Petra Diamonds
Limited
("Petra" or the "Company" or the
“Group”)
Trading Update
Petra Diamonds Limited is pleased to provide the following
trading update for the three (Q3) and nine-month (9M) periods ending 31
March 2021.
Highlights:
- Financials:
- Q3 revenue up 16% to US$106.0m
(Q3 FY 2020: US$91.3m), as prices
recovered to pre-COVID-19 levels
- 9M revenue of US$284.2m, in-line with prior year (9M FY 2020: US$285.2m)
- Operations:
- Q3 production of 704,498 carats (Q3 2020: 932,456 carats) and
9M production of 2,445,360 carats
(9M FY 2020: 3,002,697 carats)
- Post period end an exceptional 11.82 carat blue stone was sold
for US$9.5m and an exceptional 39.34
carat blue stone was recovered, to be sold via special tender
- Health & Safety:
- Improving trend in FY 2021, with the Lost Time Injury Frequency
Rate for the 9M decreasing to 0.47,
from 0.50 in H1, and 0.65 in Q1 (9M
FY 2020: 0.27) ascribed to a behaviour-based intervention
programme
- Total injuries, including LTIs, for the 9M decreased to 30 (9M FY 2020: 37)
- Balance Sheet:
- Completion of capital restructuring strengthening the balance
sheet, with consolidated net debt reduced to US$290.7m at 31 March
2021 (31 December 2020:
US$700.4m)
- Unrestricted cash of US$139.8m at
31 March 2021 (31 December 2020: US$92.4m), with undrawn banking facilities
available of US$10.8m
- Diamond inventory valued at US$75.5m at 31 March
2021 (31 December 2020:
US$105.0m)
Q3 and 9M FY 2021 Production and Sales – Summary
|
Unit |
Q3
FY 2021 |
Q3
FY 2020 |
Variance |
9
months to 31 March 2021 |
9
months to 31 March 2020 |
Variance |
Gross revenue |
US$M |
106.0 |
91.3 |
+16% |
284.2 |
285.2 |
0% |
Total production |
Mt |
1.8 |
3.4 |
-48% |
6.1 |
10.9 |
-44% |
Total diamonds |
Carats |
704,498 |
932,456 |
-24% |
2,445,360 |
3,002,697 |
-19% |
- 'Other' includes alluvial diamond mining at
Williamson.
Richard
Duffy, Chief Executive of Petra Diamonds, commented:
“We are seeing encouraging signs of a
recovery in the diamond market, supporting better pricing,
reflected in the third quarter revenue numbers. Post completion of
the capital restructuring, Petra is in a far stronger position,
with a solid platform for future growth and development. Production
during the period reflected continued out-performance from
Cullinan, with remedial action to address waste ingress at Finsch
delayed as a result of excessive rainfall levels, which also
negatively impacted Koffiefontein, whilst the Williamson mine
remains on care and maintenance. We expect to see improved
performance from Finsch as underground water ingress reduces and
the remediation steps are implemented.”
Conference Calls
Petra’s Chief Executive, Richard
Duffy, and Finance Director, Jacques
Breytenbach, will host a conference call at 9:30am and at 4pm
BST today to discuss the Trading Update with investors and
analysts. Please see below for dial in details.
Trading Update
Health and safety
The Lost Time Injury Frequency Rate (LTIFR) continued to fall in
FY 2021, decreasing to 0.47 for the 9M, from 0.50 in the first half and 0.65 in Q1 FY
2021. The total number of injuries during the nine-month period,
which includes LTIs, decreased to 30 (9M FY 2020: 37).
This trend reflects the benefit of the Company’s behaviour-based
intervention campaign, targeting a zero-harm working environment.
The campaign follows the higher level of LTIFR compared to the same
nine-month period last year, with 20 lost-time injuries recorded,
compared to 16 in FY 2020.
COVID-19 continues to pose a significant risk to the health and
safety of the Group’s workforce. Petra has implemented systems and
strategies across all its operations aimed at preventing and/or
containing the spread of the virus. To date, the Company has had
340 confirmed cases. More information on the Company’s response to
the pandemic is available on its website:
https://www.petradiamonds.com/sustainability/health-and-safety/our-response-to-covid-19/.
Production and Operations
Q3 production decreased 24% to 704,498 carats (Q3 FY 2020:
932,456 carats), with production for the nine-month period
decreasing 19% to 2,445,360 carats (9M FY 2020: 3,002,697 carats).
Q3 production reflected a strong performance from Cullinan, with
production up 9% to 436,703 carats, combined with 43% lower
production at Finsch, at 253,607 carats, an 18% decrease in
production at Koffiefontein, to 14,188 carats, and Williamson
remaining on care and maintenance.
Cullinan continues to recover some exceptional diamonds,
including a 299.3ct type IIa white stone and a 11.82ct type IIb
blue stone during the period as well as an exceptional 39.34ct type
IIb blue stone, post the period end.
Production at Finsch was impacted by measures taken to curtail
waste ingress. Production at Finsch and Koffiefontein was also
affected by the high level of rainfall during Q3 FY 2021.
Discussions with the Government of Tanzania in relation to various issues at the
Williamson mine, including the overdue VAT receivables and the
blocked diamond parcel, are ongoing and are expected to conclude
during Q4 FY2021.
The Company intends to provide its feedback on the Company’s
conclusions and next steps following the investigation into
allegations of human rights abuses at the Williamson mine around
the end of April 2021. The
investigation is being undertaken by an external independent
advisor, in conjunction with the Company’s legal advisors.
Diamond market
Improved demand for rough diamonds continued in Q3, due to
robust demand for jewellery driving continued purchasing by the
midstream. Retail demand is expected to remain positive as
economies re-open; albeit the industry has entered its period of
typically lower demand and the resurgence of COVID-19 in some
countries poses some risk to logistics and the timing of sales for
the remainder of FY 2021.
Diamond pricing has been supported by supply discipline, driving
a better supply / demand balance in the midstream, which remains a
key factor in the health of the market in 2021. Due to the impact
of COVID-19 and the closure of the Argyle mine in Australia in 2020, rough diamond production is
expected to have contracted significantly in 2020 and may continue
to decline.
Diamond
Sales
Q3 revenue increased 16% to US$106.0m (Q3 FY 2020: US$91.3m). This increase was driven by improved
pricing, the sale of a 299.3 carat exceptional diamond in February
for US$12.2m and the carryover of 382
Kcts, of mostly lower value stock from H1 FY 2021, sold during
January 2021. On a like for like
basis, realised diamond prices increased ca.12% from those achieved
in H1 FY 2021.
Post the period end, an exceptional 11.82 carat blue stone,
recovered during the period from the Cullinan mine, was sold for
US$9.5m. The Company also announced
the recovery of an exceptional 39.34 carat blue stone, also from
the Cullinan mine, which will be sold via a special tender.
Project 2022 Update
Throughput ideas remain the largest contributor to growing
operational cash flow and Cullinan remains on track to deliver its
throughput stretch target for FY 2021. As previously outlined, due
to reduced throughput at Finsch, Koffiefontein and Williamson, the
annualised contribution from throughput initiatives is now expected
to be in the region of US$50m, versus
previous expectations of US$70m.
Initiatives undertaken to drive cost efficiencies are expected
to deliver an annualised run rate of US$20m going in to FY 2022. The decrease of
US$2m in cost efficiencies over
previous guidance in H1 FY 2022 relates to higher than anticipated
electricity pricing in South
Africa, combined with the postponement of some moveable
asset sales into FY 2022.
Corporate and Financial
The recapitalisation of the Group was completed during the
period, significantly strengthening the balance sheet, with
consolidated net debt reducing to US$290.7m, from US$700.4m at the end of December 2020.
Petra Diamonds had unrestricted cash of US$139.8m, available undrawn banking facilities
of US$10.8m and diamond inventory
valued at US$75.5m as at 31 March 2021. At 31
December 2020, unrestricted cash was US$92.4m, the Company had fully drawn bank
facilities and the diamond inventory was valued at US$105.0m.
Board
Following completion of the capital restructuring, the
appointment of Mr. Matthew Glowasky
as a Non-Executive Director of the Company became effective.
Matthew’s prospective appointment was initially announced on
22 December 2020.
~ Ends ~
Conference Call:
Participants may join the call by dialling one of the following
numbers shortly before the call:
First Call - 9:30am BST
From the UK: 0330 606 1118
From South Africa (toll free):
80 006 4593
From the rest of the world: +44 330 606 1118
Room Number: 406885
Participant passcode: 0580
A replay of the conference call will be available on the
following numbers:
From the UK: 0330 606 1118
From the US (toll free): (877) 890-2416
From South Africa (toll free):
80 006 4593
From the rest of the world: +44 330 606
1118
Playback passcode: 119099
Second Call – 4:00pm BST
An additional conference call to cater for North American and
other international investors will be held at 4:00pm BST today. Participants are advised to
listen to the replay of the first conference call in advance of
this call.
From the United States (toll
free): (877) 890-2416
From the rest of the world: +44(0) 333 300 0804
From the UK: 0330 606 1118
From South Africa (toll free):
80 006 4593
From the rest of the world: +44 330 606 1118
Room Number: 406885
Participant passcode: 0580
For further information, please
contact:
Petra Diamonds,
London
Telephone: +44 20 7494 8203
Marianna
Bowes
investorrelations@petradiamonds.com
Des Kilalea
Julia Stone
Notes:
- The following definitions have been used in this
announcement:
- Exceptional Stones: diamonds with a valuation and selling
price of US$5m or more per
stone
- cpht: carats per hundred tonnes
- Kcts: thousand carats
- Kt: thousand tonnes
- LOM: life of mine
- LTI: lost time injury
- LTIFR: lost time injury frequency rate
- Mcts: million carats
- Mt: million tonnes
- FY: financial year
- Q: quarter of the financial year
- ROM: run-of-mine (i.e. production from the primary
orebody)
- SLC: sub level cave
- m: million
About Petra Diamonds Limited
Petra Diamonds is a leading independent diamond mining group and
a consistent supplier of gem quality rough diamonds to the
international market. The Company has a diversified portfolio
incorporating interests in three underground producing mines in
South Africa (Finsch, Cullinan and
Koffiefontein) and one open pit mine in Tanzania (Williamson).
Petra's strategy is to focus on value rather than volume
production by optimising recoveries from its high-quality asset
base in order to maximise their efficiency and profitability. The
Group has a significant resource base of ca. 243 million carats,
which supports the potential for long-life operations.
Petra conducts all operations according to the highest ethical
standards and will only operate in countries which are members of
the Kimberley Process. The Company aims to generate tangible value
for each of its stakeholders, thereby contributing to the
socio-economic development of its host countries and supporting
long-term sustainable operations to the benefit of its employees,
partners and communities.
Petra is quoted with a premium listing on the Main Market of the
London Stock Exchange under the ticker 'PDL'. The Company’s
US$337 million loan notes due in 2026
will be listed on the Global Exchange market of the Irish Stock
Exchange. For more information, visit www.petradiamonds.com.
APPENDIX – CORPORATE & FINANCIAL
AND PRODUCTION & SALES TABLES
|
Unit |
31
March 2021 |
31
December 2020 |
30
June
2020 |
31
March
2020 |
Closing exchange
rate used for conversion |
|
R14.77:US$1 |
R14.69:US$1 |
R17.32:US$1 |
R17.84:US$1 |
Cash at bank
(including restricted cash) |
US$m |
153.8 |
106.3 |
67.6 |
77.0 |
Diamond
inventories1 |
US$m
Carats |
75.5
1,020,973 |
105.0
1,385,402 |
84.1
1,357,584 |
61.3
842,144 |
Diamond debtors |
US$m |
2.6 |
3.7 |
4.8 |
14.9 |
US$336.7 million loan
notes (issued March 2021)2 |
US$m |
338.7 |
- |
- |
- |
US$650 million loan
notes (issued April 2017)3 |
US$m |
- |
702.0 |
676.9 |
650.0 |
Bank loans and
borrowings4 |
US$m |
108.4 |
61.2 |
52.1 |
28.0 |
BEE partner bank
facilities4 |
US$m |
- |
47.2 |
40.0 |
40.9 |
Bank facilities
undrawn and available5 |
US$m |
10.8 |
- |
- |
22.4 |
Consolidated net
debt7 |
US$m |
290.7 |
700.4 |
693.2 |
627.0 |
Notes:
- Recorded at the lower of cost and net realisable
value.
- The US$336.7 million loan
notes represents the gross capital of US$336.7 million of notes, plus accrued interest
until the end of the Period, issued following the Restructuring
which completed on 10 March
2021.
- The US$650 million loan notes
represents the gross capital of US$650
million of notes issued on April
2017, plus accrued and unpaid interest for the relevant
periods; these loan notes were settled in full following the
Restructuring which completed on 10 March
2021.
- Bank loans and borrowings represent amounts drawn under the
Group’s refinanced South African bank facilities as part of the
Restructuring, and comprises the ZAR1.2
billion term loan (US$81.3
million) and ZAR400 million
(US$27.1 million) drawn under the
ZAR560 million (US$37.9 million) revolving credit facility.
During the Period and as part of the Restructuring, the BEE partner
bank facilities (which comprised the BEE guarantees) were settled
by the Group through proceeds of the ZAR1.2
billion term loan.
- Consolidated Net Debt is bank loans and borrowings plus loan
notes, less cash, less diamond debtors and includes the Black
Economic Empowerment guarantees of US$nil (ZARnil) as at
31 March 2021 (ca.
US$47.2 million (ZAR692.8 million) as at 31
December 2020, ca. US$40.0
million (ZAR693.6 million) as
at 30 June 2020) ca. US$40.9 million (ZAR729.0
million) as at 31 March
2020).
Group Production and Sales
|
Unit |
Q3
FY 2021 |
Q3
FY 2020 |
Variance |
Nine
months to 31 March 2021 |
Nine
months to 31 March 2020 |
Variance |
Sales |
|
|
|
|
|
|
|
Diamonds sold |
Carats |
1,069,205 |
1,082,937 |
-1% |
2,782,002 |
2,826,744 |
-2% |
Gross
revenue |
US$M |
106.0 |
91.3 |
+16% |
284.2 |
285.2 |
0% |
|
|
|
|
|
|
|
|
Production |
|
|
|
|
|
|
|
ROM tonnes |
Mt |
1.7 |
3.2 |
-49% |
5.8 |
10.2 |
-43% |
Tailings &
other1 tonnes |
Mt |
0.1 |
0.2 |
-38% |
0.3 |
0.7 |
-57% |
Total tonnes
treated |
Mt |
1.8 |
3.4 |
-48% |
6.1 |
10.9 |
-44% |
|
|
|
|
|
|
|
|
ROM diamonds |
Carats |
656,461 |
913,017 |
-28% |
2,301,307 |
2,908,529 |
-21% |
Tailings &
other1 diamonds |
Carats |
48,037 |
19,439 |
+147% |
144,053 |
94,168 |
+53% |
Total
diamonds |
Carats |
704,498 |
932,456 |
-24% |
2,445,360 |
3,002,697 |
-19% |
- 'Other' includes alluvial diamond mining at
Williamson.
Cullinan – South Africa
|
Unit |
Q3
FY 2021 |
Q3
FY 2020 |
Variance |
Nine
months to 31 March 2021 |
Nine
months to 31 March 2020 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
62.9 |
31.2 |
+102% |
170.2 |
112.9 |
+51% |
Diamonds sold |
Carats |
651,268 |
426,283 |
+53% |
1,546,026 |
1,157,130 |
+34% |
Average price per
carat |
US$ |
97 |
73 |
+32% |
110 |
98 |
+13% |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,054,978 |
1,016,653 |
+4% |
3,394,451 |
3,311,850 |
+2% |
Diamonds produced |
Carats |
388,666 |
391,235 |
-1% |
1,302,292 |
1,246,606 |
+4% |
Grade |
cpht |
36.8 |
38.5 |
-4% |
38.4 |
37.6 |
+2% |
|
|
|
|
|
|
|
|
Tailings
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
105,825 |
37,412 |
+183% |
327,210 |
154,524 |
+112% |
Diamonds produced |
Carats |
48,037 |
9,307 |
+416% |
144,053 |
43,722 |
+229% |
Grade |
cpht |
45.4 |
24.9 |
+82% |
44.0 |
28.3 |
+56% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,160,803 |
1,054,065 |
+10% |
3,721,661 |
3,466,374 |
+7% |
Diamonds produced |
Carats |
436,703 |
400,542 |
+9% |
1,446,345 |
1,290,328 |
+12% |
Note:
- The Company is not able to precisely measure the ROM /
tailings grade split because ore from both sources is processed
through the same plant; the Company therefore back-calculates the
grade with reference to resource grades.
Finsch – South Africa
|
Unit |
Q3
FY 2021 |
Q3
FY 2020 |
Variance |
Nine
months to 31 March 2021 |
Nine
months to 31 March 2020 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
31.4 |
34.9 |
-10% |
86.2 |
96.5 |
-11% |
Diamonds sold |
Carats |
391,921 |
529,443 |
-26% |
1,160,568 |
1,313,406 |
-12% |
Average price per
carat |
US$ |
80 |
66 |
+22% |
74 |
73 |
+1% |
|
|
|
|
|
|
|
|
Total ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
460,057 |
724,690 |
-37% |
1,783,057 |
2,258,945 |
-21% |
Diamonds produced |
Carats |
253,607 |
437,537 |
-42% |
948,915 |
1,318,244 |
-28% |
Grade |
cpht |
55.1 |
60.4 |
-9% |
53.2 |
58.4 |
-9% |
|
|
|
|
|
|
|
|
Tailings
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
0 |
37,373 |
-100% |
0 |
211,541 |
-100% |
Diamonds produced |
Carats |
0 |
7,041 |
-100% |
0 |
39,890 |
-100% |
Grade |
cpht |
0 |
18.8 |
-100% |
0 |
18.9 |
-100% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
460,057 |
762,063 |
-40% |
1,783,057 |
2,470,486 |
-28% |
Diamonds produced |
Carats |
253,607 |
444,578 |
-43% |
948,915 |
1,358,134 |
-30% |
Note:
- The Company is not able to precisely measure the ROM /
tailings grade split because ore from both sources is processed
through the same plant; the Company therefore back-calculates the
grade with reference to resource grades.
Koffiefontein – South Africa
|
Unit |
Q3
FY 2021 |
Q3
FY 2020 |
Variance |
Nine
months to 31 March 2021 |
Nine
months to 31 March 2020 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
11.7 |
8.9 |
+32% |
22.9 |
23.6 |
-3% |
Diamonds sold |
Carats |
26,007 |
25,151 |
+3% |
44,951 |
59,314 |
-24% |
Average price per
carat |
US$ |
451 |
352 |
+28% |
509 |
398 |
+28% |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
130,494 |
236,350 |
-45% |
624,155 |
797,646 |
-22% |
Diamonds produced |
Carats |
14,188 |
17,307 |
-18% |
50,101 |
61,852 |
-19% |
Grade |
cpht |
10.9 |
7.3 |
+48% |
8.0 |
7.8 |
+4% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
130,494 |
236,350 |
-45% |
624,155 |
797,646 |
-22% |
Diamonds produced |
Carats |
14,188 |
17,307 |
-18% |
50,101 |
61,852 |
-19% |
Williamson – Tanzania
|
Unit |
Q3
FY 2021 |
Q3
FY 2020 |
Variance |
Nine
months to 31 March 2021 |
Nine
months to 31 March 2020 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
0 |
16.4 |
-100% |
4.6 |
52.3 |
-91% |
Diamonds sold |
Carats |
0 |
102,060 |
-100% |
30,339 |
296,894 |
-90% |
Average price per
carat |
US$ |
0 |
161 |
-100% |
150 |
176 |
-15% |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
0 |
1,225,429 |
-100% |
0 |
3,880,335 |
-100% |
Diamonds produced |
Carats |
0 |
66,939 |
-100% |
0 |
281,827 |
-100% |
Grade |
cpht |
0 |
5.5 |
-100% |
0 |
7.3 |
-100% |
|
|
|
|
|
|
|
|
Alluvial
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
0 |
94,802 |
-100% |
0 |
293,500 |
-100% |
Diamonds produced |
Carats |
0 |
3,090 |
-100% |
0 |
10,555 |
-100% |
Grade |
cpht |
0 |
3.3 |
-100% |
0 |
3.6 |
-100% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
0 |
1,320,231 |
-100% |
0 |
4,173,835 |
-100% |
Diamonds produced |
Carats |
0 |
70,029 |
-100% |
0 |
292,382 |
-100% |