London-listed Petra Diamonds has increased its full-year 2015 production to 3.2 million carats, a 3% increase from the previous year.
On to 5 million carats by 2019
As such, Petra Diamonds remains on track to meet its production target of about 5 million carats annually by the 2019 financial year.
“Consistent with previously guided mine plans, the increased contribution from undiluted ROM [Run of Mine] ore from FY 2016 onwards will accelerate the growth in carat production and Petra remains firmly on track to meet its target of approximately 5 million carats per annum by FY 2019,” the company said in a statement.
Expectations are for average prices to rise even higher in the period to FY 2019 as the growth will come from ROM production (as opposed to tailings) which will deliver higher value carats to Petra’s product mix.
Total operating costs are under control and largely in line with prior guidance. Capital expenditure to FY 2019 remains fully funded via company cashflows and current debt facilities.
Guidance post current mine plans
Due to the nature of Petra’s kimberlite orebodies, the resources remain open ended at depth. As a result, significant residual resources remain available for mining after the stated current mine plans.
This is most pronounced at both Cullinan and Finsch, where extensive residual resources have been well defined and are included in both mines’ current total resource figures (SAMREC), indicating substantial mine lives post FY 2030 (end of current mine plans at both operations). This implies significant residual values post the current mine plans.
Mine plans beyond FY 2030 will leverage off infrastructure established as part of the current capital programmes. Plans to extend mine lives beyond current estimates will be made available in future guidance.
Current project estimates indicate a capital spend of R100 per tonne to access these residual resources. This spend is comparable to an open pit mine with a strip ratio of around 3:1, confirming the favourable economics to open up new ore using the block cave mining method.
From 2004 to 2014, real diamond prices increased at a rate of 7% p.a. The market for rough diamonds is expected to remain underpinned by a firmer US market (the world’s major market for polished diamonds), as well as continued growth in demand from emerging markets. Furthermore, constrained supply is also expected to support future rough diamond price increases.
Exceptional stones are classified by Petra as stones with a sales value greater than US$5 million per stone. Exceptional stones added an average of US$18 million per annum to revenues over the last six years (2008 being the date at which Petra took over the Cullinan mine). Over the last two years, this average has increased to ca. US$26 million per annum (excluding the value of the 122.5 carat blue stone planned to be sold in September 2014).
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