Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (November 2017)
32 slides from Petra Diamonds's investor presentation, Nov 4, 2017
Slide 1: Why are diamonds so special?
Why are diamonds so special? 4 November 2017
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: Discover Petra Diamonds
Discover Petra Diamonds • A leading independent diamond mining company and listed on the Main Market of the LSE (‘PDL’) • Founded by Adonis Pouroulis in 1997 with market capitalisation of <£10 million, Petra has a current value of +£400 million and has grown annual production to 4 million carats • D
Slide 4: What is a diamond?
What is a diamond? • One of the oldest substances known to man - diamonds are as old as the stars “A scientist will tell you a diamond is pure carbon. I • Thought to have been formed between 1-3 billion years ago, diamonds are time capsules into an era believe it is much more.” before life began on
Slide 5: Historically prized above all other gems
Historically prized above all other gems • For centuries their exquisite beauty, inner fire and “The diamond, known for a unique physical qualities have made diamonds prized above all other gems long time only to kings and then to very few of them, has • Ancient Greek word αδάμας (adámas) meaning gr
Slide 6: A brief history of diamond mining
A brief history of diamond mining • 4BC Diamonds believed to be first discovered in Golconda, India – the birthplace of diamonds; until the end of 19th C, it was the source of the finest and largest diamonds in the world, incl. the Koh-i-Noor (105.6cts) • 1400s Diamonds started to become fashionable
Slide 7: Diamonds linked to economic development
Diamonds linked to economic development • ca. 5 million people have access to appropriate healthcare globally thanks to diamond revenues • ca. 10 million people globally are directly or indirectly supported by the diamond industry • Diamonds led to the industrialisation of South Africa • Diamonds ac
Slide 8: A truly scarce commodity
A truly scarce commodity Putting annual production into perspective Diamond Gold Copper Iron ore 27 tonnes 2,952 tonnes 20 million tonnes 2 billion tonnes US$12 billion US$118 billion¹ US$98 billion¹ US$118 billion¹ Source: Kimberley Source: SNL Metals Source: SNL Metals Source: SNL Metals Process S
Slide 9: Putting historical production into perspective
Putting historical production into perspective • Only 5.7 billion carats have been mined since antiquity = 1,150 tonnes • The specific gravity of a diamond is 3.52 = 327m3 • 327m3 = 8m x 8m x 5m high • However, if we assume roughly 1/2 of these diamonds are industrial quality then this = 163m3 • Cir
Slide 10: Diamonds are rare…and getting rarer
Diamonds are rare…and getting rarer Only 30 significant kimberlite mines in production today Petra Diamonds Limited: November 2017 10
Slide 11: Exploration has a less than 1% success rate
Exploration has a less than 1% success rate Diamond exploration results Only 7 ‘Tier 1’ mines 6,800 (+US$20 billion Reserves) 1. Jwaneng 2. Orapa 1,000 3. Udachnaya 4. Venetia 5. Catoca 60 7 6. Cullinan Kimberlites Sampled Diamondiferous Economic Tier 1 7. Mir kimberlites Source: De Beers Petra Diam
Slide 12: Diamond supply may already have peaked…
Diamond supply may already have peaked… • Production peaked at 177 million carats in 2005 – not expected to reach there again • 2016 production of 134 million carats (Kimberley Process Statistics) • Major diamond mines have passed their production peak; once mines go underground, can no longer keep
Slide 13: …but demand for diamonds continues to grow
…but demand for diamonds continues to grow Global diamond jewellery sales of ca. $80 billion Demand is driven by: • Continued growth in US and developed markets Share of World Polished Diamond Consumption in Value (US$ PWP) • Bridal diamond jewellery is the bedrock • Self-purchase by women is an imp
Slide 14: Petra has grown by acquisitions, not discoveries
Petra has grown by acquisitions, not discoveries • Petra explored for diamonds from 1997 to 2008 in Angola; despite discovery of +200 kimberlites, did not find economic orebody • These former De Beers mines were the mainstay of world production before the Russian and Botswana mines opened from the 1
Slide 15: 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 Golden Jubilee The Oppenheimer 755
Slide 16: Many challenges to be overcome
Many challenges to be overcome Petra acquired mines that were either closed down or facing closure • Lack of investment, development and resource allocation to the mines in the years pre takeover • Unproven business model and initial scepticism about our assets Challenges along the way • Global econ
Slide 17: Succeeding against the odds
Succeeding against the odds Significant investments made • Petra will have invested a total of ca. $1.4 billion over the period FY 2008 to FY 2019 • Mining is a long-term industry – e.g. investment made today may will only reap rewards in 10 years time Achievements so far • Cost base of each asset a
Slide 18: Our growth path
Our growth path • Petra has grown production from 0.1 to 4.0 million carats US$m Mcts 900 5.0 – 5.3 6 Agreement to acquire Kimberley 800 Acquisition of Mines Finsch 5 700 Acquisition of Kimberley UG 4.0 600 4 Acquisition of 3.7 Williamson 3.2 477 500 472 3.1 Acquisition of 431 Merger 425 3 Cullinan
Slide 19: Our production profile - the full spectrum
Our production profile - the full spectrum High volumes of lower quality and commercial goods at a typical Small volumes of higher quality and larger diamonds tender layout Only ca. 1 in 10,000 diamonds is fancy coloured World-class gems: The Cullinan Heritage and The Star of Josephine Petra Diamond
Slide 20: The health and safety of our people is our priority
The health and safety of our people is our priority • Our mines and mining method are inherently safe, but accidents can happen due to being a heavy industry • Our mines are certified OHSAS 18001:2007, the international safety management framework • Continuous risk assessment and management • 100% o
Slide 21: Sustainability – providing stable employment
Sustainability – providing stable employment • By investing its resources in its mines, Petra has put in place long-term, sustainable mine plans • When Petra acquired mines: +/- 2,500 employees • Today Petra employs more than 5,600 employees • And several thousand contractors during expansion progra
Slide 22: Focus on developing our people
Focus on developing our people • Petra has increased its training spend to $8.5 million in FY 2017 • Efforts start at grassroots level – improving education standards in local schools • Bursaries, scholarships and training offered to community members • Numerous Company programmes to develop our emp
Slide 23: Driving grassroots development
Driving grassroots development The Petra Foundation funded the construction of a new science The Williamson mine owns and operates the Mwadui Primary laboratory for the Chipa-Tabane High School School, providing education to 492 students Petra supports My Maths Buddy in South Africa, which focuses C
Slide 24: The Petra Graduation Ceremony 2017
The Petra Graduation Ceremony 2017 • A celebration of the many Petra graduates who completed one of our development programmes Petra Diamonds Limited: November 2017 24
Slide 25: Focus on the development of women
Focus on the development of women Diversity is proven to result in improved decision making and better results • Number of Company initiatives aimed at encouraging and developing women at all levels of the business, with women representing: • 33% of engineering learnerships • 31% of mining learnersh
Slide 26: Focus on long-term socio-economic development
Focus on long-term socio-economic development • Petra doubled its social spend to $3.4 million in FY 2017 • Our development work focuses on addressing the most critical needs of our communities in order to drive meaningful sustainable development • Projects are agreed in consultation with stakeholde
Slide 27: Minimising our environmental footprint
Minimising our environmental footprint • Diamond mining is energy and water intensive but it does not use any harmful chemicals – vegetation grows freely on our tailings dumps • Ongoing initiatives to reduce energy usage, including continual investigation of renewable energy sources • Continual redu
Slide 28: Ensuring ethical provenance
Ensuring ethical provenance • Petra will only operate in countries which are members of the Kimberley Process and will only sell diamonds mined at our operations • We are fully committed to upholding the human rights of all our stakeholders, including employees, contractors, partners and communities
Slide 29: Sustaining consumer demand – today and tomorrow
Sustaining consumer demand – today and tomorrow Diamond Producers Association comprises De Beers, ALROSA, Rio Tinto, Dominion, Petra, Lucara, Gem – together 75% of world supply by value The DPA seeks to actively influence sustainable consumer demand by: • Promoting the integrity of the diamond indus
Slide 30: Addressing synthetics
Addressing synthetics • Synthetics are a feature of all gemstone markets, with diamonds being no exception • Annual production of industrial synthetic diamonds estimated at ca. 15 billion carats per annum (source: Ehud Laniado); annual production of gem synthetic diamonds estimated at ca. 4 million
Slide 31: The most highly concentrated form of wealth
The most highly concentrated form of wealth What happens when you combine incredible rarity, beauty, ethical provenance and heritage? The 12.03ct Blue Moon of Josephine Cut from a 29ct rough stone from the Cullinan mine Fancy vivid blue, internally flawless 12 November 2015: sold to Hong Kong proper
Slide 32: Thank You
Thank YouYou Thank Further enquiries: Petra Diamonds Further Cathy Malinsenquiries: Investor Relations Corporate Communications Manager [email protected] [email protected] +44 +44 20 7494 20 7494 82038203 www.petradiamonds.com www.petradiamonds.com Read more about how
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