Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Maybe the outstanding bond has somthing to do with the low share price.
It is still 3 years away?
So how much of the company is actually left for shareholders?
one third??
I don't really know if someone can comment thanks
Petra Diamonds could prove a major moneymaker
Petra Diamonds (LSE: PDL) is a London-listed independent diamond miner. It holds 74% stakes in four production operations (three underground kimberlite mines in South Africa and a large high-volume opencast kimberlite mine in Tanzania).
These sites include the Cullinan Mine in South Africa, which was the source – in 1905 – of the world-famous Cullinan diamond. At 3,106 carats, this was the largest rough gem diamond ever found. It was cut to form the two most important gemstones in the UK’s Crown Jewels. As at 30 June 2021, Cullinan’s gross resource was 150 million carats, meaning that its life could be much longer than the current target of 2030.
Last year Petra undertook a restructuring which, along with the sale of several exceptional blue and white diamonds from Cullinan, cut net debt by around two-thirds to $228m (despite its London listing, the group reports in US dollars). The Tanzanian operation (Williamson) was temporarily closed owing to Covid-19. Meanwhile, Petra is planning to sell one of its South African sites (Koffiefontein) and has received expressions of interest from several interested parties. If a buyer is not found, the group will continue to operate the mine before starting a decommissioning and closure programme. In total, Petra’s resource base is 230 million carats.
In its trading update last month, Petra says that it “continued to deliver safe, robust operating performance into the fourth quarter… total revenue increased to $585m [amid] supportive diamond market fundamentals and a 41.5% increase in like-for-like diamond prices year-on-year... Strong free cash flow generated in [the
year to the end of June 2022]… has delivered an 82% reduction in consolidated net debt to $40.6m.”
The board is unfazed by inflation. It reckons that “relatively low fuel consumption, disciplined cost management, three-year labour agreements to June 2024 and exposure to a weaker South African rand will assist us in better absorbing these cost pressures.”
Petra is confident enough to provide forward guidance for its potential production on a mine-by-mine basis until 2025. Although there may be some volatility in the short to medium term, the company says that “structural changes to the supply and demand fundamentals in the diamond market remain unchanged”, and it expects more of the same in the future.
Petra’s market value is £196m. By contrast, sterling-equivalent sales for the year to 30 June 2022 were around £480m. On a price-to-earnings (p/e) ratio of just over six for the year to 30 June 2023, according to analysts’ forecasts compiled by the Financial Times, this little-known stock looks cheap. Against the backdrop of a fast-improving diamond market, it could prove to be a major moneymaker.
Would be great if that RNS dropped but knowing this corrupt market we would probably go down . Lol
Nothing makes any sense anymore as far as investment!!!
Vegas are giving better odds these days .
Bond buy back news can come at anytime here. Once it does...boom!
Looking to invest in this recovery stock but with 4/1 buys and the share price goes down I have my reservations , even though this still looks amazingly cheap when you look at the fundamentals
itsa: actually, I do not think 113 is a significant barrier. We might move past it already next week. However, I think that you will be surprised at how high the SP will go before end of september...
In awe of such prescient commentary. How can you spare the time to post such insightful commentary?
112p to 104p finish impressive even by Petra's standards!!
! 113p will be a hard nut to crack .
Nice rise on low volume !! Maybe a nice big 50m quid rock has been found hopefully.
So far, so good. But if we now follow the same pattern like the run from December to April six months ago, I expect the SP to hit 190 in October, before we go back a few steps to test the low... But the september earnings call will be a significant event, which might "disturb" the geometric pattern of my technical analysis. Hold and see ;-)
Here we go ! ,-)
@Splendor: Good, balanced analysis of the pros/cons.
So, where are we on the PDL share price? In spite of my expectations, we actually got to test the 85 level... However, we did not break the support line at 80, so I did not go all in with a new mortgage etc ,-) But maybe I should have anyway... at least I will hold a significant position. Here is why:
From a technical perspective?: We have thoroughly tested the channel low at 85, we are currently flagging in a rising channel, and if (when,-) we break the 105 level in the next couple of weeks, we should be free to go to new all time high – so my goal is still intact at +150p before 2023…
Revenue and earnings?: I assume PDL is net cash by now, with two months of income since status of net debt at USD40M in June. Free cashflow for the year should also be high following the record revenue in FY22, and my guess is about USD 200M, to be confirmed when we get the results for FY22 next month.
Future development?:
1) as always diamond price levels could fall (they already are). However, in light of the Alrosa situation, global supply reductions and the rising demand, I assume they will stay at relatively high level, but find it prudent to allow for a -10% from the current record levels. This would impact revenue 1:1… so, from a FY22 baseline of USD580m that would reduce cashflow from 200 to 140.
2) Also, the increased capex from 80 in FY22 to 160 FY23 will reduce the free cashflow. Not so much a risk, since it has already been decided and announced, but a factor for evaluating the total future cashflow situation nonetheless. From 140 to 60.
3) Reduced value from exceptional finds ( >USD 5 M). Average is around USD45M, so it would be unreasonable to expect a repeat of the past record year (FY22) of USD89M this year (FY23). A fair guess would be a 50% reduction to around average of USD45M. Naturally, this will also reduce cashflow. From 60 to 15...
With such a drastically reduced future free cashflow, what about the debt?! Well, I hope the BOD will decide to repay all of the current debt in March 2023 from the current cash pile, when there is no longer any restrictions in terms of 3-4% extra fee on early repayments. This would bring the cashflow back online by removing the annual interest payments of about USD 50M. If only repaid partially, then refinance the rest from a position of strength, and start a significant share buy-back program or pay some dividends…
Altogether, I would not be surprised if free cashflow is reduced from the current level of around USD200M to just about USD 20M during the coming financial year (FY23). But since the capex investments have a positive business case, and PDL is a net cash company able to finance its own capex projects, the sp should be ok.
So, a hopeful (biased) prognosis for the coming 12 months: we go from the current level to +150 in the coming 2-5 months, then in 2H a small correction to account for the reduced cashflow and backtest the channel low at say 140… and then repeat the cycle ,-)
There is also the other side of the balance sheet to be considered. Looking at the fundamentals of the company, the YE for June 2020 indicated a loss of $223m. For the YE June 2021 a profit of $196m. This a turnaround of $419m. The operational FCF was indicated at $120.1m.
If the profits continue for the financial years 21/22, 22//23, 23/24, 24/25 etc. , there should be no problem paying off debt and interest.
Very quiet on here !!
Looks like a slow drip down to 80p again ??
The interest payments on them 330m notes will start in 2023 at 9.75%.
Plus full payment in 2026 so Petra's debt stands around 450mUS plus the 41m left on the other debt so total 491m.
Petra is far from debt free plus restrictions from bondholders.
Dividends most probably 2027??
Please correct me if I have wrong ..
There is zero interest in Petra diamonds and the volume is shocking on a daily basis !!
Easy to manipulate by the MMs.
I think them 336m notes due in 2026 is the elephant in the room ??
AIMHO
Good luck and hold tight.
Also there has been no updates on the find of exceptional stones.
Consolidated net debt US $ 40.6 Million.
Diamond inventory US $ 53.5 Million.
The only way is up!
Its a tough market. These results are superb. Also outlook is positive. Next qtr should see zero net debt (for a miner!) Even with the increased cap ex forecast FCF must be approaching $150m in 23 vs a mkt cap today of 240m.
In a 'normal' market this should be worth 3x what it trades at today.
The company can start to use its cash pile to buy back its bonds in the market
The turn around at Petra is amazing! A great set of results and a brilliant reduction in debt. The share price should surely move today.
Balance Sheet as at 30 June 2022:Consolidated net debt[2] of US$40.6 million (31 March 2022: US$107.0 million), reflecting strong free cash flow generation over the QuarterGross cash of US$288.2 million (31 March 2022: US$249.2 million) and unrestricted cash of US$271.9 million (31 March 2022: US$233.2 million)
Doesn't get much better than that !! Let's see how the market reacts to this ?? How this isn't £3 a share is beyond me .
Delighted with that. Net debt now c $40m. Costs broadly in control given inflation. What a turnaround in 18 months.
I'm sure the update will exceed market expectations!!!
But unfortunately we live in very strange times so a sell off tomorrow is inevitable.
Most of petras update result in a 10 to 15% drops.
To much doom and gloom around.
But I hope I'm wrong ???
Hopefully will see another decent reduction in net debt tomorrow. Previous quarter improved net debt by $45m on sales of $140m. Q4 sales were $180m. If we can get to sub $50m net debt that will be fantastic for the last year
Barclays cuts Petra Diamonds price target to 100 (115) pence - 'equal weight'