listed Petra Diamonds is planning to start paying dividends on a regular basis with effect from its financial year to June 2016, once it has completed the major capital expenditure programmes under way at its Finsch and Cullinan mines.
Announcing the news at a presentation
to investors at the Mining Indaba in Cape Town on Tuesday, CEO Johan
Dippenaar said the company was committed to capital expenditure of
$180m-$190m a year from 2013 to 2015.
The money is being spent to
establish deeper "block cave" extensions to the underground mining
operations on the diamond-bearing kimberlite pipes at both mines.
caving is a highly mechanised mining method that is one of the safest
and cheapest that can be used, but it requires considerable capital
invested upfront to start the operation.
Mr Dippenaar said: "There
is a very high upfront exposure but, once those block caves are in
operation, then our capital expenditure commitments decline sharply and
we can leverage off that infrastructure for years to come."
said the deep-level extensions would take mining operations into
"undiluted" kimberlite ore, which had a number of advantages over the
present operations that took place in old mining areas where the
kimberlite ore had been diluted by amounts of waste rock.
particular, the grade in the new mining areas is expected to be sharply
higher than the material Petra has been mining closer to surface.
Dippenaar said he expected average grades to rise 50%-60% from about 37
carats per hundred tons of ore mined to about 56 carats per hundred
tons mined at Finsch, and from about 31 carats per hundred tons mined to
about 50 carats per hundred tons mined at Cullinan.
As a result, group profit margins are expected to rise from about 34% in the 2013 financial year to roughly 50% by 2019.
also pointed out that the expansion programme was fully funded with
debt facilities of $222m in place from Absa, Rand Merchant Bank, First
National Bank and the International Finance Corporation.
operates six diamond mines, five of which are in South Africa. Four of
those mines were acquired from De Beers, while the fifth, Helam, has
been placed on care and maintenance after Petra’s initial attempts to
sell the mine were unsuccessful.
The sixth operation, the Williamson mine in Tanzania, was also acquired from De Beers.
about the possibility of listing Petra on the JSE, Mr Dippenaar
replied: "It’s not a priority for us. We have a lot on our plate at
present and we are fully funded to pay for our expansion plans so we
don’t need to raise any money."