Petra
Diamonds Limited
(Petra,
the Company or the Group)
Cost
savings target increased to more than US$30m per annum and entry into definitive
transaction agreement for the sale of
Koffiefontein
In line
with its approach to building business resilience, Petra announces
additional steps to reduce costs and provides an update of the sale
of its interest in the Koffiefontein Diamond Mine (KDM).
Richard Duffy, Petra’s Chief Executive Officer,
said:
“We
remain on track to deliver the US$75
million of cash savings in FY 2024 as a result of capital
deferrals and cost savings of circa US$10
million. The Company has further increased its cost savings
target for FY 2025 to more than US$30
million per annum, on a sustainable basis going forward,
across its South African operations, centralised services and
overheads. This cost rebase will align our group support structures
with our more streamlined operational requirements and transition
Petra to a more smoothed capital profile to enable sustainable net
free cash flow generation, notwithstanding the continued slower
recovery of the diamond market as a result of ongoing economic
uncertainty and weakness in China.
Regular
updates on the Company’s delivery against the US$30 million plus annualised cost savings target
will be provided and an update on our revised Life of Mine Plans,
incorporating our transition to a more smoothed capital profile,
will be shared at the end of June
2024.
Since
taking the decision to close Koffiefontein, Petra has remained
committed to also exploring a responsible exit in consultation with
its stakeholders. I am pleased that the sale agreement reached with
Stargems will, once completed, provide ongoing economic activity in
the region. We believe Stargems has the technical and financial
capability to conduct operations in a responsible manner for all
stakeholders.
We
look forward to working closely with the DMRE, employees, community
representatives and other key stakeholders in completing the sale.
As a result of this transaction, Petra will avoid incurring
closure-related costs of US$15-18
million included in the Company’s 31
December 2023 balance sheet provisions.ʺ
Further
reduction in operating expenditure
The
Company’s group structure is being realigned to meet the
requirements of the operations. Regrettably, as a result of this
group restructure, S189(3) notices (proposed retrenchments) under
the South African Labour Regulations Act (LRA) have been issued to
all group employees to commence consultations around affected
roles.
At Finsch
Mine, a proposal to revise throughput tonnages from circa 2.8 to
2.2 million tonnes per annum has required a review of the current
continuous operations shift configuration. As a result, S189(3)
notices under the LRA have been issued to affected employees and
consultations with organised labour have commenced.
At
Cullinan Mine, cost savings targets have been set assuming
currently planned throughput tonnages going forward.
Collectively,
the measures outlined above are expected to deliver in excess of
US$30 million of sustainable
annualised operating cost savings from FY 2025 onwards.
Entry
into definitive transaction agreement for the sale of
Koffiefontein
Further to
Petra’s announcement on 13 December
2023 regarding its entry into a non-binding term sheet for
the sale of KDM, Petra is pleased to announce it has now entered
into a definitive transaction agreement with affiliates of the
Stargems diamond group (Stargems) for this transaction. Stargems
has a significant global presence in the diamond and jewellery
industry, including as an owner and operator of diamonds mines in
South Africa.
On
completion of the sale, Petra will transfer its stake in the entity
that owns KDM to Stargems for a nominal cash consideration and will
no longer be responsible for KDM’s environmental rehabilitation
liabilities and care and maintenance costs. In Petra’s interim
results for H1 FY 2024, provisions totalling US$23.1 million were made for liabilities, costs
and commitments associated with KDM. After completion, Petra will
remain liable for funding certain ongoing social commitments
relating to KDM that were made during Petra’s ownership.
Completion
of the sale is subject to obtaining the consent of the Department
of Mineral Resources and Energy in accordance with Section 11 of
South Africa’s Mineral and Petroleum Resources Development
Act.
Petra will
provide further updates on the progress of completing the sale in
due course.
Petra is
being advised on the sale by Questco Corporate Advisory, a South
African-based boutique corporate advisory firm, and Edward Nathan
Sonnenbergs Inc. as legal advisors.
For
further information, please contact:
Investor
Relations, London Telephone:
+44 20 7494 8203
Patrick Pittaway investorrelations@petradiamonds.com
Julia Stone
Kelsey Traynor
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 three underground
mines in South Africa (Finsch and
Cullinan Mine) and one open pit mine in Tanzania (Williamson). The Koffiefontein mine
is currently on care and maintenance in preparation for sale or
closure.
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 with a premium listing on the Main Market of the London
Stock Exchange under the ticker 'PDL'. The Company’s loan notes due
in 2026 are listed on the Irish Stock Exchange and admitted to
trading on the Global Exchange Market. For more information, visit
www.petradiamonds.com.