (March 2022) Total cash bala
Slide 61: We will follow a well-structured capital allocation approach
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix We will follow a well-structured capital allocation approach FIRST ORDER SECOND ORDER DISCRETIONARY OF ALLOCATION OF ALLOCATION ALLOCATION (only after satisfying 1st & 2n
Slide 62: Strengthening of the capital structure
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Strengthening of the capital structure • Current capex projects to be internally funded • Committed to further reducing gross debt levels • Opportunities to improve on ou
Slide 63: Our strategy
Our strategy A Type IIa white diamond and a Type IIb blue diamond typical of the Cullinan mine orebody
Slide 64: Pursuing a value driven growth strategy
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Pursuing a value driven growth strategy 1 2 3 BROWNFIELD INORGANIC AND CURRENT ORGANIC CORPORATE OPPORTUNITIES OPERATIONS EXPANSION PROJECTS • Maximise value from • Devel
Slide 65: Eight key strengths to leverage in executing our growth strategy
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Eight key strengths to leverage in executing our growth strategy Diamond Sales and M&A and Agile, mining at scale marketing partnering entrepreneurial capabilities credib
Slide 66: Desired outcome – a healthy project funnel
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Desired outcome – a healthy project funnel ILLUSTRATIVE, NOT EXHAUSTIVE Idea Investment Generation Pre- Feasibility Feasibility Committee Carbon Credits Carbon Capture Al
Slide 67: Value proposition
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Value proposition Robust operations and growth potential Strengthened financial platform • Best-in-class safety performance • Strong cash generation through 3-year Projec
Slide 68: Appendix
Appendix The Finsch mine in South Africa
Slide 69: Board of Directors
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Board of Directors Board Stats as at 1 March 2022 36% Female Peter Hill Richard Duffy Jacques Breytenbach Varda Shine Bernard Pryor Octavia Matloa Non-Executive Chairman
Slide 70: Capital Structure
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Capital Structure Shareholder % of voting Share price (6 months to 18 February 2022) rights Vontobel Holding AG 17.83 Monarch Master Funding 2 12 (Luxembourg) S.a.r.l. In
Slide 71: Petra Corporate Bond
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Petra Corporate Bond Petra’s bond trading history (Since re-instatement) Petra Diamonds Corporate Bond 106 Chart Title Issue date: 09 March 2021 104 103.3 Issue size: US$
Slide 72: Impact of ZAR/USD movement on Petra
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Impact of ZAR/USD movement on Petra 80-90% of operating costs are ZAR denominated* Exchange rate volatility over the past 24 months: USD • ZAR weakness in first half of 2
Slide 73: Binding term sheet to refinance its 1L debt facility
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Binding term sheet to refinance its 1L debt facility at more favourable terms Previous terms New terms R560m RCF (R400m current) Facility R1200m term loan R1000m RCF (R85
Slide 74: Cost breakdown – fixed (77%) and variable (23%)
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix Cost breakdown – fixed (77%) and variable (23%) Investor Day 74
Slide 75: Block caving simplified
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix 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 weigh
Slide 76: Sub-level caving overview
Introduction Interims Market backdrop Resetting Petra Sustainability Operational update Financial framework Our Strategy Appendix 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 m