Petra Diamonds FY 2026-2030 presentation: Production to peak in 2028 with declining capex needs

Introduction & Market Context

Petra Diamonds Ltd (LSE:PDL) presented its five-year analyst guidance for fiscal years 2026-2030 in August 2025, providing detailed projections for production volumes, operating costs, and capital expenditure requirements. The presentation offers investors insight into the company’s medium-term outlook as it continues operations at its flagship Cullinan and Finsch mines in South Africa.

The diamond miner, whose stock has seen a 3.91% increase to trade at £20.73 as of October 13, 2025, faces ongoing challenges from exchange rate volatility, with the presentation noting continued South African rand weakness in FY 2025 due to macroeconomic sentiment and inflationary concerns.

Production and Financial Projections (FY 2026-2030)

Petra’s five-year guidance shows total diamond production is expected to increase from 2.4-2.8 million carats in FY 2026 to peak at 3.0-3.5 million carats in FY 2028, before gradually declining to 2.7-3.1 million carats by FY 2030.

As shown in the following comprehensive guidance table, the company projects a steady decrease in total cash costs (excluding royalties) from $161-174 million in FY 2026 to $150-163 million in FY 2030:

Capital expenditure is notably front-loaded, with total capex projected to rise from $83-90 million in FY 2026 to $101-110 million in FY 2027, before significantly declining to just $19-23 million by FY 2030. This pattern suggests major development projects will be completed in the earlier years of the forecast period.

Extension capital, which includes investments in mine expansion projects, follows a similar trajectory, declining from $71-76 million in FY 2026 to merely $5-7 million by FY 2030. Sustaining capital remains relatively stable throughout the period at $10-16 million annually.

Cullinan Mine Outlook

The Cullinan Diamond Mine, famous for producing the 39.34-carat blue diamond that sold for a record $40.2 million in July 2021, shows a projected decline in total carats recovered from 1,497-1,659 thousand carats in FY 2026 to 1,306-1,447 thousand carats by FY 2030.

The detailed mine guidance indicates that tailings processing will be phased out by FY 2030, with tailings tonnes treated decreasing from 0.6-0.8 million tonnes in FY 2026 to zero by the end of the forecast period:

Looking beyond the five-year guidance period, Petra has mapped out the Cullinan Mine’s extended Life of Mine profile, which projects operations continuing until approximately FY 2045. The chart below illustrates how production will transition through different mining areas including C-Cut, CC1E Ph1, C-Cut Ext 1 & Ext 2, and potential future extensions:

This extended outlook is supported by the mine’s orebody layout, which details the various mining blocks and their estimated resources:

Finsch Mine Outlook

The Finsch mine shows a different production trajectory, with ROM carats projected to increase from 986-1,093 thousand carats in FY 2026 to 1,434-1,589 thousand carats by FY 2030, reflecting the development of new mining areas.

The detailed mine guidance for Finsch shows consistent ROM tonnes treated of 2.1-2.3 million tonnes annually, while extension capital expenditure decreases substantially from $33-35 million in FY 2026 to just $1-2 million by FY 2030:

Similar to Cullinan, Petra has provided a long-term Life of Mine profile for Finsch, projecting operations to continue until approximately FY 2037:

The Finsch mine’s orebody layout illustrates the various mining blocks that will support this production outlook:

Cost Structure and Exchange Rate Sensitivity

A critical aspect of Petra’s financial performance is its cost structure and sensitivity to exchange rate fluctuations. The presentation reveals that both Cullinan and Finsch mines have predominantly fixed cost structures, with fixed costs accounting for 92% of total cash on-mine costs at both operations.

As illustrated in the following breakdown, labor represents the largest cost component at both mines (43% at Cullinan and 39% at Finsch), followed by electricity and stores:

The company’s financial performance remains highly sensitive to ZAR/USD exchange rate movements, with the presentation noting that a ZAR1 movement against the USD equates to approximately $8-10 million impact on EBITDA and $12-15 million on operational free cash flow:

Ownership and Capital Structure

The presentation provides insight into Petra’s ownership structure as of July 23, 2025, with major shareholders including The Terris Fund, SPC (29.37%), Azvalor Asset Management SGIIC SA (18.78%), and JOSIVAR Sarl (11.56%), an entity wholly owned by Petra’s Chair, José Manuel Vargas.

The company also highlighted its commitment to Broad-Based Black Economic Empowerment (BEE), noting that its South African mining operations are 26% BEE-owned, comprising Kago Diamonds (14% ownership) and IPDET (12% ownership).

Forward-Looking Statements

Petra’s five-year guidance presents a picture of a mature diamond mining operation with well-defined life spans for its key assets. The front-loaded capital expenditure suggests the company is making necessary investments to maximize production in the near term, while the declining capex requirements in later years could potentially improve free cash flow if diamond prices remain supportive.

The extended Life of Mine profiles for both Cullinan and Finsch indicate substantial remaining reserves, though production is projected to gradually decline in the longer term. Investors should note that these projections are based on current mining plans and could be affected by changes in market conditions, operational performance, or potential future discoveries.

The company’s high sensitivity to exchange rate movements and predominantly fixed cost structure underscores the importance of operational efficiency and the potential impact of macroeconomic factors on financial performance. As with all mining operations, actual results may vary from projections based on geological conditions, diamond prices, and broader market dynamics.

Full presentation:

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