Petra announces profit for 2008

In announcing its first ever profit earned in a year, which was achieved in the year ending June 30, 2008, Petra Diamonds also informed the industry of key corporate changes, that of selling its cutting and polishing operation to focus on diamond production and exploration.

The company has been witnessing a change in its revenues and production scales with its increasing asset portfolio, which in turn has prompted it to pay more attention to production and exploration.

The company’s revenues for the year scaled up 352 percent to $76.9 million, and a production of 200,287 carats of diamonds, which was prompted by a full year of production from the Koffiefontein mine since its acquisition from De Beers in July 2007. The company is targeting to cross the production mark beyond 1 million in fiscal 2009, through production from Koffiefontein and its three fissure mines - Helam, Sedibeng and Star and the addition of the Kimberley underground, Cullinan and Williamson mines, which Petra is in the process of buying from De Beers. It bought the Cullinan mine in July 2008, and is expecting to close deals on the Williamson and Kimberley Underground mines by October and December, respectively.

Including these operations, Petra’s net attributable reserves are 121 million carats valued at around $13.67 billion, from 9.33 million carats reserves valued at $1.9 billion in October 2007. The recent take over of BHP Billiton’s share of the Alto Cuilo and Luangue exploration projects in Angola, initiation of mining at the Sierra Leone Kono project have been recent additions to Petra’s assets.

Petra announced that its EBITDA (earnings before interest, tax, depreciation and amortisation) valued at $25.5 million for the said year, as compared to the same period a year ago when it faced a deficit of $5.2 million. Net profits achieved were worth $1.9 million, while a year ago loss valued at $20.9 million, as the company invested $7.8 million in BHP Billiton’s stake, and an exchange loss of $4 million. It had $37 million in cash on hand at fiscal year end. “This

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year saw Petra move from being an exploration company to a global mining company,” said Johan Dippenaar, Petra’s chief executive officer. “It was by far our most successful year.” With this heavy asset holding, Petra is keen and confident on increasing its revenues through mining, following which came its decision to sell its South Africa-based cutting and polishing business, Calibrated Diamonds Investment Holdings, to Gem Diamonds for ZAR 47 million ($5.9 million.). In the agreement, Petra has kept its right to access Gem Diamonds’ polishing facilities in Mauritius and Dubai for a 30-month period, and has the option to establish a diamond beneficiation facility in South Africa using the Calibrated intellectual property for 24 months. It will also retain ownership of 594 carats of polished stones cut by Calibrated to date, and will individually sell the same. Petra would consider individual stones to assess whether it was economically viable to warrant the investment to take it downstream through Gem Diamonds’ operations.

The overall short supply of roughs in the market and an expectation of growing to $5 billion by 2010, and rising prices, attracted the company to concentrate on mining. “Given that certain of Petra’s assets are renowned for the production of large, high value and fancy colored diamonds, we are very well placed to benefit from this market dynamic and have indeed achieved record prices for the period across all our operations.”