Good morning, and welcome to the Petra Diamonds Limited Conference Call. Throughout this recorded call, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time by the Q&A tab situated in the right-hand corner of your screen. 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'd like to submit the following poll. I'd now like to hand you over to Richard Duffy, CEO. Good morning to you, sir.
Morning. Thank you very much. Good morning or afternoon to everybody, and thank you for joining us today for a discussion of our first quarter operating update for the three months ended 30 September 2022. I'm Richard Duffy, CEO, and with me is Jacques Breytenbach, our CFO, who will cover the key financial points for us. After taking you through our announcement, we'll open up for any questions. Turning first to safety, which remains our number one priority. We are very pleased that we have continued to improve our safety performance. The lost time injury frequency rate of 0.16 for the quarter improved by 48% from 0.31 last year, and 51% from the previous quarter. Lost time injuries fell by 40% from last year and 50% from the previous quarter to 3.
This improving trend supports the effectiveness of our remedial actions and behavior-based intervention programs. We nevertheless continue to focus on providing a zero-harm working environment, and we will continue to make every effort to reduce the risk of harm in the workplace. Turning now to our revenue in the market. The sales results from our first tender for financial year 2023, which were announced on 13th of September, yielded $102.9 million in rough diamond sales from 520,000 carats sold. Prices were supported by a high proportion of high-value gem quality single stones, particularly from the Cullinan mine, which resulted in a 21% increase in our average realized price against tender six in financial year 2022, more than offsetting the 4.5% softening in our like for like pricing.
Revenue from rough diamond sales fell by 10% from quarter one last year to the $102.9 million I mentioned. Although volumes were down 10% compared to the same period, no exceptional stones were sold during this quarter compared to $50 million in sales proceeds from two exceptional stones in the comparative period. Improvement in overall pricing over the 12-month period, coupled with a strong product mix at Cullinan mine in this quarter, largely negated the impact of the exceptional stones revenue drop. In addition to the rough diamond sales, we also realized a $1.4 million profit uplift from a 342.92-carat rough diamond that was sold into partnership in August 2021 for $10 million with a 50% share of profits in the polished stones.
We have one additional partnership stone, a 13.74-carat blue, which sold for $5.7 million in April 2022, which is still in progress, and we'll provide an update once it has been sold. As you will have seen from our own and other diamond producers' announcements, the diamond market has softened from the recent highs earlier in the year, which we largely attribute to the ongoing COVID-related lockdowns in China. In particular, this has led to subdued demand and relative pricing pressure on the 0.75-carat to 5-carat size ranges in our first tender.
We also confirmed today that we extended the closing of our second sales tender for this financial year 2023 for a portion of our gem and near-gem quality goods, particularly in the +1 to 5 carat size ranges as a result of unusual market conditions with some build up in inventory pre-Diwali. Pricing in other size categories are in line with expectations. We will therefore confirm the sales results for this tender around mid-November. This extension is not currently expected to have any impact on the closing of our third sales tender. Production for the quarter totals 763,200 carats, a 13% reduction from last year, but 2% above the previous quarter end of 30 June 2022. The reduction from last year largely reflects lower grades at Cullinan, as well as lower than expected tonnes mined at Finsch.
At Cullinan, as mentioned at the time of our Q4 2022 results, we experienced a reduction in the grade recovered resulting from a change in the ore makeup, given a higher proportion of kimberlite from the central and north-eastern portion of the C-cut that is both lower grade and higher density, as well as a higher proportion of cave waste. This is exacerbated by not yet having access to the fresher and higher grade ore in tunnels 36 and 41, as well as higher density tailings material and waste from the ongoing project development work negatively affecting the DMS in the final recovery process. Various mitigation options are being considered, including expediting access to tunnels 36 and then tunnel 41, provided ground conditions are conducive to this.
As a result, we now expect that production from Cullinan mine will be towards the lower end of our guidance range of 1.6-1.8 million carats for this financial year 2023. At Finsch, as previously reported, we have largely mitigated the waste ingress and the implementation of enhanced drill, blast, and draw controls, as well as certain changes made in the treatment plant, which led to a 9% improvement in run-of-mine grade to 45.4 carats per 100 tonnes from the previous quarter. However, tons treated fell 12% from the previous quarter to 572 million tons due to lower tunnel availability and a Section 54 stoppage notice.
We expect to recoup some of these production losses during the remainder of the year, with Finsch's production now towards the lower end of our guidance range of 1.3-1.4 million carats for financial year 2023. At Williamson in Tanzania, production was 26% higher than the previous quarter, this being driven by a 6% increase in tons treated and an 18% increase in grade mined at 7.7 carats per 100 tons. The first quarter of financial year 2022 is not a useful comparative as the mine was in the process of being ramped up after having been on care and maintenance. At Koffiefontein, Petra has been exploring options for a responsible exit as Koffiefontein approaches the end of its mine plan.
As we announced at the time of publishing our annual report, the sales process which we announced in April 2022 has been unsuccessful in identifying a potential buyer, and Petra is exploring alternative options in close consultation with its stakeholders, and in particular, our workforce. An update on this, along with any impact on production guidance, will be given once a decision on the way forward has been reached. I will now hand over to Jacques, who will run through some of the key financial numbers as well as the recent successful tender offer for our bonds. Jacques.
Thank you, Richard, and good day, everyone. Consolidated net debt at the end of the quarter came in at $77.6 million, which increased from $40.6 million at the end of June 2022. This is in line with our expectations due to our tender cycle and the result of inventory building, build up during the quarter, with the value of rough diamonds on hand increasing from $52.7 million at the start of the quarter to $76.3 million. The successful tender offer to repurchase $143.6 million of the company's loan notes during September, saw gross cash reducing from $288 million at the end of the previous quarter to $154 million. A further $1 million of loan notes was purchased shortly after period end.
As a result of this repurchase of the loan notes, we expect to save around $14 million of interest expense per annum. The 1 billion RCF, or revolving credit facility, with Absa Bank remains undrawn, with an available balance equivalent to some US dollar $55.1 million at the end of September, with the difference from the end of the previous quarter reflecting the impact of the rand weakening against the dollar over this period. Cost inflation continues to affect the mining industry globally and not just our operations in SA and Tanzania, and we are monitoring cost increases very closely.
With some 80%-90% of our OpEx and 90%-95% of our capital expenditure denominated in rand across our SA operations, the strengthening US dollar is mitigating the impact to a large extent, supported by our disciplined approach to cost management. We saw the rand closing at 18.15 rand against the dollar, compared to 16.27 rand as at 30 June. As a reminder, our guidance was based on 15 rand to the dollar, given in July. For that, let me hand back to Richard to wrap up with our outlook and then the Q&A.
Thanks, very much, Jacques. In conclusion, notwithstanding the recent softening of the diamond market and issues that have affected production at Cullinan and Finsch, Petra remains in a strong position being considerably more resilient through its strengthened balance sheet and the implementation of our operating model together with ongoing cash generation. We reiterate our guidance and take comfort from underlying fundamental market support as a result of the structural supply deficit, notwithstanding any short-term volatility relating to prevailing macroeconomic challenges. That concludes our overview, and we'll hand back to the host for any questions. Thank you.
Richard, Jacques, thank you very much. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated in the top right-hand corner of your screen. Just while the company takes a few moments to review those questions submitted today, I'd like to remind you that a recording of this call and the published Q&A can be accessed via your investor dashboard. As you can see, we received a number of questions throughout today's call, and Patrick, if I could just ask you to read out those questions to the team where it's appropriate to do so. I'll pick up from you at the end.
Thank you. Our first question comes from Sam E. What do you see as realistic options for Koffiefontein Mine as you look to exit?
Thanks very much. It's Richard. I'll take that question. As we announced, we had been through a process in looking at options for us to exit Koffiefontein, and we have now announced that on the back of a process to look for a potential buyer, we didn't receive any offers from that route. As a result of that, we are currently engaging with our key stakeholders, which are obviously employees and organized labor, as well as the regulator, the Department of Mineral Resources, to look at a sensible way forward to reduce the cash burn at Koffiefontein. It's been a marginal operation in our hands for a number of years, and we're exploring how we best then sensibly and responsibly exit.
That's currently work in progress. There are processes we need to follow. We doing that currently, and we'll keep you posted as that process unfolds. We will have a further update on where we've got to, certainly by the next call we have and possibly prior to that.
Thank you. I have a follow-up question from Sam. What is the plan regarding the payment of a dividend, and when?
Yeah. Just to remind ourselves, we did together with our full year 2022 results announce that we had approved the dividend policy, and we set that out in some detail. I won't go through that now. Essentially what that means is, we as a board will consider the possibility of dividends against that dividend policy, and we would be doing that together with our interims which would be in and around February of next year.
Thank you, Richard. I have a question from Steve. Are there any further monies due from the Williamson parcel of diamonds that were taken away a few years ago?
Again, just to go back to the detail, we announced that we had concluded a framework agreement with the government of Tanzania in December. As part of that framework agreement, we referenced the seized parcel of diamonds. Just to remind ourselves, that we had indicated, I think at the time, that the value of that parcel was around $14 million, $14-$15 million. That framework agreement references that the government of Tanzania would contribute any proceeds or would contribute the proceeds from the sale of that parcel to the mine itself. That was set out in the agreement. There were also various payments that the mine would make as part of that settlement to the government of Tanzania.
The short answer is, there is the parcel has not yet been sold. The proceeds from the parcel, once sold, would be contributed to Williamson. That hasn't yet happened, and we obviously continue to engage with government. The agreement isn't yet effective. We're in the process of completing some conditions precedent and getting various regulatory approvals. That's all happening, but it hasn't concluded as yet.
Thank you, Richard. Another follow-up question from Sam. Would you consider share buybacks?
Sam, it's Jacques here. Share buybacks does form part of our announced capital allocation strategy. However, at this point in time, the board has, as Richard mentioned in your earlier question, approved a dividend policy. We have not yet considered and or intend to put forward to our upcoming AGM a resolution to our shareholders in terms of a share buyback scheme to be launched. That may happen at a future date. Where we are today, we have not yet made those final decisions. As I said, it does form part of a possible capital allocation strategy.
Thank you, Jacques. A question from Andreas on the diamond market. Do you see a mid- to long-term bifurcation of the rough diamond market due to sanctions on Russian supply by the U.S. and possibly the E.U. as well?
Yeah. Look, that's a difficult one to answer definitively. I think it's all a little bit in a state of flux at the moment. You know, we've seen some slowdown in supply of smaller size categories to the market, which we attribute to some difficulty in the normal supply chain and payment chains associated with Alrosa production. They produce typically smaller size ranges. So there appears to be some disruption, but it would appear that diamonds are still Russian diamonds are still finding their way to the market. So, you know, a number of retailers have required certification that diamonds they purchase are not Russian-sourced.
If sanctions are extended, you know, by U.S. and E.U., then you may see that result. From our side obviously, you know, we continue to supply the market. We are able to clearly detail the provenance source of our diamonds. And we're also able to supply information around the benefits that accrue as a result of purchasing those diamonds. We'll continue to drive that and focus on that, you know, also as members of the Natural Diamond Council. I think we just have to watch how this evolves, and if sanctions get extended, you know, through further the supply chain than is currently the case, you may see some bifurcation.
Right now, I think it's still in a state of flux.
Perfect. Thank you, Richard, Jacques, Patrick, thank you very much for that. I think you've actually managed to address all those questions from investors. Of course, the company will review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, Richard, could I just ask you for a few closing comments?
Thank you very much. Thanks to all of you who attended our call. As usual, if you do have questions that you haven't been able to ask, please do forward those to our IR team, and we will get back to you. Thanks for your attendance, and look forward to our next call.
Richard, Jacques, thank you very much for updating investors today. Could I please ask investors not to close this session, as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few minutes to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of Petra Diamonds Limited, we'd like to thank you for attending today's call, and good afternoon to you all.