Petra Diamonds Regulatory News (PDL)

Petra Diamonds Ltd - Trading Update Q3 FY 2021

PR Newswire

London, April 19

Petra Diamonds Limited

("Petra" or the "Company" or the “Group”)

Trading Update

Petra Diamonds Limited is pleased to provide the following trading update for the three (Q3) and nine-month (9M) periods ending 31 March 2021.

Highlights:

Q3 and 9M FY 2021 Production and Sales – Summary

Richard Duffy, Chief Executive of Petra Diamonds, commented:

“We are seeing encouraging signs of a recovery in the diamond market, supporting better pricing, reflected in the third quarter revenue numbers. Post completion of the capital restructuring, Petra is in a far stronger position, with a solid platform for future growth and development. Production during the period reflected continued out-performance from Cullinan, with remedial action to address waste ingress at Finsch delayed as a result of excessive rainfall levels, which also negatively impacted Koffiefontein, whilst the Williamson mine remains on care and maintenance. We expect to see improved performance from Finsch as underground water ingress reduces and the remediation steps are implemented.”

Conference Calls

Petra’s Chief Executive, Richard Duffy, and Finance Director, Jacques Breytenbach, will host a conference call at 9:30am and at 4pm BST today to discuss the Trading Update with investors and analysts. Please see below for dial in details.

Trading Update

Health and safety 

The Lost Time Injury Frequency Rate (LTIFR) continued to fall in FY 2021, decreasing to 0.47 for the 9M, from 0.50 in the first half and 0.65 in Q1 FY 2021. The total number of injuries during the nine-month period, which includes LTIs, decreased to 30 (9M FY 2020: 37).

This trend reflects the benefit of the Company’s behaviour-based intervention campaign, targeting a zero-harm working environment. The campaign follows the higher level of LTIFR compared to the same nine-month period last year, with 20 lost-time injuries recorded, compared to 16 in FY 2020.

COVID-19 continues to pose a significant risk to the health and safety of the Group’s workforce. Petra has implemented systems and strategies across all its operations aimed at preventing and/or containing the spread of the virus. To date, the Company has had 340 confirmed cases. More information on the Company’s response to the pandemic is available on its website: https://www.petradiamonds.com/sustainability/health-and-safety/our-response-to-covid-19/.

Production and Operations

Q3 production decreased 24% to 704,498 carats (Q3 FY 2020: 932,456 carats), with production for the nine-month period decreasing 19% to 2,445,360 carats (9M FY 2020: 3,002,697 carats).

Q3 production reflected a strong performance from Cullinan, with production up 9% to 436,703 carats, combined with 43% lower production at Finsch, at 253,607 carats, an 18% decrease in production at Koffiefontein, to 14,188 carats, and Williamson remaining on care and maintenance.

Cullinan continues to recover some exceptional diamonds, including a 299.3ct type IIa white stone and a 11.82ct type IIb blue stone during the period as well as an exceptional 39.34ct type IIb blue stone, post the period end.

Production at Finsch was impacted by measures taken to curtail waste ingress. Production at Finsch and Koffiefontein was also affected by the high level of rainfall during Q3 FY 2021.

Discussions with the Government of Tanzania in relation to various issues at the Williamson mine, including the overdue VAT receivables and the blocked diamond parcel, are ongoing and are expected to conclude during Q4 FY2021.

The Company intends to provide its feedback on the Company’s conclusions and next steps following the investigation into allegations of human rights abuses at the Williamson mine around the end of April 2021. The investigation is being undertaken by an external independent advisor, in conjunction with the Company’s legal advisors.

Diamond market

Improved demand for rough diamonds continued in Q3, due to robust demand for jewellery driving continued purchasing by the midstream. Retail demand is expected to remain positive as economies re-open; albeit the industry has entered its period of typically lower demand and the resurgence of COVID-19 in some countries poses some risk to logistics and the timing of sales for the remainder of FY 2021.

Diamond pricing has been supported by supply discipline, driving a better supply / demand balance in the midstream, which remains a key factor in the health of the market in 2021. Due to the impact of COVID-19 and the closure of the Argyle mine in Australia in 2020, rough diamond production is expected to have contracted significantly in 2020 and may continue to decline.

Diamond Sales

Q3 revenue increased 16% to US$106.0m (Q3 FY 2020: US$91.3m). This increase was driven by improved pricing, the sale of a 299.3 carat exceptional diamond in February for US$12.2m and the carryover of 382 Kcts, of mostly lower value stock from H1 FY 2021, sold during January 2021. On a like for like basis, realised diamond prices increased ca.12% from those achieved in H1 FY 2021.

Post the period end, an exceptional 11.82 carat blue stone, recovered during the period from the Cullinan mine, was sold for US$9.5m. The Company also announced the recovery of an exceptional 39.34 carat blue stone, also from the Cullinan mine, which will be sold via a special tender.

Project 2022 Update

Throughput ideas remain the largest contributor to growing operational cash flow and Cullinan remains on track to deliver its throughput stretch target for FY 2021. As previously outlined, due to reduced throughput at Finsch, Koffiefontein and Williamson, the annualised contribution from throughput initiatives is now expected to be in the region of US$50m, versus previous expectations of US$70m.

Initiatives undertaken to drive cost efficiencies are expected to deliver an annualised run rate of US$20m going in to FY 2022. The decrease of US$2m in cost efficiencies over previous guidance in H1 FY 2022 relates to higher than anticipated electricity pricing in South Africa, combined with the postponement of some moveable asset sales into FY 2022.

Corporate and Financial

The recapitalisation of the Group was completed during the period, significantly strengthening the balance sheet, with consolidated net debt reducing to US$290.7m, from US$700.4m at the end of December 2020.

Petra Diamonds had unrestricted cash of US$139.8m, available undrawn banking facilities of US$10.8m and diamond inventory valued at US$75.5m as at 31 March 2021. At 31 December 2020, unrestricted cash was US$92.4m, the Company had fully drawn bank facilities and the diamond inventory was valued at US$105.0m. 

Board

Following completion of the capital restructuring, the appointment of Mr. Matthew Glowasky as a Non-Executive Director of the Company became effective. Matthew’s prospective appointment was initially announced on 22 December 2020.

~ Ends ~

Conference Call:

Participants may join the call by dialling one of the following numbers shortly before the call:

First Call - 9:30am BST

From the UK: 0330 606 1118

From South Africa (toll free): 80 006 4593

From the rest of the world: +44 330 606 1118

Room Number: 406885 

Participant passcode: 0580

A replay of the conference call will be available on the following numbers:

From the UK: 0330 606 1118

From the US (toll free): (877) 890-2416

From South Africa (toll free): 80 006 4593

From the rest of the world: +44 330 606 1118

Playback passcode: 119099 

Second Call – 4:00pm BST

An additional conference call to cater for North American and other international investors will be held at 4:00pm BST today. Participants are advised to listen to the replay of the first conference call in advance of this call.

From the United States (toll free): (877) 890-2416

From the rest of the world: +44(0) 333 300 0804

From the UK: 0330 606 1118

From South Africa (toll free): 80 006 4593

From the rest of the world: +44 330 606 1118

Room Number: 406885 

Participant passcode: 0580

For further information, please contact:

Petra Diamonds, London Telephone: +44 20 7494 8203

Marianna Bowes investorrelations@petradiamonds.com

Des Kilalea

Julia Stone

Notes:

About Petra Diamonds Limited

Petra Diamonds is a leading independent diamond mining group and a consistent supplier of gem quality rough diamonds to the international market. The Company has a diversified portfolio incorporating interests in three underground producing mines in South Africa (Finsch, Cullinan and Koffiefontein) and one open pit mine in Tanzania (Williamson).

Petra's strategy is to focus on value rather than volume production by optimising recoveries from its high-quality asset base in order to maximise their efficiency and profitability. The Group has a significant resource base of ca. 243 million carats, which supports the potential for long-life operations.

Petra conducts all operations according to the highest ethical standards and will only operate in countries which are members of the Kimberley Process. The Company aims to generate tangible value for each of its stakeholders, thereby contributing to the socio-economic development of its host countries and supporting long-term sustainable operations to the benefit of its employees, partners and communities.

Petra is quoted with a premium listing on the Main Market of the London Stock Exchange under the ticker 'PDL'. The Company’s US$337 million loan notes due in 2026 will be listed on the Global Exchange market of the Irish Stock Exchange. For more information, visit www.petradiamonds.com.

APPENDIX – CORPORATE & FINANCIAL AND PRODUCTION & SALES TABLES

Notes:

Group Production and Sales

Cullinan – South Africa

Note:

Finsch – South Africa

Note:

Koffiefontein – South Africa

Williamson – Tanzania