Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Non-Deal Roadshow (November 2016)
40 slides from Petra Diamonds's roadshow presentation, Nov 21, 2016
Slide 1: European Roadshow
European Roadshow 21-23 November 2016 Driving Forward
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: FY 2016 – Driving Forward
FY 2016 – Driving Forward Continued production growth • Record production of 3.7 Mcts and 19.0 Mt in FY 2016 • FY 2019 target increased from ca. 5 Mcts to ca. 5.3 Mcts Expansion programmes on track • SLC at Finsch and new C-Cut block cave at Cullinan commenced initial production • Cullinan mill plan
Slide 4: Financial Position
Financial Position Unit 30 Sep 2016 30 June 2016 30 June 2015 Closing exchange rate used for conversion R13.71:US$1 R14.68:US$1 R12:16:US$1 Cash at bank US$m 42.2 48.7 166.6 US$ loan notes (including accrued interest) US$m 308.3 302.0 303.3 Bank loans and borrowings US$m 197.8 131.5 35.0 Net debt US
Slide 5: Q1 FY 2017 Operational Results
Q1 FY 2017 Operational Results Production by mine Revenue by mine Production Split - Carats Finsch 20% 19% Tailings 5% Cullinan 42% / Other 34% 53% 1% Williamson 18% Koffiefontein 66% 22% Combined Kimberley ROM Operations 14% 6% Unit Q1 FY 20171 Q1 FY 2016 FY 20161 SALES Revenue US$M 94.7 N/A 430.9
Slide 6: Diamond Market – Overview
Diamond Market – Overview Supply Demand • Supply constraints: Global rough diamond production • US recovery: economy continues to improve; very strong rose 2% to 127 Mcts worth $13.9bn in 2015 (average diamond buying culture (ca. 45% of world demand); retail $109/ct) demand currently performing well
Slide 7: Diamond Market – Overview
Diamond Market – Overview FY 2016 Market FY 2017 Outlook • Petra pricing down ca. 6% for Year • Market conditions will depend on continued supply discipline from • H1: Market experienced challenging conditions in H1 2016 – the major producers, as well as a stable retail market, particularly Petra pr
Slide 8: Exceptional Diamonds
Exceptional Diamonds • Petra classifies ‘exceptional diamonds’ as stones that sell for +$5 million each • Exceptional diamonds contributed on average $23 million pa from FY 2009 to FY 2016 • Average increased to ca. $36 million pa in FY 2014 to FY 2016 • First tender of FY 2017 included sale of a 13
Slide 9: Moving to Undiluted Ore
Moving to 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 establishing
Slide 10: Growth and Margin Expansion
Growth and Margin Expansion Adjusted EBITDA margin expected to rise from ca. 38% in FY 2016 to +50% by FY 2019 • Increase in ROM grades and increase in tonnage throughput (mainly due to Kimberley Mines transaction) to lead to ca. 43% growth in production • Lower value tailings carat production to re
Slide 11: Finsch – Development Programme
Finsch – Development Programme Expansion Plan FY 2016 Development: Waste: 2,484 metres; Raiseboring: 99 metres; Kimberlite: 2,969 metres • Expansion plan to take production to ca. 2.0 Mctpa (ROM) by FY 2018 • Sub level cave - tunnelling in host rock complete - 6/11 tunnels in production – 1st level
Slide 12: Finsch Development Snapshot
Finsch Development Snapshot Long hole drilling, 70 Level SLC kimberlite Tipping blasted ore through rockbreaker Access development tunnel UG conveyor used to transport broken ore Installation of the Apron Feeder Bulkhead The new bulk sample plant Petra Diamonds Limited November 2016 12
Slide 13: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan FY 2016 Development: Waste: 1,911 metres; Raiseboring: 838 metres; Kimberlite: 2,837 metres • Expansion plan to take production to ca. 2.2 Mcts by FY 2019 (2.0 ROM & 0.2 tailings) • C-Cut Phase 1: new block cave being established on the western side of
Slide 14: Cullinan Development Snapshot
Cullinan Development Snapshot Rock breaker south extraction Long hole drilling draw point North production conveyor 2 Mill plant, mill basis and DMS feed area Crusher installation 101 conveyor to mill Petra Diamonds Limited November 2016 14
Slide 15: Cullinan Mill Plant Project
Cullinan Mill Plant Project Recovery, XRL and HPGR 2 Silos and conveyor belts Mill structure • Increase in diamond liberation and gentler process likely to result in less breakage • Saving of ca. ZAR20 – 25/t in processing costs • Strong standalone economics Payback of ca. 3 years IRR of 25% • C
Slide 16: Growth and Margin Expansion
Growth and Margin Expansion Petra to maintain a fairly flat tonnage profile from FY 2017 onwards, but the replacement of poor quality tonnes with better quality tonnes will significantly grow production and increase the average value per carat FY 2019 production target of ca. 5.3 Mcts; revenue of ca
Slide 17: Sustainability
Sustainability Health and Safety • Achievements: Stable LTIFR; Finsch won two MineSAFE Awards • Challenges: Petra’s mining method and operations are inherently safe but there is an ever present risk of accidents • Fatality in Jul 15 at Tailings Treatment Plant at Cullinan related to equipment mainte
Slide 18: Integrated Approach to Sustainability
Integrated Approach to Sustainability Williamson Children’s Day Environmental Awareness Local Economic Development An annual fun day for children of all ages Tree planting at local schools Finsch’s Small Business supports entrepreneurs Professional Development Education Community Exposure to career
Slide 19: Appendix
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Slide 20: Capital Structure
Capital Structure Share Price (1 year to 15 Nov 2016) vs As at 15 November 2016 Number FTSE 250 & FTSE 350 Mining of voting % ISC rights BlackRock Investment (UK) Limited 79,795,839 15.1% T. Rowe Price 57,956,911 10.9% Standard Life Investments 39,638,469 7.6% M&G Investment Funds 28,900,000 5.5% Di
Slide 21: The Petra Board
The Petra Board Adonis Pouroulis Johan Dippenaar Jim Davidson Non-Executive Chairman CEO Technical Director One of South Africa’s most successful Acknowledged world authority on kimberlite Successful mining entrepreneur diamond entrepreneurs with 25 years’ geology and exploration Founded Petra Diamo
Slide 22: World Diamond Mines
World Diamond Mines Petra Diamonds Limited November 2016 22
Slide 23: Focus on Africa
Focus on Africa • Five producing mines (four in South Africa and one in Tanzania), plus exploration in Botswana and South Africa • Diversified portfolio is key to managing production risk across the Group Petra Diamonds Limited November 2016 23
Slide 24: An Exceptional Growth Plan
An Exceptional Growth Plan July 2007 July 2008 February 2009 Koffiefontein Cullinan Williamson Petra has acquired six non-core diamond mining operations from De Beers Petra approach: • Flat management structures 70% Petra¹; 30% BEE 74%¹ Petra; 26% BEE 75% Petra¹; 25% Government of Tanzania • Focus o
Slide 25: 2016 Resource Statement (30 June 2016)
2016 Resource Statement (30 June 2016) World-class Resource base of 312.2 million carats¹ worth ca. US$48.6 billion² Gross Resources (Mcts) 100 49.1 50 40.4 194.2 9.0 6.7 - Cullinan Finsch Williamson Operations3 Kimberley Operations Koffiefontein Gross In Situ Value (US$bn)² 15.5 24.5 4.4 3.1 1.2 -
Slide 26: Production and Revenue – FY 2016 vs. FY 2019
Production and Revenue – FY 2016 vs. FY 2019 Gross Production Gross Revenue FY 2016 actual: 3.7 million carats FY 2016 actual: US$430.9 million 18% 19% Finsch 6% 43% 60% 2% Cullinan 18% 14% Williamson Koffiefontein 6% Kimberley 14% FY 2019: ca. 5.3 million carats1 FY 2019: ca. US$0.8 billion1 39% 39
Slide 27: The Diamond Market in 2015
The Diamond Market in 2015 • Global diamond jewellery sales +2% in local currency but -2% in USD: ca. $79 billion Share of World Polished Diamond Consumption in Value (US$ PWP) Diamond Jewellery Value, Growth by Geography (US$bn) Source: De Beers Diamond Insight Report 2016 Petra Diamonds Limited No
Slide 28: Petra Production Profile
Petra Production Profile • Production profile of a kimberlite is highly consistent when the mine is in steady state production • Ever growing volumes across the full diamond spectrum (from lowest to highest value) • Growing trend for mass luxury supported by strong pricing performance in smaller / 2
Slide 29: 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 Cullinan Heritage 507.5 carats r
Slide 30: The Most Highly Concentrated Form of Wealth
The Most Highly Concentrated Form of Wealth Examples of recent polished diamond sales at auction The 14.62ct The 12.03ct Blue Oppenheimer Moon of Blue diamond Josephine diamond Sold for $57.7m $3.9m per carat, Sold for $48.4m 18 May 2016 $4.0m per carat, 12 November 2015 The 24.18ct The 15.38ct Cull
Slide 31: FY 2016 Operational Results
FY 2016 Operational Results Combined Finsch Cullinan Koffiefontein Williamson Kimberley Ops FY FY FY FY FY FY FY FY FY FY 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 ROM PRODUCTION Tonnes Treated (t) 3,547,798 3,016,385 2,302,892 2,513,004 681,344 341,783 721,513 1,196,269 4,003,180 4,056,638
Slide 32: FY 2016 - Operating Costs
FY 2016 - Operating Costs Petra’s focus on cost control and the weaker ZAR helped to mitigate inflationary pressures FY 2016 On-mine cash cost breakdown (South Africa operations) 9% Group on-mine US$ cash costs decreased 3% due to: 15% • Increase in tonnes treated (7% increase) 39% • Inflationary in
Slide 33: Koffiefontein – Development Programme
Koffiefontein – Development Programme Expansion Plan Koffiefontein Kimberlite Pipe Schematic Expansion Plan – to take production to ca. 95,000 ctpa by FY 2017 • SLC to be mined over 3 levels from 560 mL to 600 mL • Production commenced from first tunnels of SLC on 560 mL – end FY 2015 • 52L Western
Slide 34: Kimberley Underground – Development Programme
Kimberley Underground – Development Programme Expansion Plan Kimberley Underground Kimberlite Pipes Schematic Expansion Plan – planned underground production of ca. 215,000 ctpa from FY 2019 • Underground ore to be treated at Central Treatment Plant – from FY 2017 • Planned grade of 13 – 14 cpht – f
Slide 35: Williamson – Development Programme
Williamson – Development Programme Expansion Plan Williamson Kimberlite Pipe Schematic Expansion Plan – to take production to ca. 325,000 ctpa by FY 2018 • Plant modifications (additional crusher circuit, 2 autogenous mills) commenced – FY 2016 • Commissioning of crusher – FY 2016 • Commissioning of
Slide 36: Debt Facilities
Debt Facilities • Bank facilities (excl. FX lines) as at 30 Sep 2016: ca. $268 million • Bank debt facilities undrawn and available to the Group as at 30 Sep 2016: $70 million • Debt includes US$300 million senior secured second lien notes issued May 2015 Lender Type Size Size Utilised at Interest R
Slide 37: Bank Debt Facilities – Covenants
Bank Debt Facilities – Covenants Distribution Maintenance Covenants Covenants 12 months to 12 months to 12 months to 12 months to 12 months to Covenant 30 June 2016 30 June 2016 31 Dec 2016 30 June 2017 31 Dec 2017 All periods and thereafter Actual Required ratio Required ratio Required ratio Requir
Slide 38: Leverage Ratios
Leverage Ratios 30 June 2016 30 June 2015 IFRS Net debt¹ USDm 375.8 160.5 Consolidated net debt (for bank debt covenant measurement) USDm 464.6 256.1 Gearing² % 69 26 Adjusted EBITDA³ USDm 164.3 139.3 EBITDA margin4 % 39 33 Consolidated net debt: EBITDA5 x 2.8 1.8 EBITDA net interest cover6 x 4.3 7.
Slide 39: Capex Profile – FY 2017 to FY 2019
Capex Profile – FY 2017 to FY 2019 1. All Capex numbers are stated in FY 2017 money terms (ZAR14:$1 where applicable) 2. Depreciation on mining assets for FY 2017 guided at ca. US$70 – 75 million at ZAR14:$1 3. As in prior guidance, capital estimates above do not include any capitalised borrowing co
Slide 40: Thank You
Thank You Further enquiries: Investor Relations [email protected] +44 20 7494 8203 www.petradiamonds.com