THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
FOR IMMEDIATE RELEASE
Petra Diamonds Limited
("Petra" or the "Company" or the “Group”)
Q3 FY 2020 Trading Update and
Liquidity Update
Petra Diamonds Limited announces the following Trading Update
(unaudited) for the three months ended 31
March 2020 (the “Period”, “Q3 FY 2020” or “Q3”) and the nine
months ending 31 March 2020 (“9M FY
2020”).
The Company is also providing a further update in relation to
liquidity, its capital structure, projected capex and its
discussions with relevant financial stakeholders.
Summary
Q3 and 9M FY 2020
- 9M FY 2020 Lost Time Injury
Frequency Rate (“LTIFR”): 0.27 (9M FY
2019: 0.19); considerable focus on curtailing the increasing LTIFR
via comprehensive safety intervention initiatives which have seen a
reduction in LTIFR recorded so far in Q4 FY 2020. Total injuries,
including those that did not result in a lost shift, for
9M FY 2020 reduced by 26%.
- Q3 production up 1% to 932,456 carats (Q3 FY 2019: 924,228
carats) notwithstanding the COVID-19 lockdown measures implemented
in South Africa from 23 March 2020.
- 9M FY 2020 production up 2% to
3,002,697 carats (9M FY 2019:
2,943,374), demonstrating the delivery of significant throughput
benefits realised through the implementation of Project 2022,
offset by the disruptions to production relating to Eskom load
shedding during Q2 FY 2020 and the COVID-19 lockdown measures
towards the end of Q3.
- Q3 revenue down 32% to US$91.3
million (Q3 FY 2019: US$135.2
million), with the March 2020
tender being impacted by the COVID-19 pandemic. Post Period end, a
follow-up tender in Antwerp
realised US$6.3 million with rough
diamond prices for the combined March / April tenders down ca. 27%
compared to February 2020 prices. Ca.
24kcts, being 5% of the volume of goods offered for sale and
comprising predominantly higher-value goods, remain unsold, further
impacting prices realised, and will be offered for sale in the next
tender cycle.
- 9M FY 2020 revenue down 17% to
US$285.2 million (9M FY 2019: US$342.4
million) due to weaker prices and lower sales in the March
tender.
- Net debt at 31 March of US$601.0
million (31 December 2019:
US$596.4 million).
- Unrestricted cash of US$64.2
million (31 December 2019:
US$40.1 million), including
US$28.0 million further to the
Company drawing down shortly before Period end the full
ZAR500 million under its working
capital facilities (31 December 2019:
nothing drawn under the bank facilities).
- ZAR:USD exchange rate volatility continued during the Period,
averaging R14.92/USD1 but closing the
Period at ZAR17.84/USD1; the weakening ZAR is partially offsetting
some of the price weakness realised through diamond sales.
Outlook
- Post the lockdown that came into effect on 26 March 2020, the Company’s South African
operations were reduced to approximately one third of normal
operating levels. From around 24 April
2020 to date, the South African mines have been operating at
staffing levels of no more than 50%, in accordance with the
Department of Minerals and Energy (“DMRE”) guidelines.
- From 1 June 2020, South Africa will be moving to Level 3
restrictions, which will allow for a further easing of restrictions
and a subsequent increase in production. The Company is in
discussions with the DMRE and organised labour around further
increasing production, safely and in accordance with COVID-19
regulations.
- The Williamson mine in Tanzania remains under care and maintenance
and recommencement of operations is dependent on improved market
conditions and rough diamond pricing.
- Due to ongoing uncertainty around the impact of COVID-19,
production guidance for FY 2020 remains suspended.
- Given the level of global restrictions on the movement of
people and goods affecting the entire diamond supply pipeline, the
Company cancelled its sixth annual tender cycle, which is usually
held during May. Petra is assessing the viability of conducting a
tender during June 2020 as the
Antwerp diamond market is showing
signs of reopening. However, we expect prices to remain subdued
until such time as activity levels across the pipeline are able to
increase in a safe manner.
- In response to the impact of COVID-19 on the business, and
taking into consideration the ongoing discussions with its various
stakeholders in relation to the Company’s capital structure, the
Company has taken steps to optimise its future capex profile in
order to minimise short-term capital requirements and manage its
liquidity through the crisis period. This has led to a
significantly reduced level of capital provisionally planned for FY
2021 of ca. US$28 million, which has
been achieved through some capital savings, but largely deferrals
to future periods as set out in the ‘Longer-term Capital Guidance’
section of the announcement.
- The Company has reached agreement with its South African lender
group regarding the conditions upon which ZAR400 million of its ZAR1.0 billion revolving credit facility is to be
made available in order to manage near-term liquidity risks arising
from the unprecedented operating and trading environment.
- The Company has also reached agreement with the South African
BEE lender group to reschedule the capital repayments due in
May 2020 and November 2020 under the Company's outstanding
bank financing of its Black Economic Empowerment partners.
- Finally, Petra has today entered into a forbearance agreement
(the “Forbearance Agreement”) with the ad-hoc group of holders (the
“AHG”) of the Company’s US$650
million 7.25% Senior Secured Second Lien Notes due 2022 (the
“Notes”). Pursuant to the Forbearance Agreement, the AHG has agreed
to forbear from the exercise of certain rights and remedies that
they have under the Notes indenture, including agreeing not to
accelerate the Notes obligations as a result of the missed interest
payment due 1 May 2020. As a result,
the Company will not make the interest payment at the present time
and will be in a strong position in the near term, to continue
discussions with its various stakeholders regarding strategic
alternatives towards longer term solutions to improve the Company’s
capital structure.
- The agreements with the lender groups referenced above and the
Forbearance Agreement are subject to certain conditions, which are
set out in the ‘Liquidity and Capital Structure’ section of the
announcement.
Q3 and 9M FY 2020 Production and
Sales – Summary
|
Unit |
Q3
FY 2020 |
Q3
FY 2019 |
Variance |
Nine
months to 31 March 2020 |
Nine
months to 31 March 2019 |
Variance |
Sales |
|
|
|
|
|
|
|
Diamonds sold |
Carats |
1,082,937 |
1,061,343 |
2% |
2,826,744 |
2,797,700 |
1% |
Gross
revenue |
US$M |
91.3 |
135.2 |
-32% |
285.2 |
342.4 |
-17% |
|
|
|
|
|
|
|
|
Production |
|
|
|
|
|
|
|
ROM tonnes |
Mt |
3.2 |
3.4 |
-5% |
10.2 |
9.8 |
5% |
Tailings &
other1 tonnes |
Mt |
0.2 |
0.3 |
-50% |
0.7 |
1.3 |
-51% |
Total tonnes
treated |
Mt |
3.4 |
3.7 |
-9% |
10.9 |
11.1 |
-2% |
|
|
|
|
|
|
|
|
ROM diamonds |
Carats |
913,017 |
898,517 |
2% |
2,908,529 |
2,845,234 |
2% |
Tailings &
other1 diamonds |
Carats |
19,439 |
25,711 |
-24% |
94,168 |
98,140 |
-4% |
Total
diamonds |
Carats |
932,456 |
924,228 |
1% |
3,002,697 |
2,943,374 |
2% |
- 'Other' includes alluvial diamond mining at
Williamson.
Richard Duffy, Chief Executive of
Petra Diamonds, commented:
“Our operations continued their
strong H1 performance into Q3, in large part due to the delivery of
throughput benefits further to the positive implementation of
Project 2022, prior to the disruptions caused by the outbreak of
COVID-19. We continued to prioritise the safety and health of our
workforce in implementing prescribed COVID-19 measures as we moved
the South African mines to operating at 50% of our workforce and
will continue to carefully manage the increase towards full
production over time.
Although restrictions brought about
by lockdowns implemented globally resulted in the cancellation of
our May tender, we are seeing early signs of markets re-opening and
are looking at the viability of holding a June tender. We intend to
remain highly flexible in our sales approach in order to take
advantage of optimal market conditions when available.
We are also reviewing our capex
requirements, with a view to deferring near term capital as one of
the key levers available to the Company in terms of managing our
liquidity whilst at the same time ensuring that the business
remains well positioned when the market recovers over the medium to
longer term.
Likewise, we have made good progress in improving our
liquidity position and addressing our capital structure through
securing access to R400 million of our RCF and executing the
Forbearance Agreement, allowing us to withhold the May interest
payment to our note holders and to continue with constructive
discussions around our capital structure.”
COMMENTARY
Health and safety
- 9M FY 2020 Group LTIFR of 0.30
(9M FY 2019: 0.19) impacted by eight
LTI’s reported during Q3. The Group recorded 16 LTI’s in the nine
months to June, ten of which were at Finsch where the majority of
the accidents were found to be behavioural in nature and of low
severity. Considerable focus has been placed on changing these
behaviours through management intervention, including in-shift
safety stops, visible-felt leadership and management walkabouts,
safety discipline enforcement and safety inspection procedures. In
Q4 so far, Finsch has recorded no further LTIs, although Cullinan
has had two additional LTIs. Our primary value at Petra is “Do No
Harm”, meaning safety is at the heart of everything we do, and the
Company is continuously aiming to improve the systems and processes
already in place to support our target of a zero harm working
environment.
- The health, safety and wellbeing of all Petra people remains
the Company’s overriding priority. While Petra’s South African
mines are highly mechanised underground operations, with limited
human interaction, the Company has put in place stringent protocols
in order to minimise the risk of COVID-19 to its employees and
contractors. More information about the Company’s response to the
pandemic can be accessed here:
https://www.petradiamonds.com/sustainability/health-and-safety/our-response-to-covid-19/
Production
South Africa:
- Q3 FY 2020 production increased 1% to 932,456 carats (Q3 FY
2019: 924,228 carats), with a 2% increase in ROM production to
913,017 carats (Q3 FY 2019: 898,517 carats).
- 9M FY 2020 production increased
2% to 3,002,697 carats (9M FY 2019:
2,943,374 carats), with a 2% increase in ROM carats produced to
2,908,529 carats (9M FY 2019:
2,845,234 carats). This production result was achieved despite the
disruptions caused by Eskom load shedding in Q2 and the COVID-19
lockdown measures implemented towards the end of Q3, demonstrating
the delivery of significant throughput benefits through the
proactive implementation of Project 2022.
- Cullinan’s Q3 production was down 7% to 400,542 carats (Q3 FY
2019: 432,001 carats) with ROM tonnes treated reducing 3%, mostly
due to the lockdown towards Period end coupled with the ROM grade
declining 4% to 38.5 cpht, though remaining in line with guidance,
and tailings treatment being restricted to higher grade recovery
tailings at much reduced throughput levels.
- Finsch’s Q3 production increased 15% to 444,578 carats (Q3 FY
2019: 387,370 carats), supported by improving ROM grades delivering
60.4 cpht (exceeding guidance), up 21% from the 50.1 cpht achieved
in the comparative period. The improved grade is the result of only
treating underground ROM tonnages and no lower grade surface
material, as was the case in the comparative period.
- Koffiefontein’s Q3 production was in line with the prior year
at 17,307 carats (Q3 FY 2019: 17,355 carats), despite being
impacted by the lockdown initiated towards Period end.
Tanzania:
- Williamson’s Q3 production was down 20% to 70,029 carats (Q3 FY
2019: 87,503 carats), affected by the pit slump of ca. 1.3 Mt that
occurred in January 2020 in an area
of the south western sector of the pit.
Post Period end, the Williamson mine was placed on care and
maintenance in mid-April, due to the unprecedented depressed market
environment. The Company will look to resume operations once
diamond prices are at a level that make it operationally
sustainable.
Discussions with the Government in relation to various issues,
including the overdue VAT receivables and the blocked diamond
parcel, are ongoing but have been interrupted by the COVID-19
outbreak.
Diamond market and sales
- The diamond market has been severely impacted by the COVID-19
outbreak, which has significantly reduced activity throughout the
pipeline, from production, rough sales, trading, cutting and
polishing right through to consumer sales. How quickly the market
can recover will depend upon the success with which the pandemic
can be arrested, thereby limiting the length and severity of the
economic downturn, as well as the lifting of restrictions on the
movement of people and products, in order for activities across the
pipeline to be resumed safely.
- There are early indications of improving market conditions in
China and other Asian economies,
while in the US a small number of retail outlets are beginning
to reopen. In the midstream, small volumes of exports have resumed
from India and buyer interest
for rough diamonds in cutting centres seems to be picking up. At
this stage, however, it is too early to draw firm conclusions from
these developments.
- The Diamond Producers Association will be playing its part to
support the market by tapping into the pent-up demand for
meaningful personal connections effected by the global lockdowns
and self-isolation, with diamonds potentially having a significant
role to play in people’s lives as they emerge from this difficult
period.
- The major diamond producers have taken steps to restrict supply
to the market, via production cuts and reduced sales, which will
assist with restoring the supply/demand balance in due course.
Longer-term the supply cuts implemented this year are expected to
benefit the fundamentals for natural diamonds, which are an
increasingly scarce resource.
Diamond
Sales and Prices
- Revenue for Q3 FY 2020 was down 32% to US$91.3 million (Q3 FY 2019: US$135.2 million) driven by significantly reduced
prices, especially in the March tender.
- The Company’s tender in February
2020 saw pricing on a like-for-like basis up marginally in
comparison to prices achieved in H1 FY 2020, reflecting stable
market conditions before the COVID-19 pandemic took hold
globally.
- Towards Period end, the Company experienced depressed and
opportunistic bidding for its diamonds at its fifth sales cycle of
FY 2020, particularly in the larger size, better quality and higher
value categories. The Company therefore chose to only sell a
portion of its South African goods, representing ca. 75% by volume
and ca. 50% by value. The remaining goods were exported to
Antwerp and of these, ca. 75% were
subsequently sold at the Company’s Antwerp marketing office. Prices achieved at
this tender were down ca. 27% overall on a like-for-like basis in
comparison to those achieved at the February
2020 tender.
A total of 24,254 carats, comprising higher value +10.8 carat
single stones as well as parcels across the larger size and higher
quality (gem and clivage) ranges, were withdrawn and will be
offered for sale in the next tender cycle.
- Prices achieved during Q3 FY 2020 are set out in the table
below, with Q3 figures impacted by the lower sales volumes than
usual and the withholding of certain higher value parcels to be
sold post Period end.
Mine |
Actual
Q3 FY 2020
(US$/ct) |
Actual
H1 FY 2020
(US$/ct) |
Actual
FY 2019
(US$/ct) |
Cullinan |
73 |
112 |
110 |
Finsch |
66 |
79 |
99 |
Koffiefontein |
352 |
431 |
480 |
Williamson |
161 |
184 |
231 |
- The Company is closely monitoring the rough diamond market to
assess the viability of conducting a rough diamond tender during
the forthcoming months. Petra is maintaining a highly flexible
approach in order to be ready for sale when market conditions
allow. To this end, it is working towards being in a position to
sell inventory prepared for sale during June
2020 in South Africa and
Antwerp.
Project 2022 Update
- Project 2022 is now fully operational at all of Petra’s mine
sites, as well as at Group level, with central teams focusing on
overhead costs and strategic sourcing.
- The work to date has entailed a structured assessment of the
value drivers at each site. As previously noted, the focus is on
throughput improvement (75% of the target), with the balance
comprising cost efficiencies, strategic sourcing and one-off
initiatives.
- All ideas are evaluated and identified initiatives are
systematically structured with timelines, enablers and project
plans for each. The implementation of the identified initiatives
was firmly on track but has been significantly interrupted by the
COVID-19 lockdown. When operations return to full capacity, focused
steps will be taken to continue the initiatives to ensure the
delivery of the expected benefits.
- Focus on cost and capital efficiencies continues.
Corporate and Financial
- A summary of the Group’s current cash, diamond inventories,
debtors, borrowings and net debt is set out below.
|
Unit |
31
March 2020 |
31
December 2019 |
30
June
2019 |
Closing exchange
rate used for conversion |
|
R17.84:US$1 |
R13.99:US$1 |
R13.99:US$1 |
Cash at bank
(including restricted cash) |
US$m |
77.0 |
53.6 |
85.2 |
Diamond
inventories1 |
US$m
Carats |
61.3
842,144 |
85.2
992,425 |
57.5
666,201 |
Diamond debtors |
US$m |
14.9 |
12.8 |
23.8 |
US$650 million loan
notes (issued April 2017) |
US$m |
650.0 |
650.0 |
650.0 |
Bank loans and
borrowings |
US$m |
28.0 |
0.0 |
0.0 |
Net
debt2 |
US$m |
601.0 |
596.4 |
564.8 |
Bank facilities
undrawn and available3 |
US$m |
22.4 |
107.2 |
106.6 |
Consolidated net
debt3 |
US$m |
627.0 |
632.9 |
595.2 |
Notes:
- Recorded at the lower of cost and net realisable
value.
- Net debt is the US$ loan notes and bank loans and borrowing
net of cash at bank (including restricted cash).
- Of the Company’s ZAR1 billion
(ca. US$56.0 million) banking
facilities, ZAR400 million (ca.
US$22.4 million) is available to the
Group, while ZAR600 million
(ca. US$33.6 million) is
conditional on further approvals by the Lender Group – see page 9
below for further information.
- Consolidated Net Debt is bank loans and borrowings plus loan
notes, less cash, less diamond debtors and includes the BEE
guarantees of ca. US$40.9 million
(ZAR729.0 million) as at 31 March 2020 (ca. US$49.3
million (ZAR689.5 million) as
at 31 December 2019).
Longer-Term Capital Guidance
- The COVID-19 pandemic has had an unprecedented impact on both
the supply and demand side of the global diamond market. The
national lockdown in South Africa
has impacted on the ability of the business to deliver on capital
programmes during the lockdown period, while currently depressed
diamond prices have led us to a re-evaluation of the Company’s
capital planning, based on the expectation that cash flow
generation will be negatively impacted over the short term.
Deferral of capital was identified as one of the key levers
available to manage liquidity whilst still ensuring that the
business remains well positioned when markets return to pre-COVID
levels over the medium to longer term.
- As a consequence, capital expenditure was optimised with the
view to minimise FY 2021 expenditure through some capital savings,
but largely through deferrals to future periods. This has led to a
significantly reduced level of capital planned for FY 2021 of ca.
US$28 million, with a ramp-up in
following years, as evidenced in the table below setting out the
Company’s indicative capital profile to FY 2026. The deferral of
capital will not impact the Company’s reserve profile.
- As part of the Company’s discussions with the AHG, the Company
is providing the indicative longer-term capital expenditure
projections below, which are based on current life-of-mine (“LOM”)
planning assumptions. These internal projections have not been
formally approved by the Company’s Board of Directors as
constituting official Company forecasts, nor should they be taken
as approval by the Board of the continuance of operations that the
capital expenditure projections may imply.
Operation |
Capex |
Unit |
FY20 |
FY21 |
FY22 |
FY23 |
FY24 |
FY25 |
FY26 |
TOTAL |
Finsch |
Expansion |
$m |
7 |
2 |
23 |
56 |
56 |
48 |
48 |
242 |
|
Sustaining |
$m |
4 |
4 |
5 |
5 |
6 |
6 |
5 |
36 |
|
Total |
$m |
11 |
6 |
29 |
62 |
63 |
55 |
54 |
278 |
Cullinan |
Expansion |
$m |
13 |
10 |
31 |
31 |
36 |
36 |
6 |
164 |
|
Sustaining |
$m |
4 |
3 |
8 |
8 |
8 |
8 |
8 |
45 |
|
Total |
$m |
16 |
13 |
39 |
39 |
44 |
44 |
14 |
209 |
Koffiefontein |
Expansion |
$m |
3 |
1 |
1 |
- |
- |
- |
- |
5 |
|
Sustaining |
$m |
1 |
1 |
1 |
- |
- |
- |
- |
3 |
|
Total |
$m |
5 |
2 |
2 |
- |
- |
- |
- |
9 |
Williamson |
Expansion |
$m |
- |
- |
- |
- |
- |
- |
- |
- |
|
Sustaining |
$m |
8 |
7 |
6 |
6 |
8 |
7 |
7 |
48 |
|
Total |
$m |
8 |
7 |
6 |
6 |
8 |
7 |
7 |
48 |
Total
Operations |
Expansion Capex |
$m |
23 |
13 |
56 |
88 |
92 |
84 |
55 |
411 |
|
Sustaining Capex |
$m |
16 |
15 |
20 |
19 |
22 |
21 |
20 |
133 |
|
Total
Capex |
$m |
39 |
28 |
76 |
106 |
114 |
106 |
75 |
544 |
Notes:
- Capex guidance given in FY 2021 real money
terms.
- South African operations capex guidance converted at
R15.55:US$1 for FY 2020 and a real
exchange rate of R16:US$1 from FY
2021 over LOM.
- The revised capital profile above allows for the continuation
and completion of each asset’s LOM plan, including the installation
of the new Block 5 Block Cave at Finsch, the CC1E project at
Cullinan and the completion of the SLC at Koffiefontein. While no
expansion capital is allocated to Williamson, the level of
sustaining capex provided will allow for the mitigation of the pit
slump in order to maintain its current mine plan, once the
operation is in a position to resume production.
- Further detailed market guidance, including planned production
levels and operating expenditures, will be released to the market
when appropriate.
Liquidity and Capital Structure
South African First Lien Banking and
BEE Facilities
The Company refers to its previous market updates published on
27 March 2020, 9 April 2020 and 1 May
2020, confirming it has been in discussions with its South
African lender group (the "SA Lenders"), being Absa Bank Limited
(acting through its Corporate and Investment Banking division)
("Absa"), FirstRand Bank Limited (acting through its Rand Merchant Bank division) ("RMB") and Nedbank
Limited, regarding the conditions (the "RCF Drawdown Conditions")
upon which up to ZAR400 million of
its ZAR1.0 billion revolving credit
facility, as amended (the “RCF”) is to be made available in order
to manage near-term liquidity risks arising from the unprecedented
operating and trading environment.
In addition, as part of the expected RCF Drawdown Conditions,
the Company has also been in discussions with its South African BEE
lender group (the "BEE Lenders"), being Absa, RMB and NinetyOne SA
Proprietary Limited (previously known as Investec Asset Management
Proprietary Limited), acting as agent for and on behalf of its
clients, to reschedule the capital repayments due in May 2020 and November
2020 under the Company's outstanding bank financing of its
Black Economic Empowerment partners (the "BEE Facilities").
Today, the Company, the SA Lenders and the BEE Lenders, have
entered into an Amendment Agreement amending certain terms of the
RCF, working capital facilities and BEE Facilities including:
- resetting the maturity date of the RCF and the BEE Facilities
to 31 July 2021 (from 20 October 2021 and 20
November 2021, respectively);
- increasing the margin under the Company's working capital
facilities provided by Absa and RMB by 100 bps to match the South
African prime lending rate;
- re-profiling the capital payments under the BEE Facilities due
on May 2020 and November 2020 to a single bullet payment on the
maturity date (31 July 2021);
and
- the payment of fees and expenses, including a 50bps fee to the
SA Lenders in connection with the BEE re-profiling, referenced
against the current principal amount outstanding under the BEE
Facilities.
Senior Secured Second Lien Notes
In its 1 May 2020 market update,
the Company announced that the RCF Drawdown Conditions are expected
to include a restriction on the Group from making interest payments
on its outstanding US$650 million
7.25% Senior Secured Second Lien Notes due 2022 (the “Notes”).
Given the desire to preserve liquidity and the need to draw on the
RCF (and the corresponding need to satisfy the expected RCF
Drawdown Conditions), the Company decided not to make the interest
payment on the Notes due 1 May 2020
(the "Interest Payment") and instead to utilise the 30-day grace
period provided for under the Notes indenture to continue active
discussions with an ad-hoc group of holders of the Notes holding in
aggregate over 50.7% of the outstanding principal amount of the
Notes (the "AHG") with a view to agreeing a forbearance agreement
in relation to the missed Interest Payment.
Today, the Company entered into a Forbearance Agreement with the
AHG which initially expires on 11:59 p.m.
GMT on 31 August 2020 (the
“Initial Expiration Date”). However, the Initial Expiration Date is
automatically extended on a month-by-month basis, provided that
such extension will not apply to those forbearing holders who
notify the Company of their intent to withdraw from the Forbearance
Agreement.
The Forbearance Agreement is subject to certain conditions,
including any representation or warranty made by any Note Party
under the Forbearance Agreement continuing to be true and complete
in all material respects as of the date of the Forbearance
Agreement. Such representations and warranties include, among
others, that as at the date of the Forbearance Agreement no member
of the Group holds any property, asset or right with a market value
in excess of US$5.0 million which is
not subject to valid and effective security in favour of the
Security SPV (under the Indenture) other than (i) the properties,
assets and mining right of Williamson Diamonds Limited, (ii) assets
of Petra Diamonds Belgium BVBA which will be subject to further
security to be granted in favour of the Note holders and the SA
Lenders and (iii) any restricted cash held in the Petra Guardrisk
rehabilitation account by Guardrisk for the purposes of
rehabilitation provisioning.
The Forbearance Agreement is subject to further conditions,
including (i) the availability of the ZAR400
million under the RCF, (ii) the delivery of an irrevocable
drawdown request for ZAR400 million
under the RCF by no later than 15 June
2020, (iii) the maintenance by the company of an actual and
forecasted balance in cash and cash equivalents of at least
ZAR100 million and not less than
ZAR200 million for 10 consecutive
days, (iv) restrictions on payments of capital expenditure in
relation to the Company's South African operations in excess of
ZAR175 million during the period
commencing on 1 June 2020 and ending
on 30 September 2020, (v) additional
restrictions on the incurrence of additional secured debt (other
than in respect of certain local working capital financing lines
incurred by non-Guarantor subsidiaries and permitted under the
Notes Indenture up to a maximum of US$25
million that is non-recourse to the wider Group in terms of
credit support and security, and (vi) compliance with certain
milestones and obligations in relation to the ongoing discussions
with stakeholders regarding the Company's long-term capital
structure, including the presentation of a draft term sheet setting
out the proposed terms of a capital restructuring plan setting out
the terms of the restructured capital structure of the Group by no
later than 30 June 2020.
Pursuant to the Forbearance Agreement, the AHG has agreed to
forbear from the exercise of certain rights and remedies that they
have under the Notes indenture, including agreeing not to
accelerate the Notes obligations as a result of the missed Interest
Payment. As a result, the Company will not make the Interest
Payment at the present time.
The effectiveness of each of the RCF amendments, the BEE
Facilities payment re-profiling and the AHG forbearance are subject
to certain conditions, including where applicable, the payment of
certain customary fees and expenses. It is expected that as soon as
practicable upon satisfaction and/or waiver of such conditions, the
Company will drawdown in full the ZAR400
million available under its RCF. It is anticipated that with
its immediate liquidity needs addressed, the Company will be in a
strong position in the near term to continue discussions with its
various stakeholders regarding strategic alternatives towards
longer term solutions to improve the Company's capital
structure.
Petra Diamonds Belgium BVBA
In connection with the Amendment Agreement, Petra Diamonds
Belgium BVBA will accede as a guarantor under the Company's South
African banking and BEE facilities as well as the Notes and will
grant security over its cash and receivables in favour of the SA
Lenders and the holders of the Notes, in each case in accordance
with and pursuant to the terms of the Amendment Agreement and the
Notes indenture.
Notes:
- The production and financial results in this announcement
are adjusted to exclude the results of KEM JV, which has been
reclassified as a discontinued operation following the proposed
disposal, announced in July
2018.
- The following definitions have been used in this
announcement:
- 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
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation 596/2014.
Upon the publication of this announcement via a Regulatory
Information Service, this inside information will be considered to
be in the public domain. The person responsible for arranging for
the release of this announcement on behalf of the Company is
Jacques Breytenbach, Finance
Director.
~ Ends ~
For further information, please
contact:
Petra Diamonds,
London
Telephone: +44 20 7494 8203
Cathy
Malins
investorrelations@petradiamonds.com
Des Kilalea
Marianna Bowes
Rothschild & Co
Giles
Douglas
giles.douglas@rothschildandco.com
Glen
Cronin
glen.cronin@rothschildandco.com
Mahir
Quraishi
mahir.quraishi@rothschildandco.com
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 producing mine in Tanzania (Williamson). Petra also conducts a
limited exploration programme in Botswana and South
Africa.
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. 250 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' and is a constituent
of the FTSE4Good Index. The Company’s US$650
million loan notes due in 2022 are listed on the Global
Exchange market of the Irish Stock Exchange. For more information,
visit www.petradiamonds.com.
Important Notice
This announcement contains statements about Petra that are or
may be forward looking statements. All statements other than
statements of historical facts included in this announcement may be
forward looking statements. Without limitation, any statements
preceded or followed by or that include the words "targets",
"goals", "should", "would", "could", "continue", "plans",
"believes", "expects", "aims", "intends", "will", "may",
"anticipates", "estimates", "hopes", "projects" or words or terms
of similar substance or the negative thereof, are forward looking
statements.
Such forward looking statements involve risks and uncertainties
that could significantly affect expected results and are based on
certain key assumptions. Many factors could cause actual results to
differ materially from those projected or implied in any forward
looking statements. Due to such uncertainties and risks, readers
are cautioned not to place undue reliance on such forward looking
statements, which speak only as of the date hereof. Petra disclaims
any obligation to update any forward looking or other statements
contained herein, except as required by applicable law or
regulation.
N.M. Rothschild & Sons Limited ("Rothschild & Co"),
which is authorised and regulated in the United Kingdom by the Financial Conduct
Authority, is acting exclusively for Petra and no one else in
connection with the contents of this announcement and will not be
responsible to anyone other than Petra for providing the
protections offered to clients of Rothschild & Co nor for
providing advice in relation to the subject matter of this
announcement or any other matters referred to in this
announcement.
APPENDIX – MINE BY MINE PRODUCTION TABLES
Cullinan – South Africa
|
Unit |
Q3
FY 2020 |
Q3
FY 2019 |
Variance |
Nine
months to 31 March 2020 |
Nine
months to 31 March 2019 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
31.2 |
46.2 |
-32% |
112.9 |
112.4 |
0% |
Diamonds sold |
Carats |
426,283 |
456,652 |
-7% |
1,157,130 |
1,145,188 |
1% |
Average price per
carat |
US$ |
73 |
101 |
-28% |
98 |
98 |
0% |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,016,653 |
1,043,105 |
-3% |
3,311,850 |
3,039,730 |
9% |
Diamonds produced |
Carats |
391,235 |
417,742 |
-6% |
1,246,606 |
1,203,186 |
4% |
Grade |
cpht |
38.5 |
40.0 |
-4% |
37.6 |
39.6 |
-5% |
|
|
|
|
|
|
|
|
Tailings
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
37,412 |
164,911 |
-77% |
154,524 |
861,265 |
-82% |
Diamonds produced |
Carats |
9,307 |
14,259 |
-35% |
43,722 |
60,841 |
-28% |
Grade |
cpht |
24.9 |
8.6 |
188% |
28.3 |
7.1 |
301% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,054,065 |
1,208,016 |
-13% |
3,466,374 |
3,900,994 |
-11% |
Diamonds produced |
Carats |
400,542 |
432,001 |
-7% |
1,290,328 |
1,264,027 |
2% |
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 2020 |
Q3
FY 2019 |
Variance |
Nine
months to 31 March 2020 |
Nine
months to 31 March 2019 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
34.9 |
48.0 |
-27% |
96.5 |
135.1 |
-29% |
Diamonds sold |
Carats |
529,443 |
475,312 |
11% |
1,313,406 |
1,304,843 |
1% |
Average price per
carat |
US$ |
66 |
101 |
-35% |
73 |
104 |
-29% |
|
|
|
|
|
|
|
|
Total ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
724,690 |
758,003 |
-4% |
2,258,945 |
2,261,337 |
0% |
Diamonds produced |
Carats |
437,537 |
379,488 |
15% |
1,318,244 |
1,307,422 |
1% |
Grade |
cpht |
60.4 |
50.1 |
21% |
58.4 |
57.8 |
1% |
|
|
|
|
|
|
|
|
Tailings
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
37,373 |
52,532 |
-29% |
211,541 |
186,927 |
13% |
Diamonds produced |
Carats |
7,041 |
7,882 |
-11% |
39,890 |
27,372 |
46% |
Grade |
cpht |
18.8 |
15.0 |
26% |
18.9 |
14.6 |
29% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
762,063 |
810,535 |
-6% |
2,470,486 |
2,448,265 |
1% |
Diamonds produced |
Carats |
444,578 |
387,370 |
15% |
1,358,134 |
1,334,794 |
2% |
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 2020 |
Q3
FY 2019 |
Variance |
Nine
months to 31 March 2020 |
Nine
months to 31 March 2019 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
8.9 |
8.3 |
6% |
23.6 |
18.8 |
25% |
Diamonds sold |
Carats |
25,151 |
14,925 |
69% |
59,314 |
38,332 |
55% |
Average price per
carat |
US$ |
352 |
559 |
-37% |
398 |
490 |
-19% |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
236,350 |
282,860 |
-16% |
797,646 |
660,251 |
21% |
Diamonds produced |
Carats |
17,307 |
17,355 |
0% |
61,852 |
42,630 |
45% |
Grade |
cpht |
7.3 |
6.1 |
19% |
7.8 |
6.5 |
20% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
236,350 |
282,860 |
-16% |
797,646 |
660,251 |
21% |
Diamonds produced |
Carats |
17,307 |
17,355 |
0% |
61,852 |
42,630 |
45% |
Williamson – Tanzania
|
Unit |
Q3
FY 2020 |
Q3
FY 2019 |
Variance |
Nine
months to 31 March 2020 |
Nine
months to 31 March 2019 |
Variance |
Sales |
|
|
|
|
|
|
|
Revenue |
US$M |
16.4 |
32.6 |
-50% |
52.3 |
76.1 |
-31% |
Diamonds sold |
Carats |
102,060 |
114,452 |
-11% |
296,894 |
309,365 |
-4% |
Average price per
carat |
US$ |
161 |
285 |
-44% |
176 |
246 |
-28% |
|
|
|
|
|
|
|
|
ROM
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,225,429 |
1,300,659 |
-6% |
3,880,335 |
3,811,110 |
2% |
Diamonds produced |
Carats |
66,939 |
83,932 |
-20% |
281,827 |
291,997 |
-3% |
Grade |
cpht |
5.5 |
6.5 |
-15% |
7.3 |
7.7 |
-5% |
|
|
|
|
|
|
|
|
Alluvial
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
94,802 |
112,709 |
-16% |
293,500 |
308,266 |
-5% |
Diamonds produced |
Carats |
3,090 |
3,570 |
-13% |
10,555 |
9,927 |
6% |
Grade |
cpht |
3.3 |
3.2 |
3% |
3.6 |
3.2 |
12% |
|
|
|
|
|
|
|
|
Total
Production |
|
|
|
|
|
|
|
Tonnes treated |
Tonnes |
1,320,231 |
1,413,368 |
-7% |
4,173,835 |
4,119,376 |
1% |
Diamonds produced |
Carats |
70,029 |
87,503 |
-20% |
292,382 |
301,924 |
-3% |