Building a world-class diamond producer. February 2012

Transcription

1 Building a world-class diamond producer February 2012

2 Important Notice These Presentation Materials do not constitute or form part of any invitation, offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities in the Company nor shall they or any part of them form the basis of or be relied upon in any manner or for any purpose whatsoever. These Presentation Materials must not be used or relied upon for the purpose of making any investment decision or engaging in an investment activity and any decision in connection with a purchase of shares in the Company must be made solely on the basis of the publicly available information. Accordingly, neither the Company nor its directors makes any representation or warranty in respect of the contents of the Presentation Materials. The information contained in the Presentation Materials is subject to amendment, revision and updating in any way without notice or liability to any party. The presentation materials contain forward-looking statements which involve risk and uncertainties and actual results and developments may differ materially from those expressed or implied by these statements depending on a variety of factors. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information or opinions contained herein, which have not been independently verified. The delivery of these Presentation Materials shall not at any time or in any circumstance create any implication that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) of the Company since the date of these Presentation Materials. The Presentation Materials are confidential and being supplied to you for your own information and may not be reproduced, further distributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (except the recipient s professional advisers) or published, in whole or in part, for any purpose whatsoever. The Presentation Materials may not be used for the purpose of an offer or solicitation to subscribe for securities by anyone in any jurisdiction. 2

3 Discover Petra Diamonds London s largest quoted pure diamond mining group PDL Provides direct exposure to the positive long term fundamentals of the diamond market December 2011 stepped up from AIM to the Main Market of the London Stock Exchange March 2012 expected to enter the FTSE 250 Index Exceptional growth objective to increase production to over 5 million carats by FY 2019 FY 2007 FY 2011 Gross Resources 9 million carats 300 million carats Production ~180,000 carats 1.1 million carats Gross Revenue US$17.0 million US$220.6 million On Mine EBITDA US$1.3 million US$76.4 million 3

4 An Exceptional Growth Path July 2007 July 2008 November 2008 May 2010 September 2011 Koffiefontein Cullinan Williamson Kimberley UG Finsch 74% Petra 26% BEE Partners 74% Petra 26% BEE Partners 75% Petra 25% Government of Tanzania 74% Petra 26% BEE Partners 74% Petra 26% BEE Partners Front Cave Block Cave Open Pit Block Cave Block Cave 14yr Mine Plan +20yr Potential Life 16yr Mine Plan +50yr Potential Life 17yr Mine Plan +50yr Potential Life 11yr Mine Plan +12yr Potential Life 18yr Mine Plan +25yr Potential Life Successful track record: Focus on efficiencies: right-size operation, restructure cost base & empower management Industry leading team utilises in-house capabilities to execute capex programmes Focus on value as opposed to volume production; optimise plant processing & security to ensure recovery of full spectrum of diamonds Achieve best rough diamond prices through open tender system 4

5 A Diversified Production Portfolio Petra is focused on Africa source of 60% of the world s diamond production by value * Petra mines Petra s portfolio includes five of the world s most important kimberlite diamond mines 5

6 Focus & Strategy Petra plans to produce +5 Mctpa through organic growth Increase output Steadily growing annual production, with a target of over 5 million carats by FY 2019 Acquisition of Finsch mine Utilise resources available including tailings deposits Drive efficiencies Focused on cash-generative diamond production Optimise recoveries Aiming to improve operating margins at each mine over time Programmes to deepen underground mines to establish new block caves and provide access to undiluted ore Focus on value as opposed to volume production Optimise plant processing and security Maintaining a culture of effective cost control Contain costs on a unit basis Utilise in-house skills to execute capex programmes 6

7 Compelling Long-Term Fundamentals Many of the world s major diamond mines are in decline and cannot maintain previous output No new important discoveries since the finds in Canada in the early 1990 s Petra strategy to focus on extending lives of existing major kimberlite mines Strong demand drivers going forward, particularly from emerging markets Tiffany & Co and Swatch both reported to be investigating means to secure supply Production forecast to remain relatively flat Significant supply/demand deficit forecast to emerge 200 World Production (MM cts) MM ct US$bn A 2006A 2007A 2008A 2009A 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E Angola Australia Botswana Canada DRC Namibia Russia South Africa Zimbabwe Other Countries Source: RBC Capital Markets, September Supply in 2008 Prices Demand Source: Deutsche Bank / Alrosa, April

8 A Shift From West To East World Diamond Jewellery Sales 2000 World Diamond Jewellery Sales 2010 World Diamond Jewellery Sales 2015E RoW 10% Other Asia 8% India 0% Europe 16% US 48% Taiwan 2% India 10% RoW 20% US 38% Italy 2% Hong Kong 2% Taiwan 2% India 11% RoW 14% US 35% Japan 18% Japan 11% China Hong Kong 11% Gulf 8% Japan 9% China 16% Gulf 9% Source: RBC Capital Markets / De Beers 8

9 Late Cycle Play Per capita consumption of key commodities: China relative to the US steady state And ever increasing corporate activity. Anglo American to buy Oppenheimer s stake in De Beers; presentation notes highly attractive industry fundamentals with late cycle exposure Alrosa - no firm decision taken but considering an IPO in Chow Tai Fook leading Chinese diamond retailer raised US$2 billion in Hong Kong IPO plans to increase stores in Asia from 1,300 to 2,000 by 2016 Graff Diamonds preparingto raiseus$1billioninhongkong IPO to expand in Asia (Financial Times 9 Nov 2011) 9

10 Production & Sales H1 FY 2012 Unit 6 months to 31 December 2011 (H1 FY 2012) 12 months to 30 June 2011 (FY 2011) 6 months to 31 December 2010 (H1 FY 2011) Production ROM diamonds Carats 817,161 1,027, ,912 Tailings & alluvial diamonds Carats 136,392 90,186 48,190 Total diamonds Carats 953,553 1,117, ,102 Sales Revenue US$M Diamonds sold Carats 678,772 1,174, ,234 Production growth mainly due to acquisition of Finsch on 14 September 2011 Further production increase expected for H2 FY 2012 due to: full 6 months contribution from Finsch & two additional ROM treatment plants coming on stream (Kimberley Underground s Wesselton plant & the Williamson plant) Petra on track to reach production target of over 2 million carats for FY 2012 Revenue growth affected by weaker prices during H1 Significant carat sales increase expected for H2 mainly due to increased production from Finsch and net release of ca. 100,000 carats closing stock (end H1 vs end H2) 10

11 Rough Diamond Prices Mine H1 FY 2012 Actual (US$) Petra Average Rough Diamond Prices* Original guidance FY 2012 (US$) FY 2011 Actual (US$) FY 2010 Actual (US$) Cullinan (101 excl. Cullinan Heritage) Finsch n/a n/a Koffiefontein Global economic uncertainty caused prices to fall from June 2011 highs Christmas retail sales figures continue to be released; generally modest growth seen in US and Europe but further strong demand from Asia Petra announced on 15 Dec 11 that weaker prices resulted in gross revenues being ca. US$23m lower than expected for H1 FY 2012 Rand weakness partially offset lower pricing during the Period (South African production) Market stabilised in late H1; Petra expects trend to continue but some volatility could be experienced RBC Capital Markets Rough Diamond Price Index Kimberley Underground n/a Fissures Williamson 298 (alluvials) 230 (ROM medium term) * Prices given are the average of ROM and tailings as Petra tenders mine production on a mixed parcel basis June 2006 = Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11

12 Flagship Asset 1: Cullinan Unit HY FY 2012 FY 2011 H1 FY 2011 ROM Production Tonnes treated Tonnes 1,225,117 2,323,403 1,187,058 Diamonds produced Carats 426, , ,989 Grade Cpht Tailings Production Tonnes treated Tonnes 370, , ,092 Diamonds produced Carats 17,283 44,246 28,067 Grade Cpht Total Production Tonnes treated Tonnes 1,595,461 2,899,008 1,450,150 Diamonds produced Carats 444, , ,056 Sales Revenue US$M Diamonds sold Carats 379, , ,049 Average price per carat US$ Ownership: Petra 74% & BEE partners 26% Good throughput performance increase in ROM and tailings tonnages ROM grade lower due to temporary plant issue now returned to normal due to equipment upgrade Tailings grade lower due to delay in introduction of re-crush section will be installed in Q3 Average value per carat lower due to weaker market & slightly lower incidence of specials 4.8ct blue diamond sold for US$1.45m (+US$300k per carat) record US$/ct for Petra 12

13 Flagship Asset 2: Finsch Unit HY FY 2012 FY 2011¹ H1 FY 2011¹ ROM Production Tonnes treated Tonnes 790,715 n/a n/a Diamonds produced Carats 305,215 n/a n/a Grade Cpht 38.6 n/a n/a Tailings Production Tonnes treated Tonnes 642,090 n/a n/a Diamonds produced Carats 109,348 n/a n/a Grade Cpht 17.0 n/a n/a Total Production Tonnes treated Tonnes 1,432,805 n/a n/a Diamonds produced Carats 414,563 n/a n/a Sales Revenue US$M 28.3 n/a n/a Diamonds sold Carats 219,408 n/a n/a Average price per carat US$ 129 n/a n/a Ownership: Petra 74% & BEE Partners 26% ¹ the acquisition of Finsch completed on 14 September 2011 and therefore there are no results prior to this time Successful integration of Finsch into Group Petra now expects +1 Mcts production for FY 2012 ROM tonnages & grades exceeded expectations management still using 33 cpht for medium term planning Tailings operation running smoothly 26kt bulk sample achieved grade of 17 cpht Average value per carat achieved lower than expectations due to weaker diamond market 13

14 Production & Revenue FY 2011 & Estimated FY 2019 Gross Production FY 2011: 1.1 million carats Gross Revenue FY 2011: US$221 million FY 2019: 5.4 million carats Cullinan Williamson Koffiefontein Kimberley Undergroud Fissure Mines FY 2019: ca.us$1 billion* Finsch 32.4% 37.8% FY 2019 figures are management estimates 4.0% 5.4% 6.6% 13.8% * Calculated using a 4% real price increase 14

15 Conclusion & Outlook Operations Successful Finsch integration expected to deliver over 1 million carats for FY 2012 Petra on track to reach its production target for FY 2012 of over 2 million carats On target to reach over 5 million carats by FY 2019 Outlook Premium listing on Main Market of LSE further enhances Petra profile and broadens potential investor base March 2012: subject to FTSE review, Petra should qualify for inclusion in the FTSE 250 index Robust balance sheet Petra announced additional debt facilities of ca. US$48 million on 30 Nov 2011 Diamond market Some short-term volatility due to current financial / capital markets uncertainty Medium to long-term fundamentals remain firmly in place Petra s strong production growth will maximise leverage to anticipated supply deficit 15

16 Finsch mine, South Africa Thank You

17 Capital Structure High Quality Shareholder Base 1 Feb 2012 Share Price Chart (1 year) Al Rajhi Holdings W.W.L. 13.3% Saad Investments Company Ltd/AWAL Bank 12.1% JP Morgan Asset Management Holdings Inc. 7.9% Capital Group International, Inc. 7.3% Scottish Widows Investment Partnership 6.4% T. Rowe Price 5.0% Listing LSE: PDL BlackRock Investment (UK) Limited 4.2% M&G Investments 3.6% Kames Capital 3.3% Ignis Investment Services Limited 3.0% Directors 2.8% Average daily trading volume (shares) 2011 Shares in issue 1.6m 501m Free float 72.0% Market 129p (1 Feb 2012) 652m 17

18 The Petra Board Adonis Pouroulis (41) Non-Executive Chairman Johan Dippenaar (54) CEO David Abery (49) Finance Director Jim Davidson (67) Technical Director Successful mining entrepreneur Founded Petra Diamonds in 1997 and floated first diamond company on AIM Along with fellow directors, built Petra into pan-african diamond group with over 3,600 employees Instrumental in raising funds to help finance and structure early stage mining companies in Africa One of South Africa s most successful diamond entrepreneurs with +20 years experience Founded diamond group in 1990 and grew portfolio to three producing mines before listing as Crown Diamonds on ASX Merger with Petra in 2005 now at helm of London s largest diamond company Extensive experience as Chief Financial Officer in South African and UK business environments In-depth knowledge of London capital markets Integral to structuring and deliverance of strategic group corporate development, including acquisitions and joint ventures Acknowledged world authority on kimberlite geology and exploration +20 years experience in mine management Formerly Head of Diamond Exploration for Rio Tinto across Southern Africa As Technical Director of Crown Diamonds, managed specialist underground fissure mines over a decade Dr Patrick Bartlett (66) Independent Non-Executive Director Acknowledged expert on kimberlite geology and design and geotechnical aspects of block caving Formerly Chief Geologist for De Beers; responsible for all kimberlite mines in South Africa In-depth knowledge of several Petra mines, having worked at Finsch, Koffiefontein, Kimberley Underground, plus was geologist at Cullinan between 1983 to 2003 Since retiring has been involved in block caving projects for BHP, Anglo and Rio Tinto Gordon Hamilton (66) Independent Non-Executive Director Extensive experience as a NED across wide range of businesses, both JSE and LSE listed; chairs Audit Committee for all these companies Formerly a partner for +30 years at Deloitte & Touche LLP; primarily responsible for multinational and FTSE 100 listed company audits, mainly in mining, oil & gas, and aerospace and defence; headed up Deloitte South Africa desk in London Served for 9 years as member of the UK Financial Reporting Review Panel Dr Omar Kamal (38) Non-Executive Director Managing Director for Al Rajhi (Petra s largest shareholder) Co-manages international investments in various asset classes focus on equities, private equity, real estate Possesses broad expertise and knowledge ranging from past experience as an academic, working in the financial industry and strategy consultant with a global financial services arm The Company intends to appoint one or more further independent NEDs as soon as is practicable in FY

19 H1 FY 2012 Operations Operation Cullinan Finsch Koffiefontein Kimberley Underground Williamson H1 FY 2012 H1 FY 2011 H1 FY 2012 H1 FY 2011 H1 FY 2012 H1 FY 2011 H1 FY 2012 H1 FY 2011 H1 FY 2012 H1 FY 2011 ROM Production Tonnes treated (Mt) 1,225,117 1,187, ,715 n/a 285, , , ,527 n/a n/a Grade (cpht) n/a n/a n/a Diamonds recovered (carats) 426, , ,215 n/a 14,364 27,390 34,751 24,988 n/a n/a Tailings / Alluvial Tonnes treated (Mt) 370, , ,090 n/a 474, ,594 n/a n/a 59, ,648 Grade (cpht) n/a n/a n/a Diamonds recovered (carats) 17,283 28, ,348 n/a 7,174 7,110 n/a n/a 2,587 10,847 Total Production Tonnes treated (Mt) 1,595,461 1,450,150 1,432,805 n/a 759, , , ,527 59, ,648 Diamonds recovered (carats) 444, , ,563 n/a 21,538 34,500 34,751 24,988 2,587 10,847 Sales Revenue (US$M) n/a Diamonds sold (carats) 379, , ,408 n/a 15,196 36,669 26,395 17,271 5,044 7,722 Average price per carat (US$) n/a

20 Aim Of Expansion Programmes Undiluted Ore Schematic - block cave mining method Virgin kimberlite ore Current mining at underground pipe mines taking place in diluted mature caves and low grade remnants Expansion programmes will open up fresh block caves, delivering undiluted ore in higher grade areas Undiluted ore Drawpoints Undercut level Substantial higher revenue per tonne leading to increased margins Production level Loaders Haulage 20

21 Cullinan Mining Overview Expansion Plan Key Components South Decline to establish production at 830m and then on to the bottom of the new shaft at 930m end FY 2012 (breakaway already established at 830m) Contract for shaft deepening & related infrastructure to be awarded imminently Development of North Decline to create further access to 830m production level - commencing Q3 FY 2012 Shaft deepening from 580m to 930m to replace the current conveyor belt orehandling system mid FY 2015 Production from new cave commencing during FY 2015 Upgrading and streamlining of plant facilities in order to treat 4Mt underground & 4Mt tailings from FY 2015, 4 year ongoing programme Men & Material Shaft Rock Shaft Current Shaft Bottom 805 Level 880m Shaft Bottom 930m Shaft Bottom Loading Level Current Shaft Bottom 580 Level 630m Level 830m Level Cullinan Mining Schematic BA5 C-CUT Phase 1 Current extent of South Decline AUC South and BAW Phase m base of Resource (open ended at depth) 0 Current Infrastructure Planned Infrastructure BB1E 732m Level 830 Level 200 metres 21

22 Finsch Mining Overview Expansion Plan Key Components Finsch Mining Schematic Mining currently taking place in Block 4 at 630m FY 2012 Treatment of Pre 1979 Tailings until FY 2015 Accessing and development of Precursor SLC at 630m FY 2013 Development of Sub Level Cave at 770m FY 2013 Production from Block 5 at 880m FY 2014 onwards Treatment of Post 1979 Tailings FY 2015 to FY 2020 Deepening of shaft to 950m and ore-handling infrastructure on 880m Level End FY 2015 Ramp up ROM to 3.5 Mpta FY 2018 Vent Shaft Precursor SLC Not in current mine plan Block 4 Remaining Block 4 Pillars Sub level Cave Block 5 Kimberlite Level: Main pipe: 3.7ha Precursors: 1.5ha SLC Conveyor Decline to 880m 880m base of Resource (open ended at depth) Production Shaft Ore Handling 630m Level 670m Level 770m Level Shaft Bottom 825m 880m Block Cave 950m Current Infrastructure Planned Infrastructure 22

23 Williamson Mining Overview Expansion Plan Key Components Williamson Kimberlite Pipe Schematic Stockpile (due to pit shaping activities) of ca. 900,000 t (>50,000 cts) 1km N Enhanced rebuild of existing plant (3 Mtpa) completed expected to be full operational April 2012 LOM Pit Shell Standby power now available at site due to recent power issues Q3 FY m Longer term expansion plan to enable a 10 Mtpa operation and construction of new main plant currently dependent upon confirmation of secure electricity supply from Tanesco, normalisation of rainfall and treatment results following 6 to 9 month production period using rebuilt 3 Mtpa plant New timing tbc Schematic showing cut-away geology and planned open pit Geology Granite Breccia RVK Bouma Shale Island BVK PK 23

24 Koffiefontein Mining Overview Expansion Plan Key Components Koffiefontein Kimberlite Pipe Schematic Installing new front cave at 590m Level FY 2013 Installing new block cave at 690m Level FY 2016 Tailings programme now ramped up with Petra processing +0.5 Mtpa 24

25 Kimberley Underground Mining Overview Expansion Plan Key Components Kimberley Underground Kimberlite Pipes Schematic Temporary mobile pan plant put in place at Wesselton Q2 FY 2012 Introduction of scrubber and apron feeder to Joint Shaft plant expected to address bottleneck Q3 FY 2012 Construction and commissioning of main plant (40,000 tpm) at Wesselton Q4 FY 2012 Underground development FY 2012 onwards m Level Sampling programme underway to extend mine life FY 2012 onwards m Level m Level 25

26 Petra Diamonds Cathy Malins