Adelaide, Mar 15, 2006 AEST (ABN Newswire) - Petra Diamonds Limited (ASX: PDL) announce interim results for the six months to 31 December 2005 (unaudited)
Highlights to 15 March 2006
- Group - expansion of operations on track in Angola, Botswana, Sierra Leone, and South Africa; base set for significant exploration developments and production upside in next six months
- Angola - kimberlitic occurrences at Alto Cuilo increased to approximately 1,323 hectares in estimated surface area (31 January 2006: 1,080); 33 kimberlitic occurrences (31 January 2006: 26) now confirmed by drilling; third core drill rig ordered to expedite drilling of the substantial number of anomalies; 350 alluvial pits (31 January 2006: 245) now completed
- Botswana - focus placed on the Gope area where there are diamondiferous kimberlites within Petra's licence areas; Falcon results for the Gope West flyblock identify 18 anomalies in the A block; 700 sq km low-level Xcalibur horizontal gradient magnetic survey in the immediate vicinity of the Gope kimberlites results in the selection of a further 24 target anomalies
- Sierra Leone - Kono project on track for first production from the Lion fissures by June 2006; Petra has earned a 51% interest in the Kono joint venture following expenditure of US$3 million on the Kono project
- South Africa - production growth target met of 167,000 carats for the twelve month period to 31 December 2005; on track for production of 200,000 carats for FY 2005/6 (FY 2004/5 actual: 143,673 carats); 76 carat (sold for US$465,000) and 67 carat diamonds recovered
Adonis Pouroulis, Chairman, said;
"Petra has established operations in some of the most prospective regions for diamond exploration across Africa. As production increases at our mines in South Africa, so too will our revenue streams, whilst we progress our exciting exploration projects and commence production in Sierra Leone. The next six months will provide a steady stream of news as we work to further realise the true value of our assets and we believe there is significant potential upside for the Company."
Chairman's Statement
It is with great pleasure that I present the 2006 interim financial statements during what is a very active time for the Group. In the period under review South African diamond production increased substantially and exploration at Alto Cuilo was fast tracked, delivering exceptional results. The period also saw site preparations in Sierra Leone and the completion of the production plant in preparation of near term production on the Kono project whilst exploration was further advanced on the Kalahari ground in Botswana.
Petra's South African operations produced just over 167,000 carats for the 2005 calendar year and are on track to produce 200,000 carats for the year to June 2006. Although the rough diamond market experienced a dip in the last quarter of the year, in that prices achieved were below those for the six months to June 2005, the market has since recovered somewhat as demand for rough continues to outpace supply. De Beers has recently announced an overall increase of 2% in rough diamond prices.
Petra is achieving its objective of being an African-focused diamond group, with operations in South Africa, Botswana, Angola and Sierra Leone. In 2005 Africa accounted for over sixty percent of diamond supply world-wide and we continue to believe the continent offers the most exciting diamond opportunities. One of our main goals is to fill the production gap between the four major diamond producers and the diamond juniors. The increasing production from South Africa and near term production from Sierra Leone will assist us to achieve this goal.
Alto Cuilo - Angola
Exploration developments at Alto Cuilo have continued to exceed our expectations. In conjunction with BHP Billiton and our Angolan partners, activities have been focused on the drilling of anomalies identified following the completion of the low-level Midas survey and the preparation and sampling of alluvial pits alongside the Luange river.
The Midas survey identified over 200 magnetic anomalies that have been earmarked for further investigation. Drilling of these anomalies has been underway since August and has so far resulted in the discovery of 33 kimberlitic occurrences, an increase from the 26 identified at the date of Petra's last quarterly report on 31 January 2006. Three of these kimberlitic occurrences have surface expressions of over 100 hectares in size. An estimated 1,300 hectares of kimberlitic occurrences have now been identified and will be further investigated. To date, over 15,000 metres of core drilling has been undertaken, with a third drill having been ordered to increase the pace of drilling. 74% of the holes drilled on the Midas anomalies have intersected kimberlite, again an exceptional success rate in kimberlite exploration.
The alluvial exploration programme continues alongside the kimberlite activities. Bulk sampling has resulted in over 350 pits being excavated so far.
The costs of exploration and associated activities on Alto Cuilo for the six months to 31 December 2005 amounted to US$7.8m, all such expenditure being funded by BHP Billiton in accordance with the Alto Cuilo JV agreement. BHP Billiton's spend as at 31 December amounted to US$13.4m.
Kalahari Diamonds ' Botswana
The successful acquisition of Kalahari Diamonds in September 2005 established Petra as the largest holder of diamond exploration licences in Botswana. It also brought several new investors to the Company including the International Finance Corporation and resulted in BHP Billiton increasing its stake in Petra.
Drilling of selected Falcon anomalies continues on the ground and Petra is undertaking further investigation of the known Gope kimberlite field, where there are several known diamondiferous kimberlites within Petra's licence areas. Our technical teams are also focusing on revisiting and improving the analysis of the Falcon data acquired so far.
Helam, Sedibeng and Star mines - South Africa
The South African mines recorded revenue of 5.5 million pounds for the six month period and Petra continues to be South Africa's second largest producer of rough diamonds by volume after De Beers. The mines achieved record production of just over 167,000 carats for calendar year 2005 and are on track for the growth target of 200,000 carats for FY 2005/6.
Mining methods are being implemented on all mines to set the platform for a significant increase in production, targeted at over 300,000 carats in FY 2009/10.
There have been some notable stones recovered from the South African mines. A 67.1 carat diamond was recovered recently, this stone being in addition to the 76 carat diamond recovered in November 2005 which was sold for US$465,000. High value recoveries of this nature, combined with stringent control of production costs, feed though to the Group's bottom line and we look forward to other similar recoveries in the future.
Kono Project - Sierra Leone
As noted in Petra's announcement of 27 February 2006, the Kono project is on track for the first diamond recovery from treatment of the initial bulk samples by June 2006. The diamond recovery plant has arrived on site and establishment of site facilities will be completed this month.
Initial trenching has established that varying fissure seams, with widths of up to 1.7 metres having been intersected. Further, geological samples taken from various kimberlite fissures in the area have returned some exceptional processing and mineral probing results
Under the terms of the Kono JV with Mano River Resources ('Mano'), by spending a total of US$3 million on the Kono Project, Petra would acquire a 51% equity interest in the Kono Project. Petra has accelerated expenditure and therefore the development of the Kono Project in order to bring production on line as soon as possible and has incurred US$3 million of expenditure and earned a 51% interest in the Kono JV. From now on expenditure will be funded pro-rata by both Petra and Mano.
Petra is very pleased to have delivered on its stated objective of the fast-tracked development of the Kono Project. With a 51% interest in this exciting project we look forward to further developments and to first production beginning later this year.
Conclusion
The Company aims to be a world class diamond group occupying a niche position; that of being a mid-tier producer of gemstone diamonds. This will be achieved by possessing a highly prospective exploration portfolio ensuring future growth, growing the Company's production profile and by geographically diversifying the Company's portfolio of projects.
The next six month period is expected to see increasing production from the mines in South Africa without a significant increase in operating costs. In the medium term production is planned from the kimberlite fissures in Sierra Leone and also from Alto Cuilo, should an economically viable alluvial deposit be quantified. The required infrastructure to achieve this is already in place. In addition, any new diamond projects that meet and fulfil Petra's overlying objectives will be carefully considered.
The Company has a strong treasury to finance the above development. The revenue for the period of 5.5 million pounds was the largest of any diamond company quoted on AIM and the Company is well placed to benefit from the robust diamond market, at the same time enjoying strong support from BHP Billiton in both Angola and Botswana.
Contact
Kevin Skinner
Senior Consultant
FIELD PUBLIC RELATIONS
231 South Road
MILE END SA 5031
Tel: (08) 8234 9555
Fax: (08) 8234 9566
Mob: 0414 822 631
kevin@fieldpr.com.au
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