Petra Diamonds Limited · LSE:PDL
Petra Diamonds — BofAML Global Metals, Mining and Steel Conference 2015
32 slides from Petra Diamonds's conference presentation, May 12, 2015
Slide 1: Opening up C-Cut Phase 1 at Cullinan
Opening up C-Cut Phase 1 at Cullinan BofAML Global Metals, Mining and Steel Conference 12 – 14 May 2015
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: A Mining Company Offering…
A Mining Company Offering… Revenue Adjusted EBITDA US$m US$m 1. Quality assets & management 203 600 188 502 200 472 392 128 400 317 90 221 100 67 200 2. Attractive market fundamentals 0 0 FY11a FY12a FY13a FY14a LTM FY11a FY12a FY13a FY14a LTM Dec 14 Dec 14 Rough Diamond Production Adjusted Op. Cash
Slide 4: 1. Quality Assets & Management
1. Quality Assets & Management • Petra has majority stakes in 5 of less than 30 significant kimberlite mines in operation • Major diamond resource of 301 Mcts valued at ca. US$58 bn1 Well diversified portfolio Four producing mines in South Africa One producing mine in Tanzania Exploration in Botswan
Slide 5: 1. Quality Assets & Management
1. Quality Assets & Management • 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;
Slide 6: 2. Attractive Market Fundamentals
2. Attractive Market Fundamentals Supply1 Global Diamond Supply: Historical & Forecast Rough Production2 • Diamond exploration success rate estimated at <1% 180 • Global rough production fell 27% from 2005 to 2013 160 Peak Production 140 Mctpa (2005) • Supply constraints (<30 significant kimberlite
Slide 7: 2. Attractive Market Fundamentals
2. Attractive Market Fundamentals • Unique supply/demand fundamentals provide support to underlying prices and limit volatility Petra’s Market Observations Typical Cullinan Tender Layout • Rough diamond prices increased 5.4% pa real over the last 10 yrs • Rough diamond market shows seasonality– norm
Slide 8: 2. Attractive Market Fundamentals
2. Attractive Market Fundamentals • Expected growth in demand across all diamond ranges Mass market goods High end goods Ultra collectables Growth in middle classes Growth in UHNWs (+US$30m) Growth in billionaires Number of projected additional middle Global UHNW wealth to reach US$40tn & Conservati
Slide 9: 3. Growth and Margin Expansion
3. Growth and Margin Expansion • Cave mining is a low-cost, mechanised, safe and efficient mining technique Introduction to Block Caving • Well-established and safe mining method first introduced in 1951, lending itself to significant automation to produce an underground “rock factory” • Initially c
Slide 10: 3. Growth and Margin Expansion
3. Growth and Margin Expansion • Brownfield expansion programmes on track to lift production to c. 5 Mcts by FY19 FY19 production (US$m) target of c.5 Mcts (Mcts) 1,200 6.0 FY15 production 1,000 5.0 target of FY14 3.2 Mcts production of 800 3.1 Mcts; 4.0 revenue of FY11 US$472m 600 production 3.0 of
Slide 11: 3. Growth and Margin Expansion
3. Growth and Margin Expansion • Development programmes to support solid continued growth and improved efficiencies Expansion Projects & ...To Drive Higher Carat Output at a Higher ...and Increased Margins Efficiency Measures.... Price per Carat... • Ongoing expansion programmes at all sites: • Annu
Slide 12: 3. Growth and Margin Expansion
3. Growth and Margin Expansion • New plant at Cullinan expected to improve recovery of the full spectrum of diamonds, significantly improve operating costs and offer strong stand-alone economics Expected benefits of the CDM Plant Existing Cullinan Plant Modern & • Construction cost of ca. ZAR1.65bn
Slide 13: 4. Strong Balance Sheet and Dividends
4. Strong Balance Sheet and Dividends • Solid underlying cash generation, well funded capex programme and commencement of dividend payments Significant Liquidity Sources Commentary • 7 May 2015: pricing of Petra inaugural US$300 million 5 year Notes Incremental Cash Following Notes Offering1 Existin
Slide 14: Outlook
Outlook 1. Quality assets & management Operating 5 of <30 significant diamond mines worldwide Favourable medium- to long-term 2. Attractive market fundamentals outlook; lower volatility than other commodities Expansion programmes on track; 3. Growth & margin expansion margins to rise substantially b
Slide 15: Integrated Approach to Sustainability
Integrated Approach to Sustainability Safety Performance 1.2 • Safety of 1 employees is top priority 0.8 • Petra aiming 0.6 for continuous 0.4 improvement 0.2 0 FY FY FY FY FY Q3 FY 2010 2011 2012 2013 2014 2015 Petra’s LTIFR Rate Promoting Sustainable Energy Environmental Management Striving for ze
Slide 16: Appendix
The current Cullinan Plant Appendix
Slide 17: Capital Structure
Capital Structure Share Price (1 year) High Quality Share Register % ISC (as at 8 May 2015) vs FTSE 250 & FTSE 350 Mining T. Rowe Price¹ 11.2% Al Rajhi Holdings W.W.L. 10.9% BlackRock Investment (UK) Limited 10.1% JP Morgan Asset Management Holdings Inc. 7.7% Prudential plc group of companies² 5.0%
Slide 18: The Petra Board
The Petra Board Adonis Pouroulis Johan Dippenaar David Abery Jim Davidson 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 Founded Petra Diamonds
Slide 19: Diamond Market: Constrained Supply
Diamond Market: Constrained Supply Commentary 2013a World Diamond Production2 • Global rough production fell 27% from 177 Mcts worth By Value By Volume US$11.6bn in 2005 (world average value of US$65/ct) to 130 8% Mcts worth US$14.1bn in 2013 (world average value of ca.8% 11% US$108/ct)1 ca.12% • 20
Slide 20: Diamond Market: Growing Demand
Diamond Market: Growing Demand • Global consumer diamond demand forecast to grow at 4-5% on average over 2013-18f1 (US$ nominal terms) Commentary China’s Consumption of Commodities Relative to US Steady State4 • Late Cycle Commodity: Demand driven by urbanisation trend, 120 Cement (=250%) growing mi
Slide 21: Regular Production of Exceptional Diamonds
Regular Production of Exceptional Diamonds • Petra’s mines have a long history of exceptional (large and/or coloured) diamond production; however, the Company is not reliant on revenue from exceptional diamonds Exceptional Diamonds (+US$5m Stones) • Exceptional diamonds contributed on average US$18
Slide 22: H1 FY 2015 – Summary Results
H1 FY 2015 – Summary Results H1 FY 2015 H1 FY 20141 FY 2014 Revenue 214.8 184.6 471.8 Adjusted mining and processing costs2 (122.9) (109.7) (277.4) Other direct income 1.0 2.1 6.7 Profit from mining activity2 92.9 77.0 201.1 Exploration expense (2.4) (1.4) (2.8) Corporate overhead (5.6) (6.2) (10.6)
Slide 23: Petra Diamond Sales Timing
Petra Diamond Sales Timing Petra Typical Tender Sales Cycle H1 H2 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 1 2 3 4 5 6 7 23
Slide 24: Q3 FY 2015 – Operations Results
Q3 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) 766,147 690,142 658,818 633,049 118,03
Slide 25: Finsch – A Major Producer with a Sustainable Mine Plan
Finsch – A Major Producer with a Sustainable Mine Plan Highlights Mine Overview • World class operation with state-of-the-art infrastructure, Location Northern Cape, South Africa modern plant and quality management Effective Ownership 82.38% Reserves (Mcts) • Produces a number of +50 ct stones, high
Slide 26: Finsch – Development Programme
Finsch – Development Programme Expansion Plan Mine Schematic • Expansion plan to take production to c. 2.0 Mctpa (ROM) by FY 2018 • Mining currently transitioning from block cave at 630m to sub level cave (“SLC”) over 4 levels from 700m to 780m – FY 2015 • New Block 5 Block Cave to be installed at 9
Slide 27: Cullinan – The World’s Most Celebrated Diamond Mine
Cullinan – The World’s Most Celebrated Diamond Mine Highlights Mine Overview • One of the world’s largest diamond resources of c. 200 Location Gauteng, South Africa Mcts valued at US$36.9 bn Effective Ownership 77.03% Reserves (Mcts) 24.3 • Renowned for large diamonds, incl. the 3,106 ct Cullinan Re
Slide 28: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan Mine Schematic • Expansion plan to take production to c. 2.2 Mcts by FY 2019 (2.0 Mcts ROM & 0.2 Mcts tailings) • C-Cut Phase 1: new block cave being established on the western side of the orebody • Development of declines, access tunnels and shaft dee
Slide 29: Other Key Assets (lower volume but higher value producers)
Other Key Assets (lower volume but higher value producers) Asset Information Koffiefontein Kimberley Underground Williamson Location Free State, South Africa Northern Cape, South Africa Shinyanga, Tanzania Effective Ownership 81.39% 86.80% 75.00% Reserves (Mcts) 0.8 0.5 n/a Resources1 (Mcts) 6.7 6.4
Slide 30: On-mine Cash Cost per Tonne
On-mine Cash Cost per Tonne • Stable on-mine cash cost per tonne achieved at Finsch and Cullinan despite inflationary environment FY2014 On-mine Cash Cost Breakdown Comments Cash cost per tonne kept under control, despite inflationary pressures on mining costs: Risk of rising electricity costs m
Slide 31: Debt Facilities
Debt Facilities Bank loans and borrowing (excl FX lines) Lender Type Size Interest Rate Repayment US$M1 Absa & RMB Amortising term facility 69.4 3M JIBAR + 3.5% 3 semi-annual payments from Mar 2018 (FNB) IFC Amortising term facility 35 3M LIBOR + 4.0% 3 semi-annual payments from Mar 2018 Absa & RMB
Slide 32: Further enquiries: Petra Diamonds
Open pit mining at Williamson Further enquiries: Petra Diamonds Cathy Malins [email protected] +44 20 7494 8203 www.petradiamonds.com
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