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Petra Diamonds' CEO Johan Dippenaar to step down as miner signals end of capex-heavy phase

Operational capital expenditure (excluding capitalised interest) decreased 46% in the year to June and Petra expects this trend to continue with roughly US$93mln of capex in the current fiscal year FY 2019 and US$72mln in FY 2020

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The company has started to get a grip on its debt mountain

Johan Dippenaar is to step down from the role of chief executive (CEO) of Petra Diamonds Limited (LON:PDL) once a successor has been found.

Petra said the decision was in line with the company's development from a phase of intensive capital expenditure and expansion to a focus on steady-state operations.

"Johan has led Petra through a long period of significant growth, taking the company's annual production from approximately 175,000 carats in FY 2006 to 4.6 million carats in FY 2018, and establishing the company as a leading independent diamond producer,” said Petra’s chairman, Adonis Pouroulis, in the company’s results statement covering the year to the end of June.

Revenue for the year was up 25% to US$495.3mln from US$394.8mln the year before.

Adjusted underlying earnings (EBITDA) climbed 37% to US$195.4mln from US$142.6mln the previous year but the company made a net loss after tax of US$203.1mln, versus a profit of US$20.7mln the year before, after taking a previously announced US$66mln impairment charge relating to the Koffiefontein mine and a US$104.3mln loss on discontinued operations.

Net debt was reduced to US$445.7mln (US$520.7mln net of diamond debtors of US$75.0mln) after the company went cap-in-hand to the City in May to raise US$178mln.

READ: Petra Diamonds launches deeply discounted US$178mln rights issue

The diamond miner said it on track to achieve its production guidance of 3.8mln to 4.0mln carats for the current financial year (excluding the KEM joint venture) after churning ut 718,635 carats in July and August.

Petra added that the previously reported turnaround at Koffiefontein is being maintained.

"FY 2018 yielded good operational results, the highest on record to date, in spite of the challenges experienced in FY 2017 and H1 FY 2018, and this was underpinned by strong safety performance across the group,” Dippenaar said.

“Learning from past challenges, the group's focus is to regain investor confidence by the continued optimisation of operations, thereby delivering consistent production output with efficient operating and capital expenditure. Petra remains on track to generate free cash flow, enabling the company to achieve a reduction in leverage to its target of two times or less consolidated net debt to consolidated EBITDA by the end of FY 2020," he added.

The response to the statement was positive, with the shares up 2.6% at 37.64p, although the shares are less than half the value they were a year ago.

Quick facts: Petra Diamonds

Price: 1.9 GBX

LSE:PDL
Market: LSE
Market Cap: £16.44 m
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