Petra Diamonds Ltd: Trading Update for the Six Months ended 31 December 2015

Petra Diamonds Limited has announed the following trading update (unaudited) for the six months ended 31 December 2015 (the “Period”, “H1 FY 2016” or “H1”), ahead of the publication of the Company’s Interim Results for the Period on 22 February 2016.

Highlights

• Production up 2 per cent to 1,629,403-carats (H1 FY 2015: 1,601,069 carats). The Company has exceeded its production target for H1 of 1.5 Mcts and remains on track to reach full year production guidance of 3.3 – 3.4 Mcts for FY 2016 and ca. 5 Mcts for FY 2019.
• Revenue down 28 per cent to US$154.0 million (H1 FY 2015: US$214.8 million); excluding Exceptional Diamonds, revenue of US$144.0 million was down 18% (H1 FY 2015: US$176.1 million).
• Diamonds sold down 7 per cent for the Period to 1,303,051-carats (H1 FY 2015: 1,401,575 carats). In line with past years, H2 is expected to be a stronger sales period due to timing of tenders; H2 FY 2016 sales volumes expected to be 1.9 – 2.0 Mcts.
• Rough diamond prices down ca. 9 per cent for H1 FY 2016 on a like for like basis in comparison to Q4 FY 2015, however the expected improvement in product mix has favourably impacted the average value per carat achieved for each of the Company’s operations. The cash-flow impact of lower pricing on Petra’s financial results has been mitigated by the significant weakening of the South African Rand over this Period.
• Capital expenditure (“Capex”) of US$151.3 million (H1 FY 2015: US$125.2 million) including capitalised borrowing costs, in accordance with guidance and the roll out of the Group’s expansion programmes; the increase is mainly due to the construction of the new Cullinan plant.
• Robust financial position as at 31 December 2015 with net debt of US$324.4 million (30 June 2015: US$171.7 million), cash at bank of US$41.6 million (30 June 2015: US$166.6 million) and debt facilities undrawn and available to the Group of US$177.1 million (30 June 2015: US$255.1 million).
• Kimberley Mines transaction completed on 18 January 2016. Petra’s FY 2016 production guidance excludes input from the Kimberley Mines operations; the Company will provide an update in due course after the initial handover period.

Johan Dippenaar, Chief Executive Officer, commented: “We have made a good start to the year, with production of 1.6 Mcts ahead of our target for H1 FY 2016 of 1.5 Mcts, placing us in a good position to achieve full year guidance of 3.3 – 3.4 Mcts. “Importantly our expansion programmes remain on track to deliver the first significant input of undiluted ore from the new mining areas in H2 FY 2016, which will lead to improved ROM grades and a better product mix. Also, the construction of the new plant at Cullinan is on track, and we look forward to the significant benefits this new plant will bring to bear at the mine. As always we remain focused on operational delivery, while maintaining a tight control of our cost base.”