Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Shareholder Meeting (November 2015)
43 slides from Petra Diamonds's shareholder meeting presentation, Nov 30, 2015
Slide 1: Annual General Meeting 2015
11 November 2015: a blue diamond from Cullinan sells for a record $48.5 million Annual General Meeting 2015 30 November 2015
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: A Mining Company Offering…
A Mining Company Offering… 1. Quality assets & management 2. Attractive long-term market fundamentals 3. Growth & margin expansion 4. Robust balance sheet & maiden dividend 3
Slide 4: An Exceptional Growth Path
An Exceptional Growth Path • Petra acquired five diamond mines from De Beers (four in South Africa, one in Tanzania) July 2007 July 2008 February 2009 May 2010 September 2011 Koffiefontein Cullinan Williamson Kimberley UG Finsch 70% Petra¹; 30% BEE 74%¹ Petra; 26% BEE 75% Petra¹; 25% 74% Petra¹; 26%
Slide 5: Growth and Margin Expansion
Growth and Margin Expansion FY 2019 • Petra to maintain a flat tonnage profile from FY 2016 onwards, but the replacement of production target of poor quality tonnes with better quality tonnes will grow production and increase the ca. 5.0 Mcts; revenue of ca. average value per carat $1.0bn 6 30 1000
Slide 6: Recent Highlights
Recent Highlights Safety • LTIFR of 0.29 in FY 2015 and 0.40 in Q1 FY 2016; a good achievement in comparison to mining operations worldwide (particularly underground) Governance • Appointment of Ms Octavia Matloa to the Board and to the Audit Committee – Nov 2014 Williamson – 23.16ct pink diamond of
Slide 7: World Diamond Mines
World Diamond Mines ” PetraDiamonds Archons: Archean areas (3 500-2 500 million years old) Procons: Early and middle proterozoic areas (2500-1 500 million years old) Tectons: Late proterozoic areas (1 500-600 million years old) O Major kimberlite diamond mines currently in operation 1 Snap Lake 2 Ek
Slide 8: Diamond Market – Overview
Diamond Market – Overview Supply Demand • Supply constraints: Global rough diamond production • US recovery: economy continues to improve; very strong decreased 4% to 125 Mcts worth $14.5bn in 2014 diamond buying culture (ca. 42% of world demand); retail (average $116/ct) sales currently performing
Slide 9: Rough Diamond Pricing
Rough Diamond Pricing Petra Sales – Pricing and Timing FY 2016 Market Conditions • Petra sells via method of competitive tender – pricing • Market continues to be challenging, due to liquidity / subject to pure market movements; experienced profitability issues in the midstream of the pipeline, the
Slide 10: Petra Rough Diamond Pricing
Petra Rough Diamond Pricing Calculated Guidance Actual Ranges of Average Weighted Weighted Individual Tender Value¹ Average Average Results US$/ct US$/ct US$/ct US$/ct Q1 FY 2016 FY 2016 FY 2015 FY 2015 Finsch 77 94 90 82 – 112 Cullinan 109 1262 1193 106 – 1354 Koffiefontein 320 570 386 226 – 536 Ki
Slide 11: Impact of Strong US Dollar
Impact of Strong US Dollar • Strong USD puts pressure on pricing of USD denominated commodities • Substantial weakness in ZAR significantly increases ZAR cashflows in South Africa • Major portion of Petra operating costs incurred in South Africa • Chart below shows rough diamond prices (PLPHROAI Ind
Slide 12: Q1 – A Strong Start to the Year
Q1 – A Strong Start to the Year Q1 FY 2016 – Production and Sales Summary Unit Q1 FY 2016 Q1 FY 2016 Variance FY 2015 Sales Diamonds sold Carats n/a 532,250 n/a 3,168,650 Gross revenue US$M n/a 100.8 n/a 425.0 Production ROM diamonds Carats 646,051 600,499 +8% 2,276,168 Tailings and other Carats 196
Slide 13: Robust Financial Position
Robust Financial Position Unit 30 September 2015 30 June 2015 30 September 2014 Closing exchange rate R13.84/US$1 R12.16/US$1 R11.28/US$1 used for conversion Cash at bank US$m 57.2 166.6 45.2 Carats 1,181,822 339,489 622,910 Diamond inventories US$m 103.4 33.5 48.4 Diamond debtors US$m 0.0 57.6 3.6
Slide 14: 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 15: Growth & Margin Expansion
Growth & Margin Expansion Operating margins expected to rise from ca. 36% to +50% by FY 2019 • Group tonnage throughput to remain flat, but increase in ROM grades to lead to ca. 60% growth in production • Lower value tailings to reduce from 29% in FY 2015 to 4% of carat production by FY 2019 Split o
Slide 16: New Cullinan Plant
New Cullinan Plant Expected Benefits of the CDM Plant Existing Cullinan Plant • Footprint decreases from ca. 26 to ca. 5 hectares • Expected reduction in number of conveyor belts from 151 (ca. 15km) to 22 (ca. 3km) • Increase of ca. 6 – 8% in revenue per tonne • Ca. 10% increase in grade due to incr
Slide 17: Optimising Recoveries at Cullinan – The Prize
Optimising Recoveries at Cullinan – The Prize • Cullinan is a world-class orebody, renowned for the regular production of large, top quality diamonds • Source of the 3,106ct Cullinan diamond (cut to form the centrepiece stones of the British Crown Jewels) and many of the world’s most famous and spec
Slide 18: Optimising Recoveries at Cullinan – The Prize
Optimising Recoveries at Cullinan – The Prize • January 2014: Petra recovers a 29.6 carat blue diamond, which is sold in February 2014 to Cora International for $25.6 million (+$860k per carat) • November 2015: Cora sells the perfect polished stone: the 12 carat, fancy vivid blue, internally flawles
Slide 19: Production and Revenue – FY 2015 vs FY 2019
Production and Revenue – FY 2015 vs FY 2019 Gross Production Gross Revenue FY 2015 actual: 3.2 million carats FY 2015 actual: US$425.0 million 23% 28% Finsch 43% 6% Cullinan 65% 2% Williamson 4% 15% Koffiefontein Kimberley 10% Underground 4% FY 2019: ca. 5 million carats1 FY 2019: ca. US$1.0 billion
Slide 20: Integrated Approach to Sustainability
Integrated Approach to Sustainability Safety Performance 1.2 Safety of 1 employees is top priority 0.8 Petra strives for 0.6 continuous improvement 0.4 0.2 LTIFR compares favourably with 0 international FY FY FY FY FY FY underground mines 2010 2011 2012 2013 2014 2015 Petra’s LTIFR Rate Heath and Sa
Slide 21: Appendix
The Koffiefontein mine, South Africa Appendix
Slide 22: Capital Structure
Capital Structure Share Price (1 year to 25 Nov 15) High Quality Share Register % ISC (as at 25 November 2015) vs FTSE 250 & FTSE 350 Mining T. Rowe Price¹ 13.0% BlackRock Investment (UK) Limited 9.9% Standard Life Investments (Holdings) Limited 8.4% M&G Investment Funds 5.5% Directors 3.2% 1. T. Ro
Slide 23: Focus on Southern Africa
Focus on Southern Africa Diversified portfolio: 5 producing mines (4 in South Africa, 1 in Tanzania), exploration in Botswana Africa is source of ca. 58% of world’s diamonds by value 23
Slide 24: FY 2015 – Summary of Results
FY 2015 – Summary of Results FY 2015 FY 2014 (US$m) (US$m) Revenue¹ 425.0 471.8 Adjusted mining and processing costs¹ (272.7) (277.4) Other direct income 2.2 6.7 Profit from mining activities1 154.5 201.1 Exploration expense (5.6) (2.8) Corporate overhead (9.6) (10.6) Adjusted EBITDA1 139.3 187.7 De
Slide 25: FY 2015 – Operations Results
FY 2015 – Operations Results Operation Finsch Cullinan Koffiefontein Kimberley UG Williamson (74%¹ Petra; 26% BEE) (74%¹ Petra; 26% BEE) (70%¹ & 2 Petra; 30% BEE) (74%¹ Petra; 26% BEE) (75% Petra; 25% Government of Tanzania) ROM Production Tonnes treated (t) 3,016,385 2,910,195 2,513,004 2,546,383 3
Slide 26: 2015 Resource Statement (30 June 2015)
2015 Resource Statement (30 June 2015) • World-class Resource base of 308.7 million carats¹ worth ca. $54.3 billion² Gross Resources (Mcts) 100 49.1 50 195.4 38.1 6.7 6.4 - Cullinan Finsch Williamson Koffiefontein Kimberley Underground Gross In Situ Value (US$bn)² 11.4 4.4 2.6 1.9 34.0 - Cullinan Wi
Slide 27: 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 28: Petra Production Profile
Petra Production Profile • The production profile of a kimberlite is highly consistent when the mine is in steady state production; Petra experienced volatility in product mix in FY 2015 due to the reliance on the heavily diluted old mining areas at its underground operations • Ever growing volumes
Slide 29: Exceptional Diamonds
Exceptional Diamonds • Petra classifies ‘exceptional diamonds’ as stones that sell for +$5 million each • Exceptional diamonds contributed on average $21 million pa from FY 2009 to FY 2015 • Average increased to ca. $36 million pa in FY 2014 and FY 2015 • Company business model is not reliant on exc
Slide 30: Finsch – Development Programme
Finsch – Development Programme Expansion Plan FY 2015 Development : 4,217 metres; Raiseboring: 376 metres; Kimberlite: 1,038 metres • Expansion plan to take production to ca. 2.0 Mctpa (ROM) by FY 2018 • Sub level cave – development of 3 out of 4 levels complete • New Block 5 Block Cave to be instal
Slide 31: Finsch Development Snapshot
Finsch Development Snapshot SLC ore handling installation infrastructure in progress Simba M4C in operation Installation of the Apron Feeder Bulkhead The new bulk sample plant 31
Slide 32: Finsch – Production Plan
Finsch – Production Plan • ROM tonnages to rise ca. 16%, but ROM carat production to rise ca. 56% due to higher grade • Positive impact on average value per carat as tailings production winds down Tonnes treated and grades Carat production and average diamond values¹ 3.0 140 6.0 70 Million carats $/
Slide 33: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan FY 2015: Development: 4,282 metres; Raiseboring: 614 metres; Kimberlite: 2,285 metres • Expansion plan to take production to ca. 2.4 Mcts by FY 2019 (2.2 ROM & 0.2 tailings) • C-Cut Phase 1: new block cave being established on the western side of the o
Slide 34: Cullinan Development Snapshot
Cullinan Development Snapshot Drilling Undercut holing – Tunnel 21 Undercut secondary support ‘Blue’ development – rock sealing ‘Blue’ development – secondary support Conveyor Level South 34
Slide 35: Cullinan – Production Plan
Cullinan – Production Plan • ROM tonnages to rise 48%, but ROM carat production expected to rise 180% • Steady state grade projection increased from ca. 50 cpht to ca. 55 cpht due to new Cullinan plant Tonnes treated and grades Carat production and average diamond values 3.0 200 60 Million carats 7.
Slide 36: Koffiefontein – Development Programme
Koffiefontein – Development Programme Expansion Plan – to take Koffiefontein Kimberlite Pipe Schematic production to ca. 100,000 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 • ROM production supplemente
Slide 37: Kimberley Underground – Development Programme
Kimberley Underground – Development Programme Expansion Plan – planned Kimberley Underground Kimberlite Pipes Schematic production of ca. 170,000 ctpa by FY 2016 • Planned ROM tonnes treated of ca. 1.2 Mtpa – from FY 2015 • Planned grade of 13 – 15 cpht from FY 2016 • Scope refinement of underground
Slide 38: Williamson – Development Programme
Williamson – Development Programme Expansion Plan – to take Williamson Kimberlite Pipe Schematic production to ca. 350,000 ctpa by FY 2018 1km • Plant modifications N (additional crusher circuit, 2 autogenous mills) to commence – FY 2016 LOM Pit Shell • Commissioning of crusher – FY 2016 205m • Comm
Slide 39: FY 2015 Operating Costs
FY 2015 Operating Costs Petra’s focus on cost control and the weaker ZAR helped to mitigate inflationary pressures FY2015 Group On-mine Cash Cost Breakdown Group On-mine Cash Cost: FY 2014 vs FY 2015 -150 -170 7% -190 13% -210 36% -230 -249 -11 +18 -1 -253 -250 -3 -2 -6 -270 44% -290 CPI Labour Fx E
Slide 40: Debt Facilities
Debt Facilities Bank loans and borrowing (excl FX lines) ca. $262 million as at 30 September 2015 Lender Type Size Interest Rate Repayment US$M1 Absa & RMB Amortising term facility 58 3M JIBAR + 3.5% 3 semi-annual payments from Mar 2018 (FNB) IFC Amortising term facility 35 3M LIBOR + 4.0% 3 semi-an
Slide 41: Leverage Ratios
Leverage Ratios FY 2015 IFRS Net debt US$160.5 Consolidated net debt for bank debt covenant measurement US$253.9 Adjusted operating cashflow US$141.3 Adjusted EBITDA US$139.3 EBITDA margin 33% Gearing 26% Consolidated net debt: EBITDA 1.8x Consolidated EBITDA to Consolidated net finance charges 7.3x
Slide 42: Capex Profile
Capex Profile 1. All Capex numbers are stated in FY 2016 money terms (except for FY 2015 actuals). 2. Depreciation on mining assets for FY 2016 guided at ca. $52 million. 3. As in prior guidance, capital estimates above do not include any capitalised borrowing costs. Guidance is to assume majority o
Slide 43: Further enquiries: Petra Diamonds
The Koffiefontein mine, South Africa Further enquiries: Petra Diamonds Cathy Malins [email protected] +44 20 7494 8203 www.petradiamonds.com