Petra Diamonds Limited announces its unaudited interim results for the six months ended 31 December 2024- the Period or H1 FY 2025 and preliminary sales results for Tender 4 FY 2025. Vivek Gadodia and Juan Kemp, joint interim Chief Executive Officers at Petra Diamonds commented, “These financial results reflect the successful implementation of the cost reduction plans and smoothed capital profiles outlined at our investor day last June, set against the prolonged period of weakness in the diamond market.
We have sustainably reduced our mining and processing costs from continuing operations by 19% and capex by 32% from H1 FY 2024. Revenue was lower by US$49 million (30%) YoY largely due to ca. US$50 million of additional revenue from tenders in FY 2023 being carried over to H1 FY 2024.
However, as a result of cost reductions, cash preservation measures, and working capital optimisation, cash flow from operations increased to US$55 million (from US$34 million in H1 FY2024). While cash flow from operations improved across the reporting periods from items not impacting EBITDA (capital smoothing and working capital management), 12-month EBITDA was impacted mainly by lower revenue.
Lower EBITDA over CY 2024 caused Petra not to meet the required leverage and interest cover covenant ratios in its Revolving Credit Facility (RCF) measured at 31 December 2024. However, Petra has obtained a waiver from our lender, Absa Bank, in relation to these covenant breaches. Petra continues to have sufficient liquidity headroom to meet the liquidity covenant requirements under the RCF and 2L Notes.
Cost reductions have been achieved through sustainably lowering overheads and on-mine cost optimisation with limited impact on our operations. Finsch has successfully transitioned into the 78-Level Phase II production areas and achieved steady operations over the past quarter having transitioned to a two-shift configuration during the first quarter of FY2025. Extension projects at both of the mines remain on track, with production commencing from CC1E at the Cullinan Mine during the Period.
Petra continues to target net free cashflow generation from FY 2025. As announced at our H1 FY 2025 operating update in January, we have initiated a multi-stream Restructuring Plan aimed at further reducing costs, optimising capital spend and generating additional revenue. The overhead labour restructure announced in December 2024 is expected to be completed by the end of March 2025. In parallel, the Life of Mine plans review is underway. Thereafter, we intend to re-engage with our lenders on the back of the revised Business Plan, updated with our cost savings initiatives and updated Life of Mine Plans.
During the Period, we completed the sale of our interest in Koffiefontein, avoiding closure-related costs of US$23 million and entered into an agreement in January 2025 to sell our interest in Williamson for a headline consideration of up to US$16 million, which is expected to complete by year-end. These steps, together with the Restructuring Plan of the business that is underway, are intended to ensure that Petra is a focused, resilient Company able to withstand pricing weakness, while positioning for upside in stronger markets.
Adjusted profit from mining activities decreased to US$18 million (H1 FY 2024: US$44 million), with the decline largely due to the increased revenue in H1 FY 2024 as a result of 456kcts of sales deferred from FY 2023, partly offset by a reduction in adjusted mining and processing costs through the cost reduction measures initiated in FY 2024.
Outlook and update on our refinancing timeline and plans: We continue to focus on improved business resilience and a successful refinancing of our debt in CY 2025. Life of Mine replanning work is ongoing to further optimise costs and future extension capital expenditure while enhancing revenue generation, along with the labour restructure announced in December 2024. Petra anticipates recommencing refinancing engagements with lenders, having updated its business plan to reflect its restructured cost base and updated life of mine plans.
We have suspended the 2L Notes Open Market Repurchase programme and remain focussed on recommencing refinancing engagements with lenders. Operationally, Cullinan Mine and Finsch continue to perform well, and we remain on track to meet our production guidance of 2.4 – 2.7 Mn cts for the year, now excluding Williamson as a discontinued operation with the sale to Pink Diamonds expected to be completed during the first quarter of CY 2025.
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