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Petra Diamonds (PDL)

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Monday 15 April, 2019

Petra Diamonds

Q3 2019 Trading Update

RNS Number : 1177W
Petra Diamonds Limited
15 April 2019
 



 

 

 

This announcement contains inside information

 

 

15 April 2019

LSE: PDL

 

Petra Diamonds Limited

("Petra", "the Company" or "the Group")

 

Trading Update - Q3 FY 2019 Production and Sales Report

 

 

Petra Diamonds Limited announces the following trading update (unaudited) for the three month period 1 January 2019 to 31 March 2019 (the "Period", "Q3 FY 2019" or "Q3") and the nine months ending 31 March 2019 ("FY 2019 YTD").

 

HIGHLIGHTS

·     Lost Time Injury Frequency Rate ("LTIFR") for the nine months to 31 March 2019 of 0.19 (FY 2018 YTD: 0.18).

·     Q3 production of 924,228 carats (Q3 FY 2018: 992,315 carats), reflecting increased production at Cullinan, Koffiefontein and Williamson, offset by lower production at Finsch.

·     Production for the nine months to 31 March 2019 up 4% to 2,943,374 carats (FY 2018 YTD: 2,836,272 carats).

·     Production guidance of 3.8 - 4.0 million carats for FY 2019 maintained.

·     Installation of the remaining draw points across the footprint of the C-Cut Phase 1 block cave at Cullinan is progressing as planned, with completion expected during H1 FY 2020.

·     With the progression across the C-Cut footprint, the incidence of larger stones is improving as demonstrated by the recovery of two +100 carats gem-quality stones during the Period.

·     The 425.1 carat D colour Type II gem quality diamond recovered at Cullinan on 29 March 2019, is expected to be sold during Q4 FY 2019 as previously announced.

·     Q3 revenue decreased 7% to US$135.2 million due to a 6% reduction in sales volumes to 1,061,343 carats sold (Q3 FY 2018: US$145.7 million from 1,131,262 carats sold).

·     Revenue for the nine months to 31 March 2019 up 1% to US$342.4 million from 2,797,700 carats sold (Q3 FY 2018 YTD: US$337.4 million from 2,641,720 carats sold).

·     Rough diamond prices achieved during the two tenders in Q3 up ca. 1% on a like-for-like basis compared to prices achieved in H1 FY 2019.

·     Net debt reduced to ca. US$553.1 million, (31 December 2018: US$559.3 million), excluding US$46.4 million relating to diamond debtors as at 31 March 2019 received shortly after Period end (31 December 2018: US$4.4 million).



Q3 FY 2019 Production and Sales - Summary

 


Unit

Q3

FY 2019

Q3

FY 2018

Variance

Nine months to 31 March 2019

Nine months to 31 March 2018

Variance

Sales








Diamonds sold

Carats

1,061,343

1,131,262

-6%

2,797,700

2,641,720

6%

Gross revenue

US$M

145.7

-7%

342.4

337.4

1%









Production








ROM tonnes

Mt

3.4

3.0

12%

9.8

9.1

8%

Tailings & other1 tonnes

Mt

0.3

0.4

-22%

1.3

1.2

16%

Total tonnes treated

Mt

3.7

3.4

7%

11.1

10.2

9%









ROM diamonds

Carats

898,517

955,333

-6%

2,845,234

2,683,959

6%

Tailings & other1 diamonds

Carats

25,711

36,982

-30%

98,140

152,313

-36%

Total diamonds

Carats

924,228

992,315

-7%

2,943,374

2,836,272

4%

 

1.     'Other' includes alluvial diamond mining at Williamson.

 

 

Richard Duffy, Chief Executive Officer, commented:

"I have visited all of Petra's operations and am impressed by the very capable teams and quality asset base, strongly reinforcing my initial views of the business. Our capital investment phase is largely over and we are well positioned to benefit from this as we move towards steady state operational performance.

 

I am pleased with the incremental improvement in operational performance at Cullinan, Koffiefontein and Williamson and despite a challenging January, Finsch's performance through February and March is as expected. Our focus remains on the delivery of free cash flow to reduce our net debt and generate future options for the Company."

 

 

CONFERENCE CALL

Petra's Chief Executive Officer, Richard Duffy and Finance Director, Jacques Breytenbach will host a conference call at 9.30am and 4:00pm BST today to discuss the Q3 FY 2019 Trading Update with investors and analysts.  Participants may join the calls by dialling one of the following numbers shortly before the call:

 

First Call - 9.30am BST

From the UK (toll free): 0800 358 9473
From South Africa (toll free): 0800 111 446
From the rest of the world: +44 333 300 0804
Participant passcode: 66129403#


A replay of the conference call will be available on the following numbers from 12:00pm BST on
15 April 2019.


From UK (toll free): 0800 358 2049

From US (toll free): 1 844 307 9361
From South Africa: +27 21 672 4123

Rest of the world: +44 333 300 0819
Playback passcode: 301282059#

 

 



 

Second Call - 4.00pm BST / 11.00am Eastern Time

This will be a Q&A call only to cater for international investors. Participants are therefore advised to listen to the replay of the earlier conference call in advance, as the main management commentary will not be repeated.

 

From the United States (toll free): 1 855 857 0686
From the rest of the world: +44 333 300 0804
From the UK (toll free): 0800 358 9473
From South Africa (toll free): 0800 111 446
Participant passcode: 32503418#

 

 

COMMENTARY

 

Health and safety

 

·     The Group's LTIFR for the nine months to 31 March 2019 remains well managed at 0.19 (FY 2018 YTD: 0.18). The Company continues to focus on its goal of a zero-harm workplace.

 

Production

·     Q3 production of 924,228 carats (Q3 FY 2018: 992,315 carats) reflected increased production at Cullinan, Koffiefontein and Williamson, offset by lower production at Finsch. Despite power interruptions across South Africa during the quarter and the Company's compliance with Eskom's request for load curtailment, the operational impact of these interruptions was largely offset by a number of mitigating measures, with negligible impact on production.

·     Production for the nine month period to 31 March 2019 increased 4% to 2,943,374 carats (FY 2018 YTD: 2,836,272 carats) following a 6% increase in ROM carats produced to 2,845,234 carats (FY 2018 YTD: 2,683,959 carats), partially offset by the planned reduction in tailings throughput at Finsch. Production guidance of 3.8 - 4.0 million carats for FY 2019 is maintained.

·     Finsch Q3 production decreased 30% to 387,370 carats (Q3 FY 2018: 553,669 carats) which is ca. 55,000 carats below expectations, 80% of which relates to a delay in the planned winder upgrade and a belt tear on the main underground conveyor, both of which occurred in January 2019. These issues have been addressed, with underground production in both February and March 2019 being in line with expectations. The balance of the Q3 shortfall relates to lower grades in the ROM surface stockpiles (overburden dumps), which are nearing depletion. Underground ROM grades remained in line with guidance during the quarter.

·     Cullinan Q3 production increased 22% to 432,001 carats (Q3 FY 2018: 354,403 carats) following a 10% increase in ROM tonnes treated to 1.04 Mt (Q3 FY 2018: 0.95 Mt) and ROM grades remaining in line with expectations at 40.0 cpht (Q3 FY 2018: 36.2 cpht). The installation of the remaining draw points across the footprint of the C-Cut Phase 1 block cave is progressing as planned, with completion expected during H1 FY 2020, reaching maturity during FY 2020. With the progression across the C-Cut footprint, an improvement in the incidence of larger stones is evident, which included the recovery of two gem-quality stones larger than 100 carats each during the Period, and also demonstrates the ability of the plant to recover these stones. Proactive management of the Eskom load curtailment saw tailings production halted during the quarter to focus on higher value ROM production.

·     Koffiefontein Q3 production increased 42% to 17,355 carats (Q3 FY 2018: 12,180 carats), with ROM throughput achieving its annualised target of 1 Mtpa, following the return to stable production after the community unrest related to municipal service delivery experienced in Q2 FY 2019.

·     Williamson Q3 production increased 21% to 87,503 carats (Q3 FY 2018: 72,063 carats) with production continuing in line with expectations. Three gem-quality pink stones were recovered and sold during the Period, positively impacting the average price achieved.

 

Sales and Diamond Market

Diamond Market

·     There were signs of stabilisation in the diamond market during Q3 with steady demand across all size categories.

Diamond Sales and Prices

·     Q3 revenue decreased 7% to US$135.2 million (Q3 FY 2018: US$145.7 million), mainly due to lower production from Finsch. Revenue for the nine month period to 31 March 2019 increased marginally to US$342.4 million (Q3 FY 2018: US$337.4 million).

·     Rough diamond prices were up ca. 1% for Q3 on a like-for-like basis in comparison to Petra's results for H1 FY 2019, the six month period to 31 December 2018.

·     A further two tenders will be held during Q4 (April to June 2019).

·     Prices realised during Q3 are summarised in the table below.

 

Mine

Actual

(US$/ct)

Q3 FY 2019

Actual

(US$/ct)

H1 FY 2019

Actual

(US$/ct)

FY 2018

Finsch

101

105

108

Cullinan

101

96

125

Koffiefontein

559

447

525

Williamson

285

223

270

 

 

Succession Planning

 

·     The Nomination Committee is in the final year of its three year Succession Plan. During the Period, the Company announced the appointment of Richard Duffy as CEO effective 1 April 2019.

·     In a recent statement regarding the voting at the Company's November 2018 Annual General Meeting the Board confirmed that given the recent CEO appointment and to ensure continuity and stability of leadership and management, the appointment of a new Chairman was not considered appropriate at this time. The Nomination Committee expects to make further changes to the composition of the Board during this calendar year.

 



 

Corporate

 

·     A summary of the Group's current cash, diamond inventories, debtors, borrowings and net debt is set out below.

 


Unit

31 Mar 2019

31 Dec 2018

30 Jun 2018

Closing exchange rate used for conversion


R14.48:US$1

R14.35:US$1

R13.73:US$1

Cash at bank

US$M

96.9

90.7

236.0

Diamond inventories

US$M

Carats

64.9

674,632

76.3

811,718

54.0

529,054

Diamond debtors

US$M

46.4

4.4

75.0

US$650 million loan notes (issued April 2017)

US$M

650.0

650.0

650.0

Bank loans and borrowings

US$M

_

_

106.7

Net debt

US$M

553.1

559.3

520.7

South African bank facilities undrawn and available

US$M

103.6

104.5

2.6

Consolidated net debt for covenant measurement purposes

US$M

580.8

627.4

531.6

 

·     The Company's ZAR1.5 billion (US$103.6 million) South African banking facilities remain undrawn and available, with an unrestricted cash balance of US$84.5 million as at 31 March 2019.

·     Discussions with South African lenders relating to covenant re-profiling are expected to be finalised by 30 April 2019.

 

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

 

Notes:

1.     The following definitions have been used in this announcement:

a.     ct: carat

b.    cpht: carats per hundred tonnes

c.     Exceptional Diamonds: stones that sell for more than US$5 million each

d.     LTIFR: lost time injury frequency rate

e.     Mcts: million carats

f.      Mt: million tonnes

g.     ROM: run-of-mine, i.e. relating to production from the primary orebody

h.     SLC: sub-level cave, a variation of block caving

i.      Tailings: material that has already been processed through a plant and stockpiled on dumps at surface

2.     Diamond inventory carrying values are stated at the lower of cost of production on the weighted average basis or estimated net realisable value.

 

~ Ends ~

 

 

For further information, please contact:

 

Petra Diamonds, London                                         Telephone: +44 20 7494 8203

Marianna Bowes                                                         [email protected] 

Salisha Ilyas                                                               

 

Buchanan                                                                  Telephone: +44 20 7466 5000

(PR Adviser)                                                               [email protected] 

Bobby Morse

Chris Judd

Ariadna Peretz                                                                       

                                               

 

 

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 producing mine in Tanzania (Williamson). Petra also conducts a limited exploration programme in Botswana and South Africa, which is currently under review.

 

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. 290 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' and is a constituent of the FTSE4Good Index. For more information, visit www.petradiamonds.com .

 



 

APPENDIX A - MINE BY MINE PRODUCTION TABLES

 

Finsch - South Africa

 


Unit

Q3

FY 2019

Q3

FY 2018

Variance

Nine months to 31 March 2019

Nine months to 31 March 2018

Variance

Sales








Revenue

US$M

48.0

66.5

-28%

135.1

167.3

-19%

Diamonds sold

Carats

475,312

620,627

-23%

1,304,843

1,591,073

-18%

Average price per carat

US$

101

107

-6%

104

105

-2%









Total ROM Production








Tonnes treated

Tonnes

758,003

841,583

-10%

2,261,337

2,400,863

-6%

Diamonds produced

Carats

379,488

530,578

-28%

1,307,422

1,462,437

-11%

Grade

cpht

50.1

63.0

-21%

57.8

60.9

-5%









Tailings Production








Tonnes treated

Tonnes

52,532

171,103

-69%

186,927

686,326

-73%

Diamonds produced

Carats

7,882

23,091

-66%

27,372

127,828

-79%

Grade

cpht

15.0

13.5

11%

14.6

18.6

-21%









Total Production








Tonnes treated

Tonnes

810,535

1,012,686

-20%

2,448,265

3,087,189

-21%

Diamonds produced

Carats

387,370

553,669

-30%

1,334,794

1,590,265

-16%

 

Note:

1.     The Company is not able to precisely measure the ROM / tailings grade split because ore from both sources is processed through the same plant; the Company therefore back-calculates the grade with reference to resource grades.

 

Cullinan - South Africa

 


Unit

Q3

FY 2019

Q3

FY 2018

Variance

Nine months to 31 March 2019

Nine months to 31 March 2018

Variance

Sales








Revenue

US$M

46.2

49.1

-6%

112.4

110.5

2%

Diamonds sold

Carats

456,652

404,775

13%

1,145,188

843,787

36%

Average price per carat

US$

101

121

-17%

98

131

-25%









ROM Production








Tonnes treated

Tonnes

1,043,105

951,449

10%

3,039,730

2,734,679

11%

Diamonds produced

Carats

417,742

344,357

21%

1,203,186

946,951

27%

Grade

cpht

40.0

36.2

11%

39.6

34.6

14%









Tailings Production








Tonnes treated

Tonnes

164,911

154,547

7%

861,265

191,570

350%

Diamonds produced

Carats

14,259

10,046

42%

60,841

14,687

314%

Grade

cpht

8.6

6.5

33%

7.1

7.7

-8%









Total Production








Tonnes treated

Tonnes

1,208,016

1,105,996

9%

3,900,994

2,926,249

33%

Diamonds produced

Carats

432,001

354,403

22%

1,264,027

961,638

31%

Note:

1.     The Company is not able to precisely measure the ROM / tailings grade split because ore from both sources is processed through the same plant; the Company therefore back-calculates the grade with reference to resource grades.

 

 

Koffiefontein - South Africa

 


Unit

Q3

FY 2019

Q3

FY 2018

Variance

Nine months to 31 March 2019

Nine months to 31 March 2018

Variance

Sales








Revenue

US$M

8.3

7.0

19%

18.8

18.0

4%

Diamonds sold

Carats

14,925

13,101

14%

38,332

34,656

11%

Average price per carat

US$

559

534

5%

490

520

-6%









ROM Production








Tonnes treated

Tonnes

282,860

163,335

73%

660,251

452,813

46%

Diamonds produced

Carats

17,355

12,180

42%

42,630

37,472

14%

Grade

cpht

6.1

7.5

-18%

6.5

8.3

-22%









Total Production








Tonnes treated

Tonnes

282,860

163,335

73%

660,251

452,813

46%

Diamonds produced

Carats

17,355

12,180

42%

42,630

37,472

14%

 

 

Williamson - Tanzania

 


Unit

Q3

FY 2019

Q3

FY 2018

Variance

Nine months to 31 March 2019

Nine months to 31 March 2018

Variance

Sales








Revenue

US$M

32.6

23.1

41%

76.1

41.6

83%

Diamonds sold

Carats

114,452

92,759

23%

309,365

172,204

80%

Average price per carat

US$

285

249

14%

246

242

2%









ROM Production








Tonnes treated

Tonnes

1,300,659

1,078,518

21%

3,811,110

3,481,911

9%

Diamonds produced

Carats

83,932

68,218

23%

291,997

237,099

23%

Grade

cpht

6.5

6.3

2%

7.7

6.8

13%









Alluvial Production








Tonnes treated

Tonnes

112,709

99,166

14%

308,266

292,338

5%

Diamonds produced

Carats

3,570

3,845

-7%

9,927

9,798

1%

Grade

cpht

3.2

3.9

-19%

3.2

3.4

-5%









Total Production








Tonnes treated

Tonnes

1,413,368

1,177,684

20%

4,119,376

3,774,249

9%

Diamonds produced

Carats

87,503

72,063

21%

301,924

246,897

22%

 

 

 


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