Petra Diamonds by CMB Media Group

PETRA DIAMONDS

ÂŠ Petra Diamonds - The Bulk Sample Plant â&#x20AC;&#x201C; Crushing Plant at the Finsch mine

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PETRA DIAMONDS

Petra Trades Strong In

Hard Market PRODUCTION: Karl Pietersen

An increase in production and revenue in its FY 2018 Q3 is making those involved in Petra Diamonds operation excited about what the future will hold when its various mine plans are completed later next year. www.enterprise-africa.net / 3

INDUSTRY FOCUS: MINING

Diamonds, the hardest rock known to man, continue to create industries that are difficult to crack. Mining them, cutting and polishing them, and selling them is no easy feat. But for those with experience and reputation, the industry still holds a significant level of value. Diamonds are not just used for fancy jewellery, they are present across many industry sectors, using their unique make-up to assist when only the hardest material will do. So production of these minerals is important.

This is why researchers around the world have been searching for ways to develop diamonds – or diamonds-like materials – and one expert in the UK seemed to have done just that last month. Dr Oliver Williams of the University of Cardiff demonstrated to the media a technique by which he could create, in just 24 hours, diamonds so similar to genuine stones, the difference could never be spotted. Industrial diamonds crated by humans, instead of those dug from the ground after billions of years of high-pressure and high-temperature moulding,

can usually be created by crushing carbon. But Dr William’s method involves creating a higher purity by using pressures 1000 times lower than the atmosphere and adding a special mix of gases. This is a worry for the world’s major producers – could their methods eventually be phased out thanks to technological advances? According to Citi analysts, sales of synthetic diamonds will make up 10% of total supply by 2030, up from the current 2%. But for the immediate future, miners will have to efficient and effective to extract stones and

// THE FUTURE FOCUS OF THE COMPANY WILL MOVE AWAY FROM VOLUME TARGETS TO VALUE OPTIMISATION //

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PETRA DIAMONDS

deliver sales targets. Now is the time for business excellence if ever there was one. SET IN STONE South Africa’s diamond industry goes back to 1867 when a 15 year old boy, Erasmus Jacobs, found a unusual rock on his father’s farm, close to the Orange River. The diamond was names the ‘Eureka’. The ensuing rush to uncover the valuable stones saw South Africa become the world’s leading diamond producer, turning up more diamonds in just a few years than India had in 2000 years. Some of the world’s largest and most famous diamonds come from South Africa. The Cullinan, the Hope, the Excelsior, the Centenary and many more are all South African in heritage. While the mining industry in South Africa is not what it used to be, it remains a vital part of the economy and diamond mining is a major employer. One of the company’s at the top of the industry is Petra Diamonds. Listed on the London Stock Exchange and a member of the Diamond Producers Association, Petra was formed in 1997 as a junior exploration company. Today, the company owns and manages five diamond

mines and produces around four millions carats each year. Finsch, Koffiefontein, Cullinan, Kimberley Ekapa Mining JV, and the Williamson mine in Tanzania are all Petra operations.

In April, Petra released its trading report for the third quarter of its 2018 financial year. the impressive report detailed a reduced Lost Time Injury Frequency Rate, now at 0.18 from 0.24 in the same period last year. Safety remains the highest priority at Petra, and the company has stated its long-term target of a zero harm workplace is its strongest focus. Production was up 20% for the quarter, sitting at 1,194,947 carats from 999,768 carats in FY 2017. This was a record quarterly production figure for the company and helped contribute to a revenue increase of 44% to US$172 million with the company stating it expects to achieve its prediction of 4.6 - 4.7 Mcts for the full year. Petra Diamonds Chief Executive, Johan Dippenaar was pleased with

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INDUSTRY FOCUS: MINING

// PETRA HAS RECORDED STRONG RESULTS IN BOTH PRODUCTION AND SALES, AS WELL AS A CONTINUED IMPROVEMENT IN OUR SAFETY PERFORMANCE // the report and said that the future looked bright despite challenges that will soon come into focus. “Petra has recorded strong results in both production and sales, as well as a continued improvement in our safety performance. It is also important to note that the make-up of our production is transforming, with higher value ROM production representing ca. 82% of our carat volume. The future focus of the Company will move away from volume targets to value optimisation. “While we are very encouraged by the operational delivery against our long-term expansion plans,

risks to performance continue to relate to increased volatility in the ZAR/US$ exchange rate, grade and pricing variability at Cullinan, as well as the outlook for Williamson and the blocked diamond parcel.” Strong performance was realised across the Petra mine portfolio, especially at the Finsch mine in the Northern Cape where ROM production increased 13%. “[This was] driven by higher ROM grades of 63.0 cpht (Q3 FY 2017: 54.2 cpht), positively impacted by the treatment of higher-grade surface ROM material, coupled with the increase in undiluted tonnes from the new Block 5 sub

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level cave (SLC). Overall production increased 6% to 553,669 carats (Q3 FY 2017: 522,515 carats), with the increase in ROM production offset by the planned reduction in tailings production,” the company said. Former Finsch mine manager, now Petra COO, Luctor Roode, tells Enterprise Africa that the best is still to come at Finsch. “We are still ramping up the production from Block 5 and will probably reach steady state during next year,” he says. DIAMOND MARKET On the back of the strong production report, Petra shares

PETRA DIAMONDS

spiked by 5.7% and positive market conditions make for an exciting outlook for the company. According to Petra’s Q3 trading report, the diamond market “remained relatively strong in Q3, boosted by the continued festive retail selling season, incorporating Chinese New Year and Valentine’s Day, which in turn led to restocking in the pipeline and resultant good demand for purchasing of rough diamonds.” In May, the De Beers Group also released a market report suggesting that global demand for diamonds was strong. “People around the world are spending more on diamond jewellery than ever before and it’s encouraging to see consumers in the US, the world’s largest and

most mature market, leading the way. While new designs and brand concepts played a key role in catching the consumer’s eye, it’s the timeless natural beauty, uniqueness and enduring value of diamonds that continues to resonate with people when looking to celebrate life’s special moments,” said De Beers CEO, Bruce Cleaver. According to the report from the global diamond specialist, and previous owner of the Petra mine portfolio, the global demands for 2017 was at an all-time high of US$82 billion (2% up on 2016). Strong demand in the US and China was the key driver of this market strength, and De Beers praised the marketing efforts of the industry for building a strong position. Across all of its mines, Petra

is undertaking upgrade and improvement works to ensure a safer, deeper, longer lasting, and more efficient mining operation. When these works are completed at the end of 2019, Petra will be aiming for 5-5.3 Mcts per year and a significant increase in revenue. This is a business that is doing everything possible to navigate a hard-to-master industry, and while extracting diamonds from the ground is still viable, Petra continues to demonstrate how it is done best.

WWW.PETRADIAMONDS.COM

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CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/ or in advertisements included in this magazine do not necessarily represent those of the publisher. Any resemblance to real persons, living or dead is purely coincidental. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Media Group Ltd 2018

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