Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (May 2013)
32 slides from Petra Diamonds's investor presentation, May 2013
Slide 1: Delivering Growth in Diamonds
Delivering Growth in Diamonds May 2013
Slide 2: Important Notice
Important Notice These Presentation Materials do not constitute or form part of any invitation, offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities in the Company nor shall they or any part of them form the basis of or be relied upon in any manner
Slide 3: Petra Diamonds
Petra Diamonds • Mid-tier diamond producer (LSE:PDL; FTSE 250) • Quality management team delivering strong growth • Major resource base of +300m carats • Diversified portfolio of producing mines & exploration • On track for 5 Mctpa* / c.US$1bn* revenue by FY 2019 • Sustainability at heart of Petra •
Slide 4: Roadmap to 5 million carats pa
Roadmap to 5 million carats pa • Growth profile is solely organic and brownfields – strategy to recapitalise existing mines • Fully financed using debt, treasury and cashflows Proven track record operating and FY 2012 production to more than double* and optimising new mine acquisitions FY 2012 reven
Slide 5: Diamond mines are scarce
Diamond mines are scarce • Petra operates 5 of <30 significant kimberlite mines in production • Eventually mines move underground: lower tonnages + higher operating costs 5
Slide 6: Diamond supply is declining
Diamond supply is declining • Production fell 30% from 2005 (177 Mcts; Zim 0.2 Mcts) to 2011 (124 Mcts; Zim: 8.5 Mcts) • Only a handful of new mines to come on stream in next decade • No major discoveries for 20 years, despite US$ billions spent on exploration in 1990s • Long lead times from discove
Slide 7: Diamond demand is growing
Diamond demand is growing • Demand growth driven by urbanisation and growing middle classes in emerging markets • Additional 1.3bn people to attain middle income status by 2030; 2.6bn by 2050 (HSBC ‘Consumer in 2050’ report) • Diamond consumption per capita in emerging regions still way below that o
Slide 8: Kimberlites – reliable production profile
Kimberlites – reliable production profile • Kimberlite production profile remains highly constant over time • Standard diamond population (quality and size ranges) means consistent pricing • Petra expects strong price performance in smaller/lower quality goods • Exceptional diamonds are ‘cream on to
Slide 9: Current diamond market environment
Current diamond market environment • Rough market has continued firmer trend since November/December 2012 • Prices have generally risen 5-10% since beginning of 2013 • Constrained supply/steady demand support this firmer market trend • Petra Q3 (Jan to March) prices mostly in line with guidance for
Slide 10: Diversified production portfolio
Diversified production portfolio Petra has acquired five non-core diamond mines from De Beers: July 2007 July 2008 February 2009 May 2010 September 2011 Koffiefontein Cullinan Williamson Kimberley UG Finsch South Africa South Africa Tanzania South Africa South Africa 74% Petra; 26% BEE* 74% Petra; 2
Slide 11: Moving into undiluted ore
Moving into undiluted ore • Caving is a safe and proven mechanised mining method; provides access to higher volumes of ore than other methods • Current underground mining taking place in diluted, mature caves nearing end of lives • Expansion programmes to take next ‘cut’ by deepening and establishin
Slide 12: Underground development – a snapshot
Underground development – a snapshot Installing steel brows in the new production tunnels Preparing a long hole drill rig Optimising orehandling 12
Slide 13: How Petra adds value
How Petra adds value Mine Management Project Development • Focus on efficiencies and simplification • Utilise in-house expertise/knowledge of the operation + leverage off existing development plans • Utilise in-house capabilities and share services across mines • Phased approach to achieve low capit
Slide 14: Production & Revenue – FY 2012 vs FY 2019
Production & Revenue – FY 2012 vs FY 2019 Gross Production Gross Revenue FY 2012: 2.2 million carats FY 2012: US$316.9 million 39% 35% 43% 50% Cullinan Williamson 4% 3% Koffiefontein 2% 3% 3% 6% 6% 6% Kimberley Underground FY 2019: c.5 million carats* FY 2019: c.US$1 billion* Fissure Mines Finsch 38
Slide 15: Conclusion
Conclusion Rising Production Rising Margins Rising Prices? • Organic growth to c.5 million carats • Grades expected to rise c.50% once • Supply/demand deficit forecast due based on existing portfolio expansion plans access undiluted ore to continued strong emerging markets growth • Brownfield expans
Slide 16: Integrated approach to sustainability
Integrated approach to sustainability Safety Community health The Mwadui clinic at Williamson services 400-600 people per month 1.2 Safety of 1 employees is top 0.8 priority for management 0.6 Petra striving for 0.4 zero harm across its operations 0.2 0 Left: Petra’s LTIFR FY FY FY FY FY H1 FY Q3 FY
Slide 17: Appendix
PetraDiamonds Appendix
Slide 18: Capital structure
Capital structure High Quality Shareholder Base 7 May 2013 Share Price (1 year) Al Rajhi Holdings W.W.L. 13.1% Saad Investments Company Ltd/AWAL Bank 11.9% T. Rowe Price 8.6% JP Morgan Asset Management Holdings Inc. 7.8% Prudential plc group of companies* 6.1% Listing LSE: PDL The Capital Group Comp
Slide 19: The Petra Board
The Petra Board Adonis Pouroulis (43) Johan Dippenaar (55) David Abery (50) Jim Davidson (67) Non-Executive Chairman CEO Finance Director Technical Director Successful mining entrepreneur One of South Africa’s most successful Extensive experience as Chief Financial Acknowledged world authority on Fo
Slide 20: Cullinan – Large stones
Cullinan – Large stones Petra takeover History of +100 & +200 carat stone recoveries in July 2008 20
Slide 21: Further growth in FY 2013
Further growth in FY 2013 On track for 2.65 Mcts and revenue of ca. US$385m in FY 2013 Unit Q3 Q3 Variance Nine months to Nine months to Variance FY 2013 FY 2012 31 March 2013 31 March 2012 Production ROM diamonds Carats 485,916 522,934 -7% 1,466,769 1,340,094 +9% Tailings and Carats 161,332 99,574
Slide 22: Finsch – Development programme
Finsch – Development programme Expansion Plan – to take production to 1.9 Mctpa (1.6 Finsch Mining Schematic Mctpa ROM & 0.3 Mctpa tailings) • Mining currently taking place in Block 4 at 630m – FY 2013 Current Mining Area Block 4 Pillars Change in scope for FY 2013 to 670m FY 2016: • SW Precursor re
Slide 23: Cullinan – Development programme
Cullinan – Development programme Expansion Plan – to take production to ca. 2.4 Mctpa by Cullinan Mining Schematic FY 2019 (2.0 Mctpa ROM & 0.4 Mctpa tailings) • Shaft deepening contractor commenced work on site – FY Current Infrastructure 2012 Men & Material Shaft Planned Infrastructure Rock Shaft
Slide 24: Koffiefontein – Development programme
Koffiefontein – Development programme Expansion Plan – to take Koffiefontein Kimberlite Pipe Schematic production to ca. 100,000 ctpa by FY 2016 (90,000 ctpa ROM & 10,000 ctpa tailings) • Planned reduction in ROM tonnes supplemented by ore from Ebenhaezer open pit (~5ha) • Installing new sub-level c
Slide 25: Kimberley Underground – Development programme
Kimberley Underground – Development programme Expansion Plan – to maintain annual production Kimberley Underground Kimberlite Pipes Schematic of ca. 135,000 ctpa • Construction and commissioning of main plant (40,000 tpm) at BULTFONTEIN Wesselton – complete • Substantial stockpile of ore at each pla
Slide 26: Williamson – Development programme
Williamson – Development programme Expansion Plan – Key Components Williamson Kimberlite Pipe Schematic • Company successfully recommenced production at 1km Williamson further to the N enhanced rebuild of plant – Q4 FY 2012 • Re-crush circuit in plant, which will lead to an improved LOM Pit Shell gr
Slide 27: Balance sheet snapshot
Balance sheet snapshot 31 Mar 31 Dec 30 Jun 2013 2012 2012 (US$m) (US$m) (US$m) Cash and cash equivalents: Bank 35.3 38.2 47.3 Diamond debtors 7.8 1.6 22.1 Diamond inventories 40.0 45.4 24.5 Total 83.1 85.2 93.9 Loans and borrowings: Loans and borrowings (122.9)* (127.2) (69.2) BEE loans due to Petr
Slide 28: Operating cashflow
Operating cashflow H1 H1 FY 2013 FY 2012 FY 2012 (US$m) (US$m) (US$m) (Loss) / profit before tax (14.9) (31.8) 8.4 Adjusted for non cashflow items 39.1 53.5 76.3 Cash generated before working capital changes 24.2 21.7 84.7 Decrease / (increase) in net working capital 2.4 (23.0) (2.8) Cash generated
Slide 29: Debt facilities
Debt facilities • Nov 2012: new debt facilities completed of ca. US$249.5m with Absa, RMB (FNB) and IFC • An increase by ca. US$111m from ca. US$138m and optimisation of Petra’s prior debt structures Lender Type Size Interest Rate Repayment Absa & Amortising term facility US$94.8 JIBAR + 4.0% 5 semi
Slide 30: Capex profile (as per August 2012 guidance)
Capex profile (as per August 2012 guidance) Financial Year 2013 2014 2015 2016 2017 2018 2019 Operation Finsch ROM tonnes treated 2.8 2.8 3.2 3.5 3.5 3.5 3.5 Tailings tonnes treated 2.8 3.5 3.5 3.5 3.0 3.0 3.0 Expansion Capex (ZARm) 449.8 665.7 377.8 221.9 321.1 168.2 93.0 Sustaining Capex (ZARm) 93
Slide 31: South Africa and Tanzania
South Africa and Tanzania South Africa Tanzania Corporate tax 28% 30% Diamond royalty Formula based on profitability of 5% of turnover mining operation; 0.5% up to 7% of turnover Rough diamond export levy 5%, certain exemptions apply; n/a Petra sells all SA goods in Joburg State Diamond Trader Petra
Slide 32: Thank You
PetraDiamonds Thank You