Discussion of our Audited Full Year Results for the 12 months ended 30 June 2024. I'm Richard Duffy, CEO of Petra Diamonds, and I'm joined again by Jacques Breytenbach, our CFO, who will cover the key financial metrics. After taking you through our announcement, we'll open up for Q&A. This will be hosted both verbally through the raised hand icon, and we will then move on to any typed questions moderated through the chat feature. We have also today released our annual report and financial statements, as well as our sustainability report. Please note that we will be recording this webcast, and it will be available on our website later today. Moderator, could you please move to slide four?
I start today with a slide that you may recall from our Investor Day in June, where we set out the resilience built into the business and Petra's compelling value proposition. In financial year 2024, in response to weaker diamond prices, we reduced our operating cost base by around $19 million, and CapEx by approximately $80 million for the year, including some $75 million in deferrals. From financial year 2025 onwards, operating costs will be sustainably reduced by around $44 million per annum relative to guidance we provided for FY 2025 back in July 2023. And from FY 2025, we have smoothed future capital to around $100 million annually for our South African operations. Together, these actions are targeting the delivery of free cash flow through both capital and market cycles.
During the year, we took the opportunity to repurchase $5 million of our 2026 second lien notes on market and at a discount to face value. This continued post-period end with the repurchase of our second lien notes to date, now totaling $12 million at a cost of $9 million, which will save us around $1.2 million in future annual interest costs. We intend to continue opportunistic open market repurchases. Our focus for the current financial year is on delivery of these cost savings and implementation of our smooth capital profile to generate positive cash flow from the current financial year, financial year 2025. This positions us well for a successful refinancing of our 2026 second lien notes. Moderator, could we move to the next slide, slide five, please.
Despite current market weakness, which has characterized much of financial year 2024, we are seeing some price stabilization on the back of actions taken by producers and the midstream in reducing supply to the market. As we've highlighted previously, the medium to longer term supply-demand fundamentals for the natural diamond industry remain supportive. Supply, as shown in the top chart, is in structural decline and expected to halve by 2045, with depletion of primary diamond mines and a lack of exploration investment. Only 2% of kimberlites are economically viable, with any discovery taking at least 10 years to come on stream. Demand, as shown in the bottom left chart, is expected to increase over the next decade. Historically, natural diamond demand tracks GDP, with recent delayed recovery in China reflecting this.
As mentioned, our product mix, with 80% of revenue coming from 20% of our product, is well geared for a recovery, as well as a growing emerging middle class. On that point, India is now the world's second-largest natural diamond consumer, with its luxury market expected to expand threefold by 2030. In the West, the rise in the marketing of LGDs and the impact of Russian sanctions has made consumers more aware of provenance and traceability, a key area that the natural diamond market is addressing in terms of verifying and assuring provenance and sustainability credentials as part of a natural diamond's journey to the end consumer. We will be rolling out this technology to provide assurance to our customers, and will highlight the benefits we are delivering to our employees, host communities, and other key stakeholders. We move to slide six, please.
Safety is our number one priority, and this is reflected in seven fatality-free years. Our focus on remedial actions and behavior-based intervention programs resulted in a reduction of seven lost time injuries to a total of 10 in financial year 2024, and a reduction in our lost time injury frequency rate from 0.24 last year to 0.16 this year. We continue our health and wellbeing programs to support our culture and performance of ensuring safety and health remain our number one priority. Moving to slide 7, please. In looking at our operating and financial highlights, diamonds produced increased due to the earlier than expected and successful ramp-up at Williamson. Diamonds sold increased on the back of the deferred parcels from FY 2023 into FY 2024, together with the increased contribution from Williamson.
As a result, despite weaker pricing year-on-year, revenue increased from $325 million- $367 million. This increase in revenue did not translate to higher EBITDA for the year, which reduced from $113 million, a more normal level for our business, to $66 million, due to the release of inventory in a weaker market. CapEx reduced from $117 million- $84 million, due to the deferral of certain capital projects during FY 2024. Operational free cash flow improved from negative $65 million in FY 2023 to negative $17 million in FY 2024.
Although our net debt increased year-on-year, we saw an $11 million improvement from the first half of the year, level of $212 million, achieving what we had targeted at the time of publishing our H1 interim results earlier this year. I will now hand over to Jacques.
Thanks, Richard, and moderator, move to slide 9. Good morning, all. We have reported revenue of $367 million for the year. The year-on-year increase is mainly due to the deferral of sales from fiscal year 2023 to this year, fiscal year 2024, supported by increased contribution from our Williamson operation, but unfortunately, offset by weaker diamond price compared to the previous year. Adjusted EBITDA reduced to $66 million, down from $113 million, representing an adjusted EBITDA margin of some 18%, driven by reduced rough diamond prices and impacted by a $71 million swing in diamond inventory movement year-on-year.
Net loss after tax of some $107 million, compared to the loss of $102 million in the prior year, and this number is stated after impairments totaling $78 million: $45 million contributed to or attributed to Finsch Mine, and $33 million to the Cullinan Mine, as a result of the revised life of mine plans and lower pricing assumptions. Operational free cash flow improved from negative $65 million in FY 2023 to negative $17 million in 2024, reflecting an increase in cash from operations of some $90 million and a reduction of $29 million in our cash outflows for capital expenditure, following the deferral of certain of our capital projects during the year.
As at the end of June 2024, $25 million was drawn on our existing RCF, and $246 million outstanding on our second lien loan notes, and unrestricted cash balances were $28 million, offset by an $8 million overdraft at our Williamson Mine. Moderator, if you can click to slide 10. At our investor day, we provided more detailed insight into our diamond market, and so today I will keep it brief. Prices achieved in fiscal year 2024 saw like-for-like prices down 12.4% compared to the prior year, with softness evident throughout the year, as also evident in the Zimnisky Diamond Index. Our own prices were supported by product mix, resulting in fairly flat pricing over the last 18 months.
As announced, we delayed our Tender 1 for fiscal year 2025 until mid-October, given a particularly weak market environment in August. Broader market commentary suggests some signs of pricing stabilization, and as a result, we are maintaining our fiscal year 2025 diamond price assumptions given at our investor day in June. Moving to slide 11. Overall, total on-mine costs were in line with expectations, increasing some 11% compared to the prior year, FY 2023, largely due to the ramp-up at Williamson and cost inflation across our South African operations, partially offset by an 18% reduction in centralized costs, supported by the changes to our operating model to effect these cost reductions.
Adjusted mining and processing costs were up 47%, largely ascribed to the net movement in diamond inventory valuation, with the $37 million inventory released in fiscal year 2024, and the $34 million build-up in the prior year, resulting in a $71 million profit and loss statement swing year-on-year. We do not expect a recurrence of this in future years and year-end reporting years, given our inventory levels have largely stabilized, and our sales cycles should deliver similar inventory balances going forward. Moving to slide number 12.
As previously announced, we exceeded our initial estimates of cost reductions for fiscal year 2024 against the guidance released in July 2023, delivering some $10 million across the SA operations and centralized structures, which were, apologies, which was at the upper end of our expectations in November 2023, and a further $9 million at Williamson for the year. We also exceeded our initial estimates of between $75 million- $80 million of CapEx savings, achieving $80 million in fiscal year 2024 in deferrals and savings. Sustainable cost savings will deliver $44 million for fiscal year 2025, comprising $30 million across our SA operations and the central structures, and a further $14 million at Williamson.
We also expect CapEx to remain below $100 million for FY 2025, in line with the smooth capital profile we announced at the time of our investor day. Moderator, if we can move to slide 13. Slide 13 sets out the Cullinan Mine and Finsch contributions, which positively contributed to adjusted profit from mining activities, while Williamson posted a loss for FY 2024 due to the ramp-up to full production during the year. Now moving to slide 14. Looking at our balance sheet, diamond inventories reduced significantly from June 2023, with this level of inventory expected to be largely maintained. Consolidated net debt decreased from $212 million at the end of December 2023 to $201 million.
at June 2024, compared to $177 million the prior year, largely due to the actions taken to reduce operating costs and deferral of some CapEx. As previously announced, and as a prudent measure, the group increased its commitments under the ZAR 1 billion, $54 million revolving credit facility with Absa Bank to ZAR 1.75 billion, some $96 million, providing an additional $41 million of liquidity headroom. And as a post-close event in August and September, the group drew down some ZAR 855 million of our revolving credit facility as a result of the deferral of our first SA tender, to now close in October 2024. Moving to slide 15.
Here, I would like to highlight the key components of our debt, which comprises a first lien revolving credit facility with Absa Bank, $25 million drawn as at the end of June, and $246 million outstanding on our second lien notes. During the year, as mentioned earlier as well, the group repurchased some $5 million of these notes, open market repurchase program, for a cash consideration of some $4 million, with a further $7 million repurchased post-period event for a cash consideration of $5 million. These have been canceled and will save around $1.2 million annually in interest payments going forward. Unrestricted cash of $28 million was offset by an $8 million overdraft at Williamson operation.
As also mentioned at Investor Day, we are now focused on refinancing the loans and on charting the path to generating sustainable cash flow from FY 2025 onwards. Moving to slide 16. FY 2024 saw an average exchange rate some 5% weaker than our fiscal year 2023 exchange rate. Post-fiscal year 2024, we are seeing improved dollar strength due to improved global economic sentiment, stable power supplies in South Africa, and positive sentiment following the national elections in SA earlier this year. With that, I will now hand over to Richard to take you through our operational results.
Thanks. If you could go to slide 18. Thanks, Jacques. For all of our operations, we provide an in-depth look at the life of mine for these operations at our Investor Day, and you can see all of that on our website. For now, reflecting on financial year 2024, Cullinan Mine remained at the upper end of guidance with regards to tonnes mined, however, run-of-mine grades were below expectations, exacerbated by a reliance on diluted run-of-mine ore, due to some of the capital deferrals, which delayed access to our fresher ore areas. Our focus in financial year 2025 is to transition and ramp up our Sub-Level Cave production from the CC1 East project. The smooth capital development results in the Cullinan Mine stepping down to 3.7 million tonnes from financial year 2027 onwards, and maintaining that going forward.
But importantly, with carat production remaining at similar levels as in FY 2026 as a result of higher grade from our CC1 East area. If you could turn to slide 19, please. At Finsch, a number of operating challenges were addressed this past year, and we are on track for further operating stability and improvement in run-of-mine grades in financial year 2025, as we complete our transition from a 2.8 million tonnes- 2.2 million tonnes a year operation. Currently, the majority of tunnels to access the fresher ore at 78 Level Phase 2 have now been commissioned, and FY 2025's focus will be to optimize the current two-shift configuration to deliver more predictable and stable operations. Could turn to slide 20, please. Williamson successfully ramped up through the year, which you can see across all of the metrics and performance.
Financial year 2025 will see a focus on waste stripping to provide sufficient access to the ore body to maintain the run rate in our life of mine plan, and provide materials for construction of the new TSF, which commenced in quarter one of financial year 2025. Turning to slide 22. In conclusion, steps taken in FY 2024 to mitigate the impact of diamond market weakness has enhanced our resilience, and with our new smooth capital profile and reduced cost base, we are now well positioned to generate free cash flow through the cycle. We believe that prices will stabilize towards the end of this calendar year, before showing some improvement in calendar year 2025. Through the actions taken, we are targeting net debt to EBITDA below one and a half times from financial year 2026.
Finally, we have a high-quality, long-life asset base set up to deliver value to our stakeholders through market cycles, and well-positioned to benefit from expected price movement in calendar year 2025, and a supportive market in the medium to longer term. This concludes the formal part of our presentation. Before handing over to Patrick to lead our Q&A, I would just like to note that this is Jacques last results presentation. I would like to thank him for his significant contribution over the last 18 years to Petra Diamonds, and wish him every success in the future. Patrick?
Thank you, Richard. We will first take verbal questions. To ask a verbal question, please click on the Raise Hand icon. We will then run through any questions written in the chat. And we'll just give it a minute for questions to come through.
...As a reminder, if you would like to ask a verbal question, please raise your hand. We have one question from Peter Mallin-Jones. I'll just unmute you. Please, carry on. Pete?
Hi, Pete. Mike doesn't seem to be unmuted. IT team, if you can assist.
Sorry, Pete, just give us a sec. We're trying to sort out your mic. Can the IT team assist?
Pete, you should be able to unmute yourself now.
Pete, you wanna try again? Otherwise, we're gonna have to revert to written, unfortunately.
We have another question from Stefano.
Let's see if Stefano has any more success. We are-
Hi, guys. Can you hear me?
Yes, we can hear you.
All right. So thank you so much for the opportunity to ask a question, and, Jacques, congrats on your retirement, I guess. Going forward, I hope you all the best. So I've got a couple to ask. The first one is I was wondering if you could-
Sorry, we've lost Stefano.
Sorry, can you hear me?
Yes.
Okay, brilliant. So I was wondering if you could first give maybe some shorter guidance for the fiscal year 2025. More specifically, at which point should we expect that free cash flow inflection point? Is it gonna be towards the late sort of like end of the year, you know, assuming a recovery diamond prices? Or do you think that we can achieve this in the next kind of like couple of quarters, especially considering where diamond prices are? That's the first question. And then on the second question, it's more about the refinancing plans. I see, you know, you've got a lot of kind of like conviction going out to the market and buying from the secondary market, the bonds.
I was wondering if there's been more progress on the conversations you've had with the banks, and more specifically, in case you're not able to refinance by the end of this year, would they be able to maybe kind of like waive the liquidity covenant that exists for, you know, March 25? Thank you.
Thanks. I'll start off. I think with regard to cash flow in FY 2025, what we've indicated is we'll be targeting net cash generation for the full year. We also indicated that in this financial year 2025 and financial year 2026, we would be looking at modest cash generation, given that we're still ramping up our projects at both Cullinan Mine and Finsch Mine, but that we would expect to see significant growth from financial year 2027 in the order of 500,000 carats of incremental production. So relatively tight years, FY 2025 and 2026, in terms of cash generation. We haven't provided specific guidance around the shape of that, but we're obviously targeting, you know, net cash generation over the full year.
So there may be some ups and downs during the year, but with objective, as stated, of net cash generation for the full year.
Yeah. Maybe just to that point, typically our sales is weighted to our second half. We typically would sell five months worth of production in H1, and seven months worth of production in H2.
Yeah.
That's just purely due to the timing of our tenders to do with the Christmas holiday breaks in on the ASAP side.
Yeah. Thanks, Jacques. So I mean, our revenue obviously is not matched to our monthly costs, so there is some lumpiness in the cash flow over the year, as Jacques has highlighted, and with typically more sales in the second half than in the first half of the year.
Yeah.
On the refinancing, I think what we have indicated is that we have continued discussions with banks around refinancing of the loan notes. We do still have some time to complete that, and we've indicated that we would look to have at least a plan in place by the end of this calendar year, and that remains the objective. In the interim, we will continue to opportunistically repurchase on market loan notes, as we had done previously, but you should expect us to revert by the end of the calendar year on the full refinancing of those loan notes.
Thank you. And as a follow-up, is it possible to use ... the RCF to buy the secondary notes from the secondary market, or is it not kind of like allowed by the banks?
Nicholas, yes, it is possible. We do have a approved basket in our first year financing arrangements with Absa Bank. With the arrangements currently, we have $25 million per fiscal year available for these purposes, and we are allowed to use the undrawn balances on the RCF to effect that.
Thank you so much. Clear.
Should we try Pete again? Pete, do you wanna have a go and see if we can hear you this time? Otherwise, revert to the written.
Marvelous. I think, my system is now working. It was a very quick one. It was really around the cost savings, the 44 million. I was just wondering, is this sort of where you've got to now, and there's a little bit more to come, that 44 might go up for sort of FY 2026? Or are we now getting so far into the sort of efficiency drives that really you're starting to impact muscle rather than trim fat?
Yeah, I think just to comment, you know, on the cost savings, I think the, you know, the 44 million is against a guidance on guidance, as we mentioned, 30 of that in South Africa and in our corporate and group structures, and 14 at Williamson. And, you know, we're confident that we will deliver that. We've already delivered, you know, a portion of that in FY 2024. And obviously what we will continue to do is to look for opportunities to improve efficiencies and further reduce costs. You know, that will continue to be a focus of the team, but I don't think that we will see anything near the order of magnitude improvement in costs than we saw, you know, in the 44 million.
And that's also because it included significant redundancies at Finsch Mine, and also at Group and corporate. So yes, we would expect to see some improvements in efficiency. We will focus on further cost efficiencies as well, but certainly not the order of magnitude from what we've seen in the 44.
Thank you very much. That was it for me.
Thanks, Pete. As a reminder, please raise your hand if you'd like to ask a verbal question or a written one via the chat.
Patrick, are there any written questions that we can perhaps take?
No written ones, no. Just maybe give it another second or two on the raised hand function.
It doesn't appear as if we have any more questions, Patrick, so my suggestion is if anyone does have any follow-up questions, please direct them to Patrick or any one of us, and we'll get back to you. But otherwise, just to say thank you very much for your participation, and we look forward to talking again in the near future. So thank you very much.