Production up 16% to 3.7 Mcts reveals Petra Diamonds

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 Production up 16% to 3.7 Mcts reveals Petra Diamonds

Petra Diamonds Limited announces its preliminary results (unaudited) for the year ended 30 June 2016 (“the Year” or “FY 2016”).

Financial Highlights

  • Revenue up 1% to US$430.9 million (FY 2015: US$425.0 million).
  • Adjusted EBITDAup 18% to US$164.3 million (FY 2015: US$139.3 million).
  • Adjusted EPS4: 9.76 US$ cents per share (FY 2015: 10.09 US$ cents per share).
  • Basic EPS: 10.38 US$ cents per share (FY 2015: 9.46 US$ cents per share).
  • Adjusted operating cashflow8up 36% to US$192.0 million (FY 2015: US$141.3 million).
  • Adjusted net profit after taxup 1% to US$63.6 million (FY 2015: US$62.8 million).
  • Net profit after tax up 12% to US$66.8 million (FY 2015: US$59.6 million).
  • Net debt7: US$384.8 million (30 June 2015: US$171.7 million).

Operational Highlights

  • Production up 16% to 3.7 Mcts (FY 2015: 3.2 Mcts), ahead of Company guidance.
  • Capex of US$324.1 million (FY 2015: US$274.1 million), reflecting the peak activity around the Group’s expansion programmes.
  • Safety: Group LTIFR stable at 0.29 (FY 2015: 0.29).
  • Gross Diamond Resources (inclusive of Reserves) increased 1% to 312.2 Mcts (30 June 2015: 308.7 Mcts).

 Outlook

  • Production expected to rise to 4.4 – 4.6 Mcts in FY 2017 (excluding ca. 0.2 Mcts attributable to Petra’s joint venture partner at KEM JV), before reaching Petra’s stated long-term target of ca. 5 Mcts in FY 2018, a year earlier than expected, and rising further to ca. 5.3 Mcts by FY 2019 – both targets representing production attributable to Petra. Barring the exclusion of production attributable to Petra’s joint venture partner at KEM JV, the Company maintains its production guidance as published on 25 July 2016.
  • All expansion programmes materially on track and on budget, with both the new sub level cave (“SLC”) at Finsch and the new block cave at Cullinan expected to deliver undiluted ore in excess of ca. 1 Mt each during FY 2017. The new Cullinan plant remains on track to be fully operational by Q4 FY 2017.
  • Despite a cautious outlook on the diamond market, Petra has made a solid start to FY 2017, with the first tender held in early September yielding ca. US$94 million (ca. 745 kcts sold); two more tenders will be held during H1 FY 2017. Prices on a like-for-like basis were generally on par with H2 FY 2016. In terms of production, the operations are performing according to expectations, with an improved product mix and increase in ROM grades witnessed across all operations (in line with guidance).
  • Petra’s revised maintenance covenants were comfortably met for the measurement period to 30 June 2016. However, distribution covenants were not met for the measurement period to 30 June 2016 and Petra will therefore not declare a dividend for FY 2016. Should the current positive production and trading conditions continue, Petra will revisit this with its lender group post H1 FY 2017, with the intention to resume dividends as soon as possible.

 Johan Dippenaar, CEO, said, “I am particularly pleased with the continued steady progress that has been made with our expansion programmes, which have remained on target over the last seven years. FY 2017 is forecast to be the first year that the Company reaps the benefit of this work as we are in line to become free cashflow positive in H2, with our cashflow profile rising strongly thereafter. We now enter the final phase of our capital expansion programmes in a strong position, with a robust balance sheet, efficient cost base and the drive to succeed.”



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