Good afternoon, ladies and gentlemen. Welcome to the Petra Diamonds Limited investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged. They can be submitted at any time via the Q&A tab that's just situated on the right-hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and if you could give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand you over to CEO Richard Duffy. Good afternoon, sir.
Good afternoon, everyone. Welcome to our H1 FY 2023 interim results. In turning to safety, which as always remains our number one priority, we continue to strive for a zero-harm workplace by focusing on our behavior-based intervention programs, given that most LTIs are behavioral in nature. The health and well-being of our employees is also important in supporting this journey to zero harm. Turning to our operating and financial results, our revenue decreased by around 20% period-on-period as a result of lower production and sales volumes and the absence of any contribution from exceptional diamonds that provided $78 million of revenue in the comparative period in financial year 2022. This was partially offset by our improved product mix and a 12.6% increase in our like-for-like diamond prices.
Lower EBITDA followed with our planned project CapEx resulting in lower operating free cash flow for the period. Consolidated net debt to EBITDA reduced from 1x at the end of H1 FY22 to 0.47x at the end of this reporting period. On sustainability, we have made good progress around operationalizing and integrating our sustainability framework across our business in our four pillars of valuing our people, respecting our planet, driving shared value partnerships, and delivering reliable production. I will touch on aspects of this through the rest of the presentation. Our purpose is creating abundance from rarity for our people in realizing their full potential to deliver extraordinary outcomes for our communities through partnering to provide enduring benefit for future generations, for our investors in generating sustainable returns through the cycle, and for our customers in celebrating love, friendship, and life's achievements.
This is supported by our Petra Culture Code, a bottom-up process that is driving our cultural transformation. Through the participation of all of our employees, we have identified a set of enablers, being those things we should be doing more of, and disablers, the things we should be doing less of. These enablers and disablers are depicted by a set of icons, also designed by our employees, and represents a formula that has allowed us to establish a baseline, enabling us to measure our progress at a group, operational, departmental, or team level. Turning now to the market. Limited projected natural diamond production has resulted in a structural supply deficit. Notwithstanding recent uncertainty in global markets around inflation and interest rate increases, the drivers of demand remain supported.
The easing of lockdown restrictions in China are expected to boost demand for diamonds, particularly in the two to 10 carat size ranges. global luxury sales are expected to be resilient in 2023, following the 21% increase in 2022, driven largely by the U.S. Our own prices reflect this, supported by our higher value product mix. Although the rough diamond index shows a modest reduction in prices following the sharp post-COVID recovery, pricing remains well above pre-COVID levels. Our higher proportion of high-value gem quality stones has supported the increase in our own prices, despite this half showing no revenue contribution from exceptional stones. I am pleased to note the sale of two gem quality blue diamonds post-period end, 17.4 and 10.4 carats, that we sold into partnership for $7 million and $2 million respectively.
Turning now to the long-term potential of our asset base as depicted on the slide in front of you. Cullinan mine remains a world-class diamond mine with a resource of 147,000,000 carats that provides the potential to mine well beyond 2040. Finsch mine has a 36,000,000 carat resource supporting potential to mine beyond 2035. Williamson mine, with a 38,000,000 carat resource, supports open pit potential through to 2039, well beyond the currently approved mine plan through to 2030.
If we look at where we are currently, we have a resilient business that is built on continuous improvement embedded in our operating model to continue to generate cash as we develop our expansion projects and do all of this with risk management integrated into the business. Sustainability through our sustainability framework, as mentioned, is being implemented and operationalized. We have a considerably strengthened balance sheet on the back of the repurchase of $145 million of loan notes. As mentioned, our consolidated net debt to EBITDA is at 0.47x . This enables us now to shift our focus towards a value-driven growth strategy in optimizing our existing third largest diamond resource and in looking at further growth opportunities beyond that. If I now shift to our operations.
What you see there is a depiction of production, annual production through to FY 2025, and you can see that we are projecting a 1,000,000 carat annual production increase in financial year 2025, driven by the projects at Cullinan Mine, the 3-level sublevel cave at CC1- East that we have previously discussed, and the C-Cut center expansion project that I will touch on shortly. At Finsch, this growth is driven by our improved operations through this H2 in financial year 2023, and development of the sublevel cave project there, with Williamson anticipated to resume production in the first quarter of FY 2024. Turning to Cullinan.
Cullinan has continued to produce in line with expectations, with grades guided between 30-32 carats per hundred tonnes for the remainder of this financial year and in FY 2024. The project at CC1- East is on track to start contributing to production from financial year 2024 towards the back end. We have commenced the reopening of tunnel 36, with tunnel 41 to follow. We're very pleased to announce the formal approval of our C-Cut extension project, which will deliver an additional 2,300,000 carats of production from FY 2025 through to FY 2033. This project delivers a return in excess of 35% and will require $32 million of capital to develop.
This will support the improvement in grades back towards 40 carats per hundred tonnes from financial year 2025. Looking now at the potential at Cullinan beyond the existing projects. You can see in that slide in front of you, where this C-Cut center extension project is. Importantly, we are able to consider development beyond both the CC1- East and C-Cut center extension projects. Future projects enabled by a new shaft to exploit the remainder of the C-Cut center, the D-Cut and CC1- East extensions has the potential to further extend Cullinan Mine to well beyond 2040, with the ore body remaining open at depth. Turning to Finsch.
The difficulties experienced in the first half of this financial year are being addressed as we begin to improve the tunnel availability and the blasted material for processing. Tunnel availability is being improved through the delivery and commissioning of new LHD and drill rigs, better draw control and a focus on our improved drill and blasting. We also have been able to fill a number of key vacancies. In looking at Finsch's further extension opportunities, the currently approved mine plan continues through to 2031, with future projects in Block 6 below the current project in Block 5 and the South West Precursor, enabling potential production to beyond 2035.
At Williamson, we are continuing with the remediation work following the tailings breach, both in terms of impacted community members and impacted livelihoods, but also around constructing an interim tailings facility, where we are ahead of anticipated resumption of operations in the Q1 of FY 2024. The independent grievance mechanism pilot is underway and running well, and projects, our Restorative Justice projects in the area of agri business and artisanal small-scale mining is also progressing. I will now hand you across to Jacques, who will talk to our financial performance.
Thank you, Richard. Good afternoon all. Looking at our H1 financial highlights, revenue as also partly covered by Richard, came in at $212 million. This number includes $1.4 million of profits realized with the sale of polished stones through our partnership arrangements. Revenue did decrease year-over-year on the back of exceptional stones of some $78 million, which was recorded in the comparative period, while product mix and pricing supported an upward movement on revenue. Adjusted EBITDA of $77 million compared to $150 million the previous year, again reflecting the movement in revenue. Jumping through to the operational free cash flow, $11.7 million were recorded for the year.
That was also after $52 million of capital, significantly up compared to the previous year's $16 million capital for the same period. Our unrestricted cash balances at the end of the period came in at $130 million, and the downward movement from $256 million in the previous year is largely attributed to the repurchasing of loan notes during our six month period. Just looking at the contribution per mine, production and revenue is obviously still dominated by Cullinan and to an extent Finsch mine, with Williamson improving quite significantly compared to our FY 2022 first half. Operating profits were recorded at both Cullinan and Finsch, while Williamson and Koffiefontein recorded losses. Williamson largely due to the tailings incident.
Certain costs that were accrued for at the mine, some $5.9 million is expected to be incurred around the tailings incident. $1,500,000 of that has already been incurred, while a further $5.2 million of accelerated depreciation was recognized following, or as a result of assets damaged during the incident. Koffiefontein's loss also came in at around the $9 million mark. Moving on to our costs. Our online cash cost remained fairly flat year-on-year, $128 million compared to just under $130 million in the previous year. Movement there was, we had some positive support from a weaker rand during the period, while lower production volumes and other cost savings saw costs decreasing by some 8%.
Increase in Williamson costs some 12% overall on the group, as a result of production at full tilt until the tailings incident, while inflation and above inflation increases came in at around 7.7% across the cost base in SA rand terms. The adjusted mining and processing costs of $130 million compared to last year's $110 million, with the upward movement largely attributable to diamond inventory movement during the year with, again, the cessation of production at Williamson resulting of very few, actually no carats being carried forward into the second half of fiscal year 2023.
We also reflect on the slide the Williamson tailings facility, $5.9 million remediation costs, and depreciation includes the $5.2 million, which I mentioned earlier. Looking at the balance sheet. Our balance sheet as at end of December reflects total cash at bank, including restricted amounts of some $146 million as compares to a year earlier of $272 million. Specifically to note the movement in loan notes, $240 million, circa $100 million, down on the previous years. Bank loans and borrowings just under $80 million, fully extinguished during this period as well.
Diamond inventories at $60 million, below last year's $79 million, again being attributed largely to Williamson, while Cullinan and Finsch mine at a slightly lower production rate also contributed to that downward movement. Bank facilities of ZAR 1 billion, circa $60 million, remains fully undrawn and available. Our consolidated net debt to our last 12-month EBITDA coming at 0.47, down on last year's 1x at the same period. Our cost guidance, which we've issued today again, shows costs remaining largely flat for FY 2023 through to FY 2025. While our expansion CapEx has been updated to reflect the latest schedules for the projects that's ongoing, and also includes the C-Cut extension project, which Richard mentioned, costing a total of some $32 million. All these numbers are stated in FY 2023 money, to ease comparisons. That's it from my overview from my side. Handing back to Richard.
Thanks, Jacques. In conclusion, focus for the remainder of this financial year, around Cullinan is completing the opening of tunnel 36 before shifting our attention to tunnel 41 and progressing the two projects there, CC1- East and the C-Cut extension project that we discussed earlier. At Finsch, focusing on improving our tunnel availability to generate the increased production that we've guided on, and also progressing development of the project there, the 3-level sublevel cave. Williamson, as mentioned, focused on completing remediation and preparing for the resumption of operations the Q1 of next financial year, and continuing to execute our and implement our independent grievance mechanism and progress our Restorative Justice projects. While at Koffiefontein, we will continue progressing responsible exit options. Our final slide, really just summarizing where we are as Petra today.
We have a robust set of operating assets with continued potential to generate further value. Our resource base is the third largest globally. We have a diversified portfolio that produces 70%-80% of the world's high-value blue diamonds, as well as some pink diamonds and large white stones. Our operating model is driving greater stability and cash generation with continuous improvement at its center. We have best-in-class safety performance and are implementing and operationalizing our sustainability framework together with a considerably strengthened balance sheet. This enables us to look at enhancing our returns to all of our stakeholders. We've highlighted a production increase of around 1,000,000 carats in financial year 2025 in terms of annual production.
We are looking at a value-driven growth strategy to further grow the business. This is all on the back of a disciplined capital allocation approach. Our projects that we've discussed are all self-funded. Jacques, both Jacques and I have mentioned our reduction in gross debt, together with the dividend policy that we announced. All of this continues in a supportive diamond market given the structural supply deficit. Thank you very much. We will now shift to taking any questions.
Richard, Jacques, that's great, thank you very much indeed for your presentation this afternoon. Ladies and gentlemen, please do continue to submit your questions just by using the Q&A tab that's situated on the right-hand corner of your screen. Just while the company take a few moments to review those questions that were submitted already, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Richard, Jacques, as you can see, we have received a number of questions throughout your presentation this afternoon. Thank you to all of those on the call for taking the time to submit their questions. Richard, Jacques, perhaps now I could just hand over to you, to read out the questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end. Thank you.
Sure. I'll take the first one from Sam. In the results, RNS, you mentioned that you expect the diamond market to recover. Could you explain why and to what extent? I think with regard to the diamond market, we have seen a considerable recovery post COVID, and the comments made around the market was that we expect there to be resilience in the market off a high base. Whilst we've seen a modest pullback off those highs, the market remains well above the pre-COVID levels. Our view is that we will continue to see resilience in the market and stabilization at or around the current levels on the back of the supportive fundamentals around this supply, structural supply deficit.
The next question, also from Sam, is how likely is an FY 2023 dividend? I think, you know, what we've said in announcing our dividend policy is that we believe that the business is now in a position to consider paying dividends and generating return for our shareholders. No interim dividend was declared, and we've indicated that the board will consider the payment of a final dividend together with our FY 2023 results. In terms of intent, we are certainly looking to pay dividends. The question of exactly when that happens will be determined by the board. Going on to the third question from Paul. Has the cause of the Williamson dam failure been formally determined? What is your provision for financial losses concerning this?
I'll take the first part of the question and Jacques the second. As we've reported previously, we have indicated that the mechanism failure was subsidence in the tailings dam wall. What we haven't yet determined is the root cause behind that subsidence, that is work that will require some geotechnical drilling. It's probably going to take us around six months to determine the root cause, we'll keep the market updated as we complete that work. Jacques will just comment on the provision part of the question.
Thanks, Richard. On the financial impact around the incident, the direct cost associated with the restoration for the areas damaged and to be repaired, including likelihood restoration and other humanitarian relief, is total of some $5.9 million. We've also lost certain assets which had a carrying value of $5.2 million, which we fully wrote down during this period. And we will also have a period of circa eight months from November of last year through to mid this year, of no production as a result of the incident. Total direct costs are around the $6 million as fully provided for.
The latest on VAT reimbursements also from Paul around Williamson in Tanzania, we've provided that or in paid pre-recognized some impairment around our VAT receivables. You'll see in the detail in the RNS today some $3.5 million of VAT impairments. It's really on a conservative view on timing of likely refunds. We've not had refunds for the last year or so, but the Framework Agreement has also not yet become effective. We do believe that once the Framework Agreement is effective, the mechanism to then ensure that VAT liabilities or receivables rather, does not accrue for an unreasonable time is in place, and we'll make use of those.
Next question, also from Paul: Do the profits on exceptional stones go specifically to debt retirement? Paul, no. We do have a capital allocation framework. Stones from exceptionals or rather proceeds from exceptionals is appropriately dealt with and does inform a discretionary allocation to the extent that it exceeds our own planning. Such discretionary allocation can be routed towards either debt reduction or in future, also possibly to special dividends and/or share buybacks. We have not yet made any decision on any of the latter, but debt reduction has been our focus up to now.
We have a question from Junmo on, please share an update on the recent sale of the blocked diamond parcel from Williamson and the estimated value using current diamond prices. We don't have any more to add other than we indicated. We were aware that a portion of the blocked parcel had gone to market. Under the Framework Agreement signed in December 2021, Government of Tanzania agreed to apply the proceeds from the sale of the blocked parcel to Williamson. We're engaging with government on that and expect them to allocate the proceeds accordingly. We have been carrying the blocked parcel at a value of $12 million.
At the time, of the initial sale prior to it being blocked, the value of that parcel was just under $15 million. The next question is from Rodrigo. I'll just read it. He says, "Thanks for the good job in the last two years. Petra's really attacked the debt problem. One question, last night, the Portuguese Minister of Foreign Affairs, João Gomes Cravinho, indicated that diamonds from Russia will be included in this 10th package of sanctions that should be announced on Friday. If this happens, will such measure affect Petra's business?
If yes, how?" I guess this one's a little more difficult to answer because it really depends on what form any sanctions take and how effective that might be in terms of curtailing the supply of Russian diamonds to the market. To date, we believe that most of the Russian goods do find their way to market. We have seen some modest impact on our smaller size fractions that have seen an increase slightly above the average of the other size ranges, which suggests some impact or at least delays in the diamonds getting to market. If those sanctions are stepped up, and it becomes more difficult for Russian goods to reach the market, then we would expect to see some pressure around pricing and supply. We would really need to understand the details of any further sanctions package before we can be more helpful. Joe has a question which I'll hand over to Jacques.
The question is, are further loan buybacks planned? If so, roughly what quantity and over what timeline? Joe, at this point, we do not have a specific plan on further loan buybacks. We would be considering, and we do have some capability around open market repurchases. Although, to date, we have not activated those in any extent. In terms of further reductions of the loan specifically, at this time, we don't see a benefit of looking at a possible refi. The bond market, buy of market is, it's not obvious that we'll get a benefit on improved pricing. We'll, we've decided for now at least to just delay any next step until we do see an opportunity in the market. Very difficult to give you any firm indication of timeline, but we will continue to look at the market to see if there's opportunity to improve, both the cost, and the mechanism associated.
Right. Thanks, everybody. At this stage, we don't have any more questions from any of you. I think we can probably hand back, to.
Richard and Jacques.
Yep.
If I may just jump back in there. Thank you very much indeed for being so generous with your time and addressing all of those questions that came in from investors this afternoon. If there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended for you to review. Add any additional responses, of course, where it's appropriate to do so. Richard, perhaps before just redirecting those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that'd be great.
Thanks very much. Yeah. I think what we've described, is, a business that has been through considerable change. We've stabilized the operations, and we're well-poised, to capture growth opportunities, going forward. Thank you very much, for your time and attendance, and we'll talk to you all again shortly. Thank you.
Richard, that's great. Jacques as well. Thank you once again for taking the time to update investors this afternoon. Could I please ask investors not to close this session, as you'll now be automatically redirected for the opportunity to provide your feedback, in order that the management team can best understand your views and expectations. It's gonna take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Petra Diamonds Limited, we would like to thank you for attending today's presentation. That now concludes today's session. Good afternoon to you all.