Petra Diamonds Regulatory News (PDL)

28 Jul 2008 07:00



Petra Diamonds Limited

Trading Update for 12 months to 30 June 2008 - Mining revenue soars by 359%

Petra Diamonds Limited ("Petra" or "the Company" or "the Group"), the international diamond mining group, today announces the following trading update (unaudited) for the year ended 30 June 2008 ("the Period").

Petra is a high-growth diamond producer and, taking into account the recent acquisition of Cullinan, is one of the world's largest diamond groups on a gross resource basis. The Company has successfully grown its base of production assets through the separate acquisitions of the Cullinan, Koffiefontein and Kimberley Underground mines. These mines complement Petra's world class exploration base in Angola (Alto Cuilo and Luangue), Botswana (Kalahari Diamonds) and operations in Sierra Leone (Kono). 

The trading update for the Period comprises Koffiefontein and Petra's fissure mines, Helam, Sedibeng and Star (the "Fissure Mines"). The acquisition of the Cullinan mine by the Petra Diamonds Cullinan Consortium was completed on 15 July 2008 and Petra will account for its 37% interest in Cullinan from that date. 

Petra will publish its results for the year ended 30 June 2008, which will include a review of exploration, beneficiation and other developments for the Period, at the end of September. 

Highlights

Sales

Mine revenue for the Period: US$76.6 million, a 359% increase on the year to 30 June 2007 (US$16.7 million); revenue includes US$5.4 million in respect of four exceptional diamonds that were each sold for more than US$1 million. Group revenue for the Period: US$76.3 million (2007: US$16.7 million) due to the net effect of inter-company sales for Group beneficiation activities 

Substantial revenue growth mainly due to Koffiefontein sales coming on stream in July 2007, supported by strong diamond prices across all operations 

230,172 carats sold for the Period, an 87% increase on the year to 30 June 2007 (122,821 carats). Koffiefontein yielded excellent values at an average of US$478 per carat; average value per carat from the Fissure Mines increased substantially to US$210, a 54% increase on the year to 30 June 2008 (US$136) 

Koffiefontein prices continue to strengthen in line with market demand for high end diamonds and operational improvements implemented by Petra; the last tender, which was held in June 2008, achieved an average price per carat of US$726

Production 

Production of 200,287 carats, an 11% increase on the year to 30 June 2008 (180,474 carats). Fissure Mine production was lower than 2007, largely due to reduced tonnages hauled at the Helam mine. The Company is focusing on the substantial US dollar potential of its recently acquired underground pipe operations (Koffiefontein, Cullinan and Kimberley Underground)

Changes made by Petra in the Koffiefontein treatment plant are yielding highly encouraging results with a further improvement in the recovered grade to 9.1 carats per hundred tonne ("cpht") 

Operating costs at Koffiefontein are in line with expectations. Costs across the Fissure Mines, on a cost per tonne basis, have increased due to escalations of certain direct production costs (diesel, electricity, raw materials) combined with the effect of the reduced tonnages 

Adonis Pouroulis, Chairman, said "Petra has delivered superior growth this year. In its first year of operation in Petra's hands, Koffiefontein has proven to be an exceptional acquisition and it is now classed as one of the world's top kimberlite mines by average value per carat and profit margin.

"Our aim to become a world leading diamond producer will take a further step forward with the integration of the Cullinan mine and the Kimberley Underground mines into the Petra group, which will raise production fourfold to over 1 million carats per annum by the financial year to June 2009. As announced separately last week, our exploration activities also continue to progress well and we are seeing highly encouraging results, particularly from our ongoing bulk sampling and narrow diameter drilling programme at Alto Cuilo in Angola."

Conference Call

Petra Diamonds' management will be discussing today's developments on a conference call at 11:30am (UK time) today. The numbers required to dial in are listed in the table below:

The conference call will be made available shortly afterwards on the Company's website: www.petradiamonds.com 

Results from latest tender - update on diamond pricing

Prices achieved from Koffiefontein continue to surpass expectations. On 13 May 2008 the Company announced that the average sales value for Koffiefontein stones for the four months to end April 2008 was US$484 per carat, an 18.6% increase versus the six months to 31 December 2007 (US$408), with the March and April tenders achieving US$524 and US$526 per carat respectively. Petra is pleased to announce that for the June 2008 tender Koffiefontein sales achieved an average of US$726 per carat, or US$569 per carat excluding an exceptional 41.67 carat stone that achieved US$1.79m. These results are a substantial increase on previous tenders and clearly illustrate the superior value of production from this mine.

These values reflect the operational changes made at Koffiefontein under Petra's management control, which continue to improve the mine's economic performance, as well as reflecting the strong market for high value diamonds, which form a substantial part of Koffiefontein's production.

The average value per carat at Petra's three Fissure Mines was US$244 per carat for the six months to the end of June 2008, a 34% increase on the value for the six months to the end of December 2007 of US$182 per carat. A significant portion of this increase is due to a change in mix over the Period, but even without this change, Petra is confident that the average of US$182 to December 2007 would have increased by at least 10%. The average price achieved for the Fissure Mines for the period since July 2007 to date is US$210 per carat.

Sales exceeded production due to diamonds recovered and sold from the stockpiles of ore on surface at Koffiefontein and Sedibeng. As at 30 June 2008 there were further stockpiles that will be processed during FY 2009. Production at the Fissure Mines was lower than expectations due to reduced tonnages at the Helam mine. This production shortfall has therefore affected carat sales and revenue, although the Helam goods at approximately US$83 per carat are the least valuable of Petra's production, so the effect is largely mitigated in terms of overall revenues. 

The breakdown of production between Koffiefontein and the Fissure Mines is given below.

Production and sales summary - combined Koffiefontein and Fissures Mines 

Koffiefontein mine

Fissure Mines (Sedibeng, Star, Helam)

Note 1: All production and sales figures are stated gross 

  Note 2: Although production was recorded at Koffiefontein in the year to June 2007 during the care and maintenance period, sales only commenced in July 2007 when the remaining conditions in the Koffiefontein acquisition agreement were met

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Notes to Editors:

About Petra Diamonds

Petra Diamonds is an international diamond mining group with a balanced portfolio combining major producing mines, world class exploration assets and a cutting and polishing business.

With operations in South Africa, Angola, Botswana and Sierra Leone, Petra's objective is to continue to grow production, developing its stature as a leading diamond producer in all of the countries in which it operates. 

In South Africa, Petra has five producing mines - Cullinan, Koffiefontein, Helam, Sedibeng and Star - and has reached agreement to acquire a further asset, the Kimberley Underground mines, from De Beers. The group is on track to increase its annual production from 200,000 carats in the year to June 2008 to around 1 million carats in the year to June 2009.

Complementing the Group's production is an exploration and development portfolio spread across some of the world's most prospective diamond fields. In Angola, Petra is developing the world class Alto Cuilo and neighbouring Luangue projects. In Botswana, Petra has established the largest diamond exploration landholding in the country, where it believes that modern exploration techniques will hold the key to the discovery of new, major kimberlites. In Sierra Leone, Petra is developing a fissure operation with its JV partner Stellar Diamonds and test work to date indicates the potential for economic operations.

The Petra group now employs some 4,000 people and over the last 10 years the Company has developed a range of social initiatives which continue to make a meaningful impact upon the lives of employees and surrounding communities. Petra's focus remains upon sustainable development, via educational programmes and skills transfer, to ensure a broad based approach with a lasting legacy, and all operations are carried out with the highest regard for the environment according to best practice.

Petra will only commit to working in countries which are members of the Kimberley Process and shareholders can remain assured that Petra's diamonds will only ever be 100% conflict free.

For further information, please visit www.petradiamonds.com.