Strengthened Balance Sheet and Stabilising Production sets Path for Growth! Petra announces its preliminary results (unaudited) for the year ended 30 June 2023 (FY 2023 or Year). At the occasion Richard Duffy, Chief Executive Officer of Petra, commented.
“FY 2023 has demonstrated the improved resilience of Petra’s operating model as we realise value from our operations, placing us in a strong position to deliver on our stated target of increasing annual group production by up to 1.3 million carats in FY 2026 as we continue to develop the long-term potential of our large resource base.
Production in FY 2023 at 2.67 Mcts, while marginally below revised guidance on the back of some operating challenges, showed an improving trend during the second half as operating performance stabilised. Williamson restarted production in July 2023 and is ramping up ahead of schedule. Key Group operational guidance is maintained.
In line with our objective of reducing gross debt while investing in organic growth and life extension, we successfully repurchased just over one-third, or US$144.6 million, of the Company’s 2026 loan notes during the Year, both strengthening our balance sheet and reducing future interest costs. This, coupled with our flexible sales process, enabled us to delay the sales of some diamonds from our last two Tenders of FY 2023, in expectation of improved pricing.
The first Tender of FY 2024 reflected persistent softer market conditions due to prevailing macro-economic uncertainties around high interest and inflation rates. Although there has been some stabilisation in global economies and growth outlooks for CY 2023, the economic outlook for CY 2024 is now more subdued. Notwithstanding this, we continue to see the prevailing structural supply deficit of diamonds providing market support in the medium to longer term.
Actions taken to strengthen our business and improve cash flow generation, together with our capital discipline around investing in the growth and life extension of our operations, means that Petra is resilient in the short-term and well placed in the medium to longer term to leverage these continued supportive diamond market fundamentals” Richard said.
Balance sheet remains robust despite lower production and deferred tender sales,
1: The results, where appropriate, exclude Koffiefontein which has been classified as a discontinued operation,
2: FY 2023 revenue amounted to US$325.3 million (FY 2022: US$563.7 million), including revenue from profit share agreements of US$1.4 million (FY 2022: US$1.1 million).
3: The average realised price in FY 2023 was US$139/ct, down 14% from US$161/ct in FY 2022, largely due to product mix, partially offset by a 2% like-for-like price increase. 4: Adjusted EBITDA, being profit from mining activities less adjusted corporate overheads, reduced to US$113.1 million (FY 2022: US$277.8 million), representing a margin of 35%, driven by lower production.
Outlook: Actions taken to strengthen our business and improve cash flow generation, together with our capital discipline, means that Petra is well placed to take advantage of the medium and longer-term supportive diamond market fundamentals.
In FY 2024, we will continue to focus on stabilising operational performance. Our projects remain on track to contribute to the Group’s increased annual production by up to 1.3 million carats in FY 2026 as we continue to develop the long-term potential of our large resource base. We remain confident that we will continue to generate sufficient cash to fund capex.