Petra Diamonds Limited · LSE:PDL
Petra Diamonds — Investor Presentation (November 2013)
38 slides from Petra Diamonds's investor presentation, November 2013
Slide 1: Petra Diamonds – Corporate Presentation November 2013
An exceptional 25.5ct Cullinan blue sold for US$16.9m in April 2013 Petra Diamonds – Corporate Presentation November 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 manne
Slide 3: Petra Diamonds
Petra Diamonds • Mid-tier diamond producer (LSE:PDL; FTSE 250) • Quality management team delivering strong growth • World-class resource base of +300m carats • Diversified portfolio of producing mines and exploration • On track for 5 Mctpa / ca. US$1bn¹ revenue by FY 2019 • Sustainability at heart o
Slide 4: Focus on Africa
Focus on Africa • Six producing mines (five in South Africa and one in Tanzania), plus exploration in Botswana • Diversified portfolio is key to managing production risk across the Group Africa is source of ca. 60% of world’s diamonds by value 4
Slide 5: An Exceptional Growth Path
An Exceptional Growth Path 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 74% Petra¹; 26% BEE 74%¹ Petra; 26% BEE 75% Petra¹; 25% 76% Petra¹; 24% BEE 76% Petra¹; 24% BEE Gov
Slide 6: World-class Resource Base
World-class Resource Base • Largest resource base outside the majors (Alrosa, De Beers, Rio Tinto) • Group Resource base of 309.6 million carats worth ~US$55.0 billion¹ (at 30 June 2013) • Solid foundation for sustainable, long-term mining operations Gross Resources (Mcts) 200.8 100 50.9 50 39.4 7.2
Slide 7: Roadmap to 5 million Carats pa
Roadmap to 5 million Carats pa • Growth profile is solely organic and brownfields – expansion programmes to open up new mining areas • Fully financed using debt, treasury and operating cashflows Proven track record operating and optimising new mine acquisitions On track for ca. 3Mctpa in FY 2014 and
Slide 8: Exciting Diamond Market Fundamentals
Exciting Diamond Market Fundamentals • Limited supply: only ~30 significant kimberlite mines in production; no major discoveries since 1990’s • Major mines maturing: past production peak; moving underground = lower tonnages + higher operating costs • Late cycle credentials: demand driven by urbanisa
Slide 9: Petra Production Profile
Petra Production Profile • Kimberlite production profile remains highly constant over time • Standard diamond population (quality and size ranges) means consistent pricing • Mainstay of Petra production is commercial, mass market goods • Petra expects strong price performance in smaller/lower qualit
Slide 10: Regular Production of Specials
Regular Production of Specials • ca. US$1m stones are fairly regular and considered run of mine An exceptional 25.5ct Cullinan Type IIb blue • +US$5m stones are considered exceptional – not used in mine stone sold for US$16.9m in April 2013 planning/forecasts, but have consistently added ca. US$16m
Slide 11: Rare Diamonds Continue to Break Records
Rare Diamonds Continue to Break Records 12 November 2013: The Orange, at 14.8cts the largest known fancy-vivid orange diamond, sold for US$36 million, or US$2.4 million per carat; being the highest price per carat on record for any diamond (South Africa – date unconfirmed) 7 October 2013: The 118.3c
Slide 12: Rough Diamond Pricing
Rough Diamond Pricing • Weaker rough pricing performance in post summer period – prices down ca. 7% on Jan to Jul 2013 • Market impacted by seasonal weakness, pipeline liquidity constraints and weak Indian Rupee • Petra now seeing firmer market conditions; anticipates stronger year end and start to
Slide 13: FY 2014 Performance – YTD
FY 2014 Performance – YTD • Strong production run rate for Q1 despite ca. two week industrial action late Aug/early Sep • Further to close of second tender in Q2, Group revenue FY 2014 to date is US$120.8m • One more tender in H1 (closing early December), then four to be held in H2 Unit Q1 FY 2014 Q
Slide 14: Expansion Programmes Snapshot
Expansion Programmes Snapshot Underground development Tailings retreatment Optimising orehandling Plant refinements 14
Slide 15: 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 16: Finsch – Development Programme
Finsch – Development Programme Expansion Plan – to take 2,311 development metres and 165 raiseboring metres in FY 2013 production to c.1.8 Mctpa by FY 2016 and c.2.0 Mctpa by FY 2019 Dedicated conveyor • Mining currently taking place in ore-handling system Block 4 at 630m – FY 2014 Current Mining Ar
Slide 17: Cullinan – Development Programme
Cullinan – Development Programme Expansion Plan – to take 4,147 development metres and 626 raiseboring metres in FY 2013 production to c. 2.2 Mctpa by FY 2019 (2.0 Mctpa ROM & 0.2 Mctpa tailings) • Commenced rehabilitation of Current Infrastructure Men & Material BA5 areas at 645m to create Shaft Pl
Slide 18: Fully Financed Capex Profile
Fully Financed Capex Profile Debt Facilities Increasing Operating Cashflow As at 30 September 2013: • Cash: US$55.3 million Group debt facilities of ca. FY 2013 adjusted operating US$222 million¹ in place with cashflow² of US$132.8 million • Diamond inventories: ca. Absa, RMB/FNB and IFC US$43.2 mil
Slide 19: Outlook
Outlook Rising Production Rising Margins Rising Prices? • Petra started Q1 FY 2014 with • Grades expected to rise ca. 50% once • Petra seeing short term firmer record production rate expansion plans access undiluted ore market conditions going into 2014 • Carat production planned to double by • Orga
Slide 20: Integrated Approach to Sustainability
Integrated Approach to Sustainability Safety 1.2 1 Safety of employees is top 0.8 priority for management 0.6 0.4 Petra striving for zero harm across 0.2 its operations 0 Left: Petra’s LTIFR FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 Q1 FY Rate 2014 Investing in communities Striving for the highest sta
Slide 21: Appendix
Finsch in South Africa Appendix
Slide 22: Capital Structure
Capital Structure High Quality Share Register % ISC Share Price (1 year) (as at 15 November 2013) Al Rajhi Holdings W.W.L. 13.1% Saad Investments Company Ltd / AWAL Bank 11.9% T. Rowe Price 10.1% JP Morgan Asset Management Holdings Inc. 7.8% Listing LSE: PDL BlackRock Investment (UK) Limited 7.3% Av
Slide 23: The Petra Board
The Petra Board Adonis Pouroulis (43) Johan Dippenaar (56) David Abery (51) Jim Davidson (68) 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 24: Production and Revenue – FY 2013 vs FY 2019
Production and Revenue – FY 2013 vs FY 2019 Gross Production Gross Revenue FY 2013 actual: 2.67 million carats FY 2013 actual: US$402.7 million 33% 33% 41% 53% Cullinan Williamson 6% 10% Koffiefontein 4% 1% 8% 4% 3%4% Kimberley Underground Fissure Mines FY 2019: ca. 5 million carats¹ FY 2019: ca. US
Slide 25: Diamond Supply is Constrained
Diamond Supply is Constrained • Production fell 28% from 2005 (177 Mcts; Zim 0.2 Mcts) to 2012 (128 Mcts; Zim: 12.1 Mcts) • Success rate for finding an economic diamondiferous kimberlite is estimated to be ca. 1% • No Tier 1 discoveries for 20 years, despite US$ billions spent on exploration in 1990
Slide 26: Diamond Demand is Growing
Diamond Demand is Growing Number of middle class households, millions • 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) • China starting to follow US t
Slide 27: FY 2013 – Key Performance Indicators
FY 2013 – Key Performance Indicators Revenue Profit from Mining Activity¹ Adjusted EBITDA² Adjusted operating cashflow³ US$M US$402.7m US$M US$136.8m US$M US$122.4m US$132.8m +27% +34% +36% US$M +57% 450 160 140 150 400 140 120 130 350 120 100 110 300 100 90 250 80 80 70 200 60 60 50 150 40 40 30 10
Slide 28: FY 2013 – Summary of Financial Results
FY 2013 – Summary of Financial Results FY 2013 FY 2012 (US$m) (US$m) Revenue 402.7 316.9 Adjusted mining and processing costs¹ (270.3) (222.6) Other direct income 6.2 9.0 Profit from mining activity1 138.6 103.3 Exploration expense (4.8) (3.0) Corporate overhead (11.4) (10.0) Adjusted EBITDA1 122.4
Slide 29: FY 2013 – Operations Results
FY 2013 – Operations Results Operation Finsch Cullinan Koffiefontein Kimberley UG Williamson (74%¹ Petra; 26% BEE) (74%¹ Petra; 26% BEE) (74%¹ & 2 Petra; 26% BEE) (74%¹ Petra; 26% BEE) (75% Petra; 25% Government of Tanzania) Total Production Tonnes treated (Mt) 5,210,546 3,861,012 4,080,893 3,172,67
Slide 30: Iconic Gems from Iconic Mines
Iconic Gems 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 507.55 carats roug
Slide 31: Cullinan – Large Diamonds
0 2 4 6 8 10 12 14 16 18 20 1903 1905 1907 1909 +200 1911 +100 1913 1915 1917 1919 1921 1923 1925 1927 1929 1931 1950 1952 1954 1956 1958 Cullinan – Large Diamonds 1960 1962 1964 1966 1968 1971 1973 1975 1977 1979 1981 1983 +100 & +200 carat stones recovered at Cullinan 1985 1987 1989 1991 1993 1995
Slide 32: Kimberley Underground – Development Programme
Kimberley Underground – Development Programme Expansion Plan – to Kimberley Underground Kimberlite Pipes Schematic maintain annual production of c. 130,000 ctpa • Construction and commissioning of plants at both Joint Shaft and BULTFONTEIN Wesselton Shaft – completed in FY 2013 • Substantial stockpi
Slide 33: Koffiefontein – Development Programme
Koffiefontein – Development Programme Expansion Plan – to take Koffiefontein Kimberlite Pipe Schematic production to c. 105,000 ctpa by FY 2017 • ROM production supplemented by ore from Ebenhaezer open pit (~5ha) – FY 2014 to FY 2016 • Installation of SLC from 560m to 580m – FY 2014 to FY 2015 • SLC
Slide 34: Williamson – Development Programme
Williamson – Development Programme Expansion Plan – to take Williamson Kimberlite Pipe Schematic production to c. 300,000 ctpa by FY 2017 • Production resumed further 1km to the enhanced rebuild of N plant – Q4 FY 2012 • Successful ramp-up of production to 2.7 Mt – FY 2013 LOM Pit Shell • Re-crush c
Slide 35: Debt Facilities
Debt Facilities • Nov 2012: new debt facilities put in place of ca. US$222 million with Absa, RMB (FNB) and IFC • An increase and optimisation of Petra’s prior debt structures (previously ca. US$138 million ) Lender Type Size Interest Rate Repayment Absa & Amortising term facility US$81.0 JIBAR + 4.
Slide 36: Capex Profile
Capex Profile Financial Year 2013A 2014F 2015F 2016F 2017F 2018F 2019F Operation Finsch ROM tonnes treated (Mt) 2.6 2.8 2.9 3.2 3.2 3.2 3.2 Tailings tonnes treated (Mt) 2.6 2.6 3.0 3.0 3.0 3.0 3.0 Expansion Capex (ZARm) 296.1 512.3 422.2 346.9 467.9 403.0 354.3 Sustaining Capex (ZARm) 93.7 132.7 115
Slide 37: 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 38: Further enquiries: Petra Diamonds
Further enquiries: Petra Diamonds Cathy Malins [email protected] +44 20 7494 8203 www.petradiamonds.com
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