Petra Diamonds Ltd - H1 FY 2025 Operating Update

[image] 21 January 2025 LSE: PDL Petra Diamonds Limited H1 FY 2025 Operating Update Petra reports its operating results for the first half of FY 2025 Richard Duffy, Chief Executive Officer of Petra, commented: "Petra delivered a solid operating performance in Q2 FY 2025, leading to total tonnes treated increasing 7% in H1 FY 2025 compared to H1 FY 2024. As a result, we are reiterating our FY 2025 production guidance of 2.8 - 3.1 Mcts for the Group. Finsch's performance improved through the first half as mining successfully transitioned into fresher ore associated with the 78-Level Phase II, resulting in reduced dilution and more predictable operations, while Cullinan Mine and Williamson continued to perform well and according to plan. At Cullinan Mine, we continued to make good progress on the CC1E development project, with first contribution of higher grade ore taking place in the second quarter. This project is expected to ramp-up over the next 16-18 months. In terms of safety, I am pleased that our safety performance has recovered following a temporary increase in LTIs and the LTIFR early in FY 2025, largely relating to the implementation of a new shift configuration at Finsch. Safety remains our top priority and we continue to focus on behaviour-based interventions in support of our goal of zero harm. Our third Tender of FY 2025 showed ongoing diamond price weakness at the end of CY 2024, although we are encouraged by recent reports of stronger online jewellery demand in the US and stronger jewellery demand in India over the festive season and Diwali, respectively. This, together with reduced supply from the major producers and industry-wide marketing efforts, should help rebalance inventories. On the back of the last tender results, the continued demand weakness from China and the current product mix at Finsch, we have revised our FY 2025 pricing assumptions for Finsch from US$80/ct - US$90/ct to US$70/ct - US$80/ct. We remain committed to our target of sustainable net cash generation from FY 2025 and have commenced additional cash generation and savings initiatives, as announced in our Tender 3 results. A multi-stream Restructuring Plan has been initiated, which includes fixed and variable labour cost reductions, non-labour cost reductions, capital optimisation and additional revenue generation initiatives. The Restructuring Plan will form the basis of re-engaging with our lenders to execute on refinancing our debt in 2025. Further details will be provided at our interim results in February 2025. Notwithstanding the continued market weakness, our consolidated net debt reduced from US$285 million at Q1 FY 2025 to US$225 million at Q2 FY 2025, with the amount drawn on the RCF increasing by US$18 million from 30 June 2024 mainly due to the repurchase of bonds through the Open Market Repurchase Programme." Highlights vs H1 FY 2024 · LTIFR and LTIs increased to 0.23 and 6, respectively (H1 FY 2024: 0.15 and 5, respectively) resulting in Petra implementing a number of behaviour-based interventions in Q2 FY 2025 improving health and safety performance · Ore processed increased 7% to 6.2Mt from 5.8Mt, largely due to improved performance at Finsch and Williamson · Total diamond production decreased marginally by 2% to 1.40Mcts from 1.43Mcts · The South African Rand strengthened during the period, averaging ZAR17.93 : US$1 (H1 FY 2024: ZAR18.69 : US$1) following the post-election period, with a weakening trend resuming towards the end of CY 2024, closing at ZAR18.85 : US$1 · Revenue (including profit share agreements) amounted to US$146 million (H1 FY 2024: US$188 million) · Diamond sales in H1 FY 2024 benefitted from 456kcts of FY 2023 sale parcels that were deferred and sold in H1 FY 2024 · Like-for-like prices were down 10% compared to H1 FY 2024 mainly from smaller size categories · Consolidated net debt increased to US$225 million as at 31 December 2024 (30 June 2024: US$201 million), mainly due to the continued weak diamond market and timing of tender sales, with three tenders scheduled for H1 FY 2025 and four tenders for H2 FY 2025. The effect of the lower diamond pricing environment was partly offset by cost control and efficiencies in capital spend profiles Operating Summary Safety, Unit H1 FY H1 FY sales 2025 2024 and production Q2 Q1 Total Q2 Q1 Total Safety LTIFR - 0.16 0.28 0.23 0.18 0.12 0.15 LTIs Number 2 4 6 3 2 5 Sales Diamonds Carats 1,215,515 85,449 1,300,964 727,189 932,431 1,659,620 sold Revenue1 US$m 124 23 146 90 98 188 Production ROM tonnes Tonnes 2,842,305 3,112,645 5,954,950 2,875,410 2,717,486 5,592,896 Tailings Tonnes 110,625 98,002 208,627 96,235 91,008 187,243 and other tonnes Total Tonnes 2,952,930 3,210,647 6,163,577 2,971,645 2,808,494 5,780,139 tonnes treated ROM Carats 655,770 630,768 1,286,538 694,884 652,021 1,346,905 diamonds Tailings Carats 65,144 48,857 114,001 36,018 44,618 80,636 and other diamonds Total Carats 720,914 679,625 1,400,539 730,902 696,639 1,427,541 diamonds 1 Revenue reflects proceeds from the sale of rough diamonds and excludes revenue from profit share arrangements Our revised pricing assumptions for FY 2025 are: +-------------+---------+---------+ |US$ per carat|FY 2025 |FY 2025 | | | | | | |Previous |Revised | +-------------+---------+---------+ |Cullinan Mine|120 - 130|120 - 130| +-------------+---------+---------+ |Finsch |80 - 90 |70 - 80 | +-------------+---------+---------+ |Williamson |170 - 200|170 - 200| +-------------+---------+---------+ Future diamond prices are influenced by a range of factors outside of Petra's control and so these assumptions are internal estimates only and no reliance should be placed on them. The Company's pricing assumptions will be considered on an ongoing basis and may be updated as appropriate. INVESTOR WEBCASTS Webcast presentation for institutional investors and analysts at 09:30am GMT today Petra's CEO, Richard Duffy, CFO, Johan Snyman, and Chief Restructuring Officer (`CRO'), Vivek Gadodia, will host a webcast for institutional investors and analysts to discuss this operating update. Lines will be open from 09:15am GMT and participants are encouraged to register early to avoid queues around the start time of 09:30am GMT. To join: https://events.teams.microsoft.com/event/f94c5334-91de-49d7-9e21 -98996e39ca09@3c08cd12-de9b-4814-9ea3-392066758217 Link for recording (available later in the day): https://www.petradiamonds.com/investors/results-reports/ Investor Meet Companywebcast at14.30pm GMTtoday Petra's CEO, Richard Duffy, CFO, Johan Snyman, and CRO, Vivek Gadodia, will also present these results live on theInvestor Meet Companyplatform, predominantly aimed at retail investors. To join:https://www.investormeetcompany.com/petra-diamonds-limited/register -investor FURTHER INFORMATION For further information, please contact: Investor Relations, London Patrick Pittaway Telephone: +44 (0)784 192 0021 Kelsey Traynorinvestorrelations@petradiamonds.com About Petra Diamonds Limited Petra Diamonds is a leading independent diamond mining group and a supplier of gem quality rough diamonds to the international market. The Company's portfolio incorporates interests in two underground mines in South Africa (Cullinan and Finsch Mines) 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 which supports the potential for long-life operations. Petra strives to conduct all operations according to the highest ethical standards and only operates 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 on the Main Market of the London Stock Exchange under the ticker 'PDL'. The Company's loan notes, due in 2026, are listed on EuroNext Dublin (Irish Stock Exchange). For more information, visit www.petradiamonds.com. Corporate and financial summary 31 December 2024 +-----------------------+------+--------+---------+-------+-------+--------+ | |Unit |As at 31|As at 30 |As at |As at |As at 31| | | |December|September|30 June|31 |December| | | | | | |March | | | | |2024 |2024 |2024 | |2023 | | | | | | |2024 | | +-----------------------+------+--------+---------+-------+-------+--------+ |Cash at bank - |US$m |42 |36 |40 |37 |75 | |(including restricted | |52 | | | | | |amounts)¹ |US$m |(10) |47 |47 |42 |85 | | | | | | | | | | · Petra Group (excl. |US$m | |(11) |(7) |(5) |(10) | |Williamson) | | | | | | | | · Williamson | | | | | | | +-----------------------+------+--------+---------+-------+-------+--------+ |Diamond debtors |US$m |- |- |31 |11 |8 | +-----------------------+------+--------+---------+-------+-------+--------+ |Diamond inventories2 |US$m |40 |92 |32 |71 |54 | | | | | | | | | | |Carats|385,878 |880,479 |286,303|671,989|483,142 | +-----------------------+------+--------+---------+-------+-------+--------+ |2026 Loan Notes3 |US$m |225 |245 |246 |256 |249 | +-----------------------+------+--------+---------+-------+-------+--------+ |Bank loans and |US$m |43 |76 |25 |24 |47 | |borrowings4 | | | | | | | +-----------------------+------+--------+---------+-------+-------+--------+ |Consolidated Net Debt5 |US$m |225 |285 |201 |232 |212 | +-----------------------+------+--------+---------+-------+-------+--------+ |Bank facilities undrawn|US$m |50 |26 |72 |69 |8 | |and available4 | | | | | | | +-----------------------+------+--------+---------+-------+-------+--------+ Note: The following exchange rates have been used for this announcement: average for 6M FY 2025 US$1: ZAR17.93 (FY 2024: US$1: ZAR18.71); closing rate as at 31 December 2024 US$1: ZAR18.85 (30 June 2024: ZAR18.19; 31 March 2024 US$1: ZAR18.92; 31 December 2023: US$1: ZAR18.28; and 30 September 2023: ZAR18.92). Notes: 1. The Group's cash balances excluding Williamson comprise unrestricted balances of US$35 million, and restricted balances of US$17 million. 2. Recorded at the lower of cost and net realisable value. 3. The 2026 Loan Notes, originally issued following the capital restructuring (the "Restructuring") completed during March 2021, have a carrying value of US$225 million which represents the outstanding principal amount of US$186 million (after the repurchases concluded during H1 FY 2025) plus US$42 million of accrued interest and is stated net of unamortised transaction costs capitalised of US$3 million. During H1 FY 2025, Petra purchased and cancelled 2026 Loan Notes with a nominal value of US$24 million through an open market repurchase programme. 4. Bank loans and borrowings represent the Group's ZAR1.75 billion (US$93 million) revolving credit facility (RCF). In August and September 2024, the Group drew down ZAR855 million (c. US$48 million) from the RCF as a result of the deferral of South African goods from Tender 1 FY 2025. ZAR500 million (c. US$28 million) was repaid during November and December 2024. As at 31 December 2024, a total of ZAR805 million (US$43 million) was drawn leaving a further balance of ZAR945 million (US$50 million) available for drawdown. 5. Consolidated Net Debt is bank loans and borrowings plus loan notes, less cash and diamond debtors. Mine-by-mine tables: Cullinan Mine - South Africa Unit H1 FY H1 FY 2025 2024 Q2 Q1 Total Q2 Q1 Total Sales Revenue US$m 69 9 78 46 51 97 Diamonds Carats 640,050 19 640,069 345,867 519,362 865,229 sold Average US$ 108 450,928 121 131 98 112 price per carat ROM Production Tonnes Tonnes 1,107,787 1,089,570 2,197,357 1,078,409 1,137,435 2,215,844 treated Diamonds Carats 331,079 314,126 645,205 331,349 318,261 649,610 produced Grade1 Cpht 29.9 28.8 29.4 30.7 28.0 29.3 Tailings Production Tonnes Tonnes 110,625 98,002 208,627 96,235 91,008 187,243 treated Diamonds Carats 65,143 48,847 114,000 36,018 44,618 80,636 produced Grade1 Cpht 58.9 49.9 54.6 37.4 49.0 43.1 Total Production Tonnes Tonnes 1,218,412 1,187,572 2,405,984 1,174,644 1,228,443 2,403,087 treated Diamonds Carats 396,222 362,983 759,205 367,367 362,879 730,246 produced Note: 1. Petra 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. Finsch - South Africa Unit H1 FY 2025 H1 FY 2024 Q2 Q1 Total Q2 Q1 Total Sales Revenue US$m 36.9 - 36.9 28 39 67 Diamonds Carats 473,314 - 473,314 298,889 375,214 674,103 sold Average US$ 78 - 78 94 104 99 price per carat ROM Production Tonnes Tonnes 532,849 477,267 1,010,116 635,872 544,140 1,180,012 treated Diamonds Carats 236,222 204,238 440,460 276,842 259,864 536,706 produced Grade Cpht 44.3 42.8 43.6 43.5 47.8 45.5 Williamson - Tanzania Unit H1 FY H1 FY 2025 2024 Q2 Q1 Total Q2 Q1 Total Sales Revenue US$m 18 14 32 17 8 24 Diamonds Carats 102,151 85,430 187,581 82,432 37,856 120,288 sold Average US$ 174 164 170 201 203 202 price per carat ROM Production Tonnes Tonnes 1,201,668 1,545,808 2,747,476 1,161,129 1,035,911 2,197,040 treated Diamonds Carats 88,469 112,404 200,873 86,693 73,896 160,589 produced Grade1 Cpht 7.4 7.3 7.3 7.5 7.1 7.3 Capital expenditure breakdown +-------------+---------+----------------+-----+-------+ |US$m |H1 FY 2025 |FY 2024| +-------------+---------+----------------+-----+-------+ | |Extension|Stay-in-Business|Total|Total | +-------------+---------+----------------+-----+-------+ |Cullinan Mine|16 |1 |17 |48 | +-------------+---------+----------------+-----+-------+ |Finsch |11 |2 |13 |25 | +-------------+---------+----------------+-----+-------+ |Williamson |0 |6 |6 |10 | +-------------+---------+----------------+-----+-------+ |Total |27 |9 |36 |83 | +-------------+---------+----------------+-----+-------+ Notes: 1. The following definitions have been used in this announcement: a. cpht: carats per hundred tonnes b. LTIs: lost time injuries c. LTIFR: lost time injury frequency rate, calculated as the number of LTIs multiplied by 200,000 and divided by the number of hours worked d. FY: financial year ending 30 June e. CY: calendar year ending 31 December f. H: half of the financial year g. ROM: run-of-mine (i.e. production from the primary orebody) h. m: million i. Mt: million tonnes j. Mcts: million carats k. ktcs: thousand carats This information was brought to you by Cision http://news.cision.com https://news.cision.com/petra-diamonds-ltd/r/h1-fy-2025-operating-update,c4093809

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