The 26% increase in production takes Petra Diamonds carat volumes to 995 905 carats (Q3, FY 2015: 791 443 carats); favourably impacted by production from the Kimberley tailings operations attributable to Petra following completion of the Kimberley Mines acquisition in January 2016.
Consequently, production guidance for FY 2016 has increased to 3.6 – 3.65 Mct from 3.3 – 3.4 Mct following the initial integration of the Kimberley Mines assets.
Revenue for the period is up 25% to US$120.5 million (Q3, FY 2015: US$96.1 million), due to increased sales volumes and the sale of the 32.33 carat pink diamond from Williamson for $15 million.
Diamonds sold also increased 13% to 937 526 carats (Q3, FY 2015: 826,815 carats) further to the initial integration of the Kimberley Mines assets.
The expansion programmes at Petra Diamonds Cullinan plant project, remain in line with expectations.
“We are excited about our partnership in Kimberley, given the potential for long-term sustainable operations to the benefit of employees and the local communities there,” says Johan Dippenaar, Petra Diamonds CEO.
[quote]”Our expansion programmes remain on track and the opening up of undiluted mining areas has continued to yield improved grades at both Finsch and Cullinan. The construction of the new plant at Cullinan is also on track, and we remain highly focused on delivering the capital projects on time and within budget.”
“Petra is currently near the end of its peak Capex year and the Group is confident that its revised covenant and debt facility levels are aligned to successfully complete its expansion programmes.”
Further Kimberley potential
Further to the completion of the acquisition of the Kimberley Mines from De Beers Consolidated Mines, which came into effect on 18 January 2016, Petra and Ekapa Mining have entered into negotiations with a view to combining the respective operations owned and operated by the consortium members in the Kimberley area – namely:
- Petra’s Kimberley Underground operations;
- Ekapa Mining’s tailings operations (via its subsidiaries Superstone Mining and Kimberley Miners Forum; and
- the newly acquired Kimberley Mines tailings resources and associated assets, including the Central Treatment Plant.
Negotiations are now at an advanced stage and the envisaged joint venture is earmarked to become effective from Q1 FY 2017 (July to September 2016).
The proposed joint venture is expected to bring significant synergies to the operations at Kimberley, with the opportunity to increase throughput and reduce operating costs, thereby extending mine life to the benefit of all parties.
In the period leading up to the envisaged joint venture, the parties have established a toll treatment arrangement across the respective operations with effect from 18 January 2016, with a resultant attributable interest to Petra of 75.9% in the production from the combined Kimberley operations, and a 24.1% attributable interest to Ekapa Mining.
This arrangement will cease upon formation of the envisaged joint venture.