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2012 AGM – Delivering Growth in Diamonds29 November 2012
LISTEDP R E M I U M
The Finsch mine in South Africa
2
Important Notice
These Presentation Materials do not constitute or form part of any invitation, offer for sale or subscription or any solicitation forany offer to buy or subscribe for any securities in the Company nor shall they or any part of them form the basis of or be reliedupon in any manner or for any purpose whatsoever.
These Presentation Materials must not be used or relied upon for the purpose of making any investment decision or engaging inan investment activity and any decision in connection with a purchase of shares in the Company must be made solely on thebasis of the publicly available information. Accordingly, neither the Company nor its directors makes any representation orwarranty in respect of the contents of the Presentation Materials.
The information contained in the Presentation Materials is subject to amendment, revision and updating in any way without noticeor liability to any party. The presentation materials contain forward-looking statements which involve risk and uncertainties andactual results and developments may differ materially from those expressed or implied by these statements depending on avariety of factors. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of theinformation or opinions contained herein, which have not been independently verified.
The delivery of these Presentation Materials shall not at any time or in any circumstance create any implication that there hasbeen no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) ofthe Company since the date of these Presentation Materials.
The Presentation Materials are confidential and being supplied to you for your own information and may not be reproduced,further distributed, passed on, or the contents otherwise divulged, directly or indirectly, to any other person (except the recipient’sprofessional advisers) or published, in whole or in part, for any purpose whatsoever. The Presentation Materials may not be usedfor the purpose of an offer or solicitation to subscribe for securities by anyone in any jurisdiction.
Petra Diamonds
• Exceptional growth profile to 5 million carats pa
• Diversified portfolio – 8 producing mines & exploration
• Major, long life resource base of +300 million carats
• High quality assets and management team
• Sustainability at heart of Petra
• Pure play exposure to diamond market (LSE:PDL)
3
A leading diamond producer with an exceptional growth profile
The Petra Board
Adonis Pouroulis (42)Non-Executive Chairman
Successful mining entrepreneurFounded Petra Diamonds in 1997 and floated first diamond company on AIMAlong with fellow directors, built Petra into pan-African diamond group with over 4,700 employeesInstrumental in raising funds to help finance and structure early stage mining companies in Africa
Johan Dippenaar (55)CEO
One of South Africa’s most successful diamond entrepreneurs with +20 years’ experience Founded diamond group in 1990 and grew portfolio to three producing mines before listing as Crown Diamonds on ASXMerger with Petra in 2005 – now at helm of London’s largest diamond company
David Abery (50)Finance Director
Extensive experience as Chief Financial Officer in South African and UK business environmentsIn-depth knowledge of London capital marketsIntegral to structuring and deliverance of strategic group corporate development, including acquisitions and joint ventures
Jim Davidson (67)Technical Director
Acknowledged world authority on kimberlite geology and exploration+20 years’ experience in diamond mine managementFormerly Head of Diamond Exploration for Rio Tinto across Southern AfricaAs Technical Director of Crown Diamonds, managed specialist underground fissure mines over a decade
Tony Lowrie (70)Senior Independent Non-Executive DirectorOver 35 years association with the equities business and an experienced NEDFormerly Chairman of ABN AMRO Asia Securities & MD of ABN AMRO Bank. Has previously been a NED of Allied Gold Plc (prior to its merger with St Barbara Limited), Dragon Oil plc, J. D. Wetherspoon plc and several quoted Asian closed end fundsCurrently NED of Kenmare Resources plc and a Director of the Edinburgh Dragon Fund
Dr Patrick Bartlett (66)Independent Non-Executive Director
Acknowledged expert on kimberlite geology and design and geotechnical aspects of block cavingFormerly Chief Geologist for De Beers; responsible for all kimberlite mines in South AfricaIn-depth knowledge of several Petra mines, having worked at Finsch, Koffiefontein, Kimberley Underground, plus was geologist at Cullinan between 1983 to 2003Since retiring has been involved in block caving projects for BHP, Anglo and Rio Tinto
Gordon Hamilton (67)Independent Non-Executive Director
Extensive experience as a NED across wide range of businesses, both JSE and LSE listed; chairs Audit Committee for all these companiesFormerly a partner for +30 years at Deloitte & Touche LLP; primarily responsible for multinational and FTSE 100 listed company audits, mainly in mining, oil & gas, and aerospace and defence; headed up Deloitte South Africa desk in LondonServed for 9 years as member of the UK Financial Reporting Review Panel
Dr Omar Kamal (39)Non-Executive Director
Managing Director for Al Rajhi (Petra’s largest shareholder)Co-manages international investments in various asset classes – focus on equities, private equity, real estatePossesses broad expertise and knowledge ranging from past experience as an academic, working in the financial industry and strategy consultant with a global financial services arm
4
Proven Track Record – Continuous Growth
5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
Gross Production Profile
Strong production growth due to Finsch acquisition
Mcts
Major increase due to higher
volume Cullinan mine
0
50
100
150
200
250
300
350
400
450
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
Gross Revenue Profile
US$ million
Recovery in rough diamond prices & sale of 507 ct Cullinan Heritage
Finsch contribution
boosts revenue
Decreased revenuedue to the economic downturn
2.8Mcts* EST +US$400m*
EST
2.2 Mcts+98% US$316.9m
+44%
* FY 2013 production and revenue are management estimates only
- CAGR of 82% - CAGR of 41%
Delivering Profitability And Cashflow
6
1: Adjusted EBITDA excludes impairment charges and reversals, share based expense, unrealised foreign exchange gains and losses and non-recurring transaction costs
0
20
40
60
80
100
120
FY2008
FY2009
FY2010
FY2011
FY2012
Profit from mining activity US$M
-20
0
20
40
60
80
100
FY2008
FY2009
FY2010
FY2011
FY2012
US$M Adjusted EBITDA1
0
10
20
30
40
50
60
70
80
90
FY2008
FY2009
FY2010
FY2011
FY2012
US$M Net Operating Cashflow
+35%+35% +58%
Highlights – FY 2012 & To Date
7
September 2011: Completion of Finsch acquisition for R1.425bn (ca. US$192m)
November 2011: Appointment of Dr Patrick Bartlett and Gordon Hamilton as independent NEDs
December 2011: Step-up from AIM to Main Market of LSE
March 2012: Inclusion in FTSE 250 Index
June 2012: FY 2012 Results: production target achieved of 2.2 million carats pa; Capex well controlled; corporate and operating costs kept in check
September 2012: Appointment of Tony Lowrie as Senior Independent NED
September 2012: Public disposal process commences to sell the Fissure Mines
September 2012: Large diameter drilling completed on KX36 in Botswana; treatment and analysis underway
November 2012: Q1 production +70% to 654,690 carats; revenue +188% to US$51.1m
November 2012: Completion of new debt facilities from RMB, Absa and IFC of US$244m
A further period delivering growth in diamonds
Fully Financed Capex Profile
• New debt facilities of ca. US$244m put in place with Absa, RMB (FNB) and IFC
• An increase and reorganisation of Petra’s existing debt structures• Provides greater assurance and flexibility to the Group’s project expansion plans
• Petra has entered into an agreement with Absa and RMB/FNB for ZAR1,600m of Rand debt facilities comprised of:
• a 64 month amortising term facility of ZAR800m (ca. US$92m)• a 70 month revolving credit facility of ZAR300m (ca. US$35m)• a working capital facility of ZAR500m (ca. US$57m)
• Petra has also entered into an agreement with IFC for US$60m of US dollar debt facilities comprised of:• a 64 month amortising term facility of US$35m• a 70 month revolving credit facility of US$25m
8
“Important and independent validation by the lenders of the quality of Petra’s asset base and our strong management team”
Balance Sheet Snapshot
30 Sep 12US$M)
FY 2012(US$M)
Cash and cash equivalents:
Bank 15.4 47.3
Diamond debtors Nil 22.1
Diamond inventories 61.5 24.5
Total 76.9 93.9
Bank borrowings:
Absa / RMB / IFC facilities drawn down (ca. US$244m total facilities; available facilities US$143.8m)
(100.2) (69.2)
Total (100.2) (69.2)
BEE loans due to Petra 90.5 89.4
Net 67.2 114.1
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0
20
40
60
80
100
120
140
160
180
200
2004 2005 2006 2007 2008 2009 2010 2011
Vol
ume
(cts
)
Global Diamond Production - Volume
Source: Kimberley Process Statistics 2004-2011
Diamond Market – Declining Supply
Majors Production(Mctpa)
2008 2009 2010 2011 2012 EST
De Beers 48.1 24.6 33.0 31.3 28-30
ALROSA 36.9 32.8 34.3 34.6 34.4
Rio Tinto 20.8 14.0 13.8 11.7 12.6
BHP Billiton 3.3 3.2 3.1 2.5 1.8
Total 109.1 74.6 84.2 80.1 77.8
• Global production of just 124 Mcts in 2011 (Zimbabwe: 8.5 Mcts) vs 176 Mcts in 2005 (Zimbabwe: 0.2 Mcts)
• Only ~30 significant kimberlite mines in production
• Many major producers moving from open pit to underground – lower tonnages & higher operating costs
• Supply forecast to be flat going forward, despite some new projects coming on stream
• No Tier 1 discoveries since 1990’s
• Long lead times to production (7 – 14 years)
10Source: Company records and estimates
Diamond Market – Increasing Demand
11
Per capita consumption of key commodities: China relative to the US “steady state”
• Demand driven by urbanisation trend and growing middle class
• 2015: 221 Chinese cities with population of +1m (vs 107 in Europe, Japan & US combined)
• Chinese economic plan seeks to boost China’s domestic consumption; goal to double China’s 2010 GDP and average incomes by 2020
• Diamond consumption per capita in emerging regions still way below that of mature markets
• ‘Mass luxury’ is coming – affordable diamond jewellery for emerging middle classes
Strong demand growth driven by China and India:China expected to surpass the size of the US market by 2025
Source: BofA Merrill Lynch Global Metals and Mining Research Source: Rio Tinto – September 2012
End Users Look To Secure Rough
13 November 2012 – Chow Tai Fook signs two year sales agreement with ALROSA:• “The greatest challenge for all diamond industry players is the scarcity of authentic natural diamonds. The
agreement with ALROSA enables us to secure more reliable supplies of rough diamonds, particularly those specifications that are in greatest demand from our customers.”
13 November 2012 – Financial Times feature from Watches & Jewellery supplement – “Suppliers struggle to keep up with diamond demand”• “The demand for what we call fancy cut diamonds, like baguettes, square, pear and marquise shaped
diamonds, for sophisticated jewellery watches is so strong that we are burning the midnight oil to keep up with our delivery deadlines” – Pini Netzer, chief executive of Eurostone
16 November 2012 – Tiffany’s agrees US$4m funding to Diamcor – strategic alliance and right to purchase production from the Krone-Endora at Venetia Project
19 November 2012 – Tiffany’s agrees US$6m loan to DiamondCorp – Lace mine offtake agreement12
China“Demand for mid-quality…diamonds over the next three to five years will be very strong (estimate +30% pa), creating a significant imbalance between supply and demand….the jewelry market in China is just beginning to take off.”
(Chow Tai Fook, Rapaport – 1 May 2012)
India
"The next decade will be the diamond decade in India”
(Gitanjali Gems – Economic Times – 12 November 2012)
Rough Diamond Prices
• Rough market stabilised in July 2012 and has remainedflat since then (Petra direct experience)
• First tenders of FY 2013 mainly delivered better thanexpected prices, but FY 2013 guidance is unchanged
• A positive retail festive season could lead to uptick inrough market in early calendar 2013
• First Petra tender (Sep) in H1 FY 2013 achievedUS$51.1 million on sale of 318,700 carats and secondtender of FY 2013 (Oct) achieved US$45.8m on sale of326,261 carats
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Rough Diamond Price Index vs Bloomberg Forward Global Base Metal Index
Mine
FY 2013Actual
September Tender Results
(US$/ct)
FY 2013GuidanceWeighted Average
(US$/ct)
FY 2012Actual
WeightedAverage
(US$/ct)
FY 2011 Actual
WeightedAverage
(US$/ct)
Finsch 133 129 138 n/a
Cullinan 1492 129 128 148
Koffiefontein 566 475 487 564
KimberleyUnderground 2363 300 320 333
Williamson 243 220 236 3024
1: All average values are a mix of ROM and tailings production, as Petra tenders production from each mine on a mixed ROM/tailings parcel basis2: Included a 69 carat stone sold for US$3.4 million3: Wesselton plant in commissioning stage4: Williamson FY 2011 value relates to alluvial production only, as there was no ROM production whilst the Phase 1 development programme was underway
Rough Diamond Price Index (June 2006=100)
50
75
100
125
150
175
200
Jun-
01
Jun-
02
Jun-
03
Jun-
04
Jun-
05
Jun-
06
Jun-
07
Jun-
08
Jun-
09
Jun-
10
Jun-
11
Jun-
12
Jun-
13
June
200
6=10
0Nov-12
Petra Production Profile
14
A 102ct yellow (Finsch)
Profile runs the full spectrum, from high to low value, across all fancy colours
A typical Type II of 68ct (Cullinan)
A very rare 3ct lilac (Finsch)
A 152ct (Cullinan)
A very high quality 13ct yellow (Cullinan)
A distinctively shaped 177ct brown (Cullinan)
Two classic colourless Finsch models of around 6 to 7.5 cts
A 113ct (Cullinan)
Aim Of Expansion Programmes – Undiluted Ore
15
• Current mining at underground pipe mines taking place in diluted mature caves resulting in lower grades
• Expansion programmes will open up fresh block caves, delivering access to undiluted ore resulting in higher grades
• Grades expected:
• Cullinan ~34cpht to ~50cpht
• Finsch ~30cpht to ~47cpht
• Koffiefontein ~5cpht to ~8cpht
• Substantial higher revenue per tonne leading to increased margins
• Reduces wear and tear on processing systems (waste rock is harder & more abrasive than kimberlite)
Still need to amend word ‘depleted’ to ‘mature’ below
Mature block cave
FY 2012 – A Snapshot
16
Cullinan: Underground production and development Finsch: Production control room
Williamson: Recommenced production after rebuilt plant commissioning
Kimberley UG: Plant constructionKoffiefontein: Ebenhaezer open pit tonnes supplemented underground
Current Mining AreaBlock 4 Pillars
Block 5Sub-Level Cave
Block 5Block Cave
South westPrecursor
670m
780m
825mShaft
Bottom
900m
950m
SLC CONVEYOR
Finsch – Expansion PlanExpansion Plan – to take production to just under 2 Mctpa by FY 2017 (1.6 Mctpa ROM & 0.3 Mctpa tailings)
• Mining currently taking place in Block 4 at 630m – FY 2012/13
Change in scope for FY 2013 to FY 2016:• SW Precursor removed from
mine plan• Footprint of SLCs enlarged; • Main Block 5 cave deferred by
two years• Earlier access to undiluted ore
& defers major Capex
Expansion plan – key points:• Development of SLC down to
780m – from FY 2013• Shaft deepening to 950m &
ore-handling infrastructure –End FY 2015
• First production from Block 5 SLC – FY 2015, ramping up to full production – FY 2017
• Steady state production from Block 5 block cave – FY 2020
Finsch Mining Schematic
Current Infrastructure
Planned Infrastructure
710m
Kimberlite Footprint @880m Level:Main pipe: 3.7haPrecursors: 1.5ha
880m base of Resource(open ended at depth) 17
Cullinan – Development Programme
Cullinan Mining Schematic
Loading Level
Expansion Plan – to take production to ca. 2.4 Mctpa by FY 2019 (2.0 Mctpa ROM & 0.4 Mctpa tailings)• Shaft deepening contractor
commenced work on site – FY 2012
• South Decline to access new production levels at 830m and then on to bottom of new shaft at 930m – end FY 2013
• North Decline to create further access to 830m production level – commenced
• Tailings programme ramp up to treat 4 Mtpa from FY 2015
• Shaft deepening from 580m to 930m to replace the current conveyor belt ore-handling system – mid FY 2015
• Initial production from new C-Cut cave – FY 2017
• Upgrading and streamlining of plant facilities in order to treat 4 Mt underground & 4 Mt tailings – from FY 2015, 4 year programme
BA5
Rock Shaft
Men & MaterialShaft
Current Shaft Bottom580 Level
630m Level
AUC South and BAW Phase 1
BB1E
830m Level
1073m base of Resource(open ended at depth)
930m Shaft Bottom
Current Infrastructure
Planned Infrastructure
C-CUTPhase 1(~5ha)
2000metres
Current extent of South Decline
North Decline
16Ha @830 Level
732m Level
880m Shaft Bottom
CurrentShaft Bottom805 Level
18
South Africa – Labour Relations
• Reality is mining wages are in top quartile of SA wage environment and multiples of other developing countries
• Labour unrest in mining industry is not a pure labour issue; underlying political and social issues
• Elections for top positions in ruling party – December 2012
• Service delivery, education, housing
• ‘Task Team’ (NUM, ANC and industry) established to tackle these issues
• Unlock the backlog of housing
• Focus on improving infrastructure
• Inquiry to explore role of mining and its importance to SA economy
• The people of South Africa will have to decide where to price its labour
• NUM recent London trip to rebuild investor confidence in South Africa
• Priority to stabilise labour relations in the industry
• Requirement to balance wage expectations with the need for sustainable industry and a competitive environment
• Petra better positioned than most due to nature of diamond mining and size of operations
19
Strategy In Action – FY 2013
20
• Investing• Capex of ca. R1.4bn in SA and ca. US$11m in Tanzania
• Optimising• Continued focus on ‘value’ production
• Reduction of bottom-cut at Finsch to 1mm to capture high value smalls
• Ongoing plant modifications at Kimberley Underground and Williamson
• Introduction of re-crush circuit to Cullinan tailings plant
• Continue to optimise plant processing and security
• Focus on continuous improvement in safety performance
• Expansion• Total tonnages mined to increase from 10Mt to ca. 17Mt
• Increased exploration spend of ca. US$5m
• Growth• Production to rise to ca. 2.85 Mcts & revenue to +US$400m
(management estimates)
Petra is committed to the responsible development of its assets to the benefit of all stakeholders
Production & Revenue – FY 2012 vs FY 2019
Gross Production
FY 2012: 2.2 million carats
Gross Revenue
FY 2012: US$316.9 million
FY 2019: c.5 million carats(1) FY 2019: c.US$1 billion(1)
Fissure Mines
KimberleyUnderground
Koffiefontein
Williamson
Cullinan
Finsch
21
35%
4%
6%6%6%
43%39%
3%2%3%3%
50%
43%
7%9%5%
36%
50%
6%2%4%
38%
(1) FY 2019 figures are management estimates calculated using a 4% real price increase
Sustainability HighlightsHealth and Safety Investing in education and communities
Tsholofelo Place of Hope (Finsch Children’s home)
Promoting biodiversity and progressive rehabilitation
The Williamson Nursery, with the capacity to raise 500,000 seedlings annually
Water is treated at Williamson and provided to local community
Commitment to local economic developmentThe indigenous nursery at Koffiefontein
Water Management
0
0.2
0.4
0.6
0.8
1
1.2
FY2008
FY2009
FY2010
FY2011
FY2012
Q1 FY2013
Health and safety of employees is top priority for management
Formation of Board level HSSE Committee in FY 2012
Petra striving for zero harm across its operations
Left: Petra’s LTIFR Rate
Appendix
Employees at the Williamson mine
Capital Structure
24
High Quality Shareholder Base 26 Nov 2012
Al Rajhi Holdings W.W.L. 13.3%
Saad Investments Company Ltd/AWAL Bank 12.1%
JP Morgan Asset Management Holdings Inc. 7.9%
Capital Group International, Inc. 7.3%
Prudential plc group of companies* 5.1%
T. Rowe Price 5.0%
Scottish Widows Investment Partnership 5.0%
BlackRock Investment (UK) Limited 4.2%
Kames Capital 3.3%
Directors 2.5%
Listing LSE: PDL
Average daily trading volume (shares) – YTD
1.0m
Shares in issue 508.1m
Free float 72%
Market cap @ 104p (26 November 2012)
£528m
Share Price & Volume (1 year)
* of this holding, 25,467,015 shares are held by M&G Investment Funds 3
An Exceptional Growth Path
25
Cullinan
July 2008
Block Cave
18yr Mine Plan+50yr Potential Life
Williamson
November 2008
Open Pit
18yr Mine Plan+50yr Potential Life
Kimberley UG
May 2010
Block Cave
10yr Mine Plan+12yr Potential Life
Finsch
Block Cave
18yr Mine Plan+25yr Potential Life
Koffiefontein
July 2007
Front Cave
13yr Mine Plan+20yr Potential Life
September 2011
Petra has acquired the following five diamond mines from De Beers:
Successful track record:• Focus on efficiencies: right-size operation, restructure cost base & empower management• Industry leading team utilises in-house capabilities to execute capex programmes• Focus on ‘value’ as opposed to ‘volume’ production; optimise plant processing & security to ensure
recovery of full spectrum of diamonds• Achieve best rough diamond prices through open tender system
0
2
4
6
8
10
12
14
16
18
20
1903190519071909191119131915191719191921192319251927192919311950195219541956195819601962196419661968197119731975197719791981198319851987198919911993199519971999200120032005200720092011
+100 & +200 carat stones recovered at Cullinan(including stones recovered up to August 2012)
+100 +200
Cullinan – Large Stones
26
Petra takeover in July 2008
Williamson – Overview
27
Granite BrecciaRVKBoumaShale IslandBVKPK
Geology
205m
LOM Pit Shell
Schematic showing cut-away geology and planned open pit
N1km
Williamson Kimberlite Pipe SchematicExpansion Plan – Key Components
• Company successfully recommenced production at Williamson further to the enhanced rebuild of plant –Q4 FY 2012
• Re-crush circuit in plant, which will lead to an improved grade, will commence commissioning – Q2 FY 2013
• ROM stockpile (ca. 700,000t containing +40,000 carats), established due to the pit-shaping operations to be treated – FY 2013 to FY 2016
• Ramp up of production from ~2.5 Mt in FY 2013 to ~3.6 Mt by FY 2016
• Phase 2 longer term expansion plan to raise production above 3.6 Mtpa –currently under review
Koffiefontein – Overview
28
Koffiefontein Kimberlite Pipe SchematicExpansion Plan – to take production to ca. 100,000 ctpa by FY 2016 (90,000 ctpa ROM & 10,000 ctpa tailings)
• Planned reduction in ROM tonnes supplemented by ore from Ebenhaezer open pit (~5ha)
• Installing new sub-level cave between 560m to 600m Level – FY 2013 to FY 2015
• Planned new block cave at 690m Level –development to commence FY 2016
• Ramp up ROM production from ~0.26 Mt in FY 2013 to 1 Mt (FY 2016) and on to 1.2 Mtpa (FY 2018)
Kimberley Underground – Overview
29
4.5 ha @ 870m Level
0.5 ha @ 845m Level
3.5 ha @ 995m Level
Kimberley Underground Kimberlite Pipes SchematicExpansion Plan – to take production to ca. 135,000 ctpa by FY 2016
• Construction and commissioning of main plant (40,000 tpm) at Wesselton – underway
• Substantial stockpile of ore at each plant built up (~0.7Mt combined)
• Mining to continue at Wesselton and Joint Shaft at a combined rate of ~760,000 tpa in FY 2013, ramping up steadily to 1 Mtpa -from FY 2016
• Sampling programme underway to extend mine life – underway
KX36 – Kimberlite Evaluation Update
• New discovery in Botswana
• Core drilling and micro-diamond sampling campaign indicated:
• Initial modelled (undiluted) diamond grade between 75-180 cpht
• Indications of a reasonably coarse diamond size distribution from MiDA modelling
• Potential kimberlite tonnage between 28 Mt and 34 Mt to a depth of 516m below surface
• Surface area interpreted to be ~5 ha under 78m of Kalahari overburden
• LDD bulk sampling campaign –drilling finished in September 2012
• Sample treatment in progress
Calcretized KimberliteWeathered KimberliteFresh Kimberlite
Initial Core Drilling516m
Phase 1Large Diameter (24”) Drilling
516m
310m
30
Further enquiries:Petra Diamonds
Cathy [email protected]
+44 20 7318 0452www.petradiamonds.com
Employees at the Williamson mine
