Petra Diamonds: Challenging times make for IR win
Industrial action at Petra Diamonds’ South Africa operations and a government block on a parcel of diamonds of 71,654.45 carats from its Tanzania mine contributed to what Cathy Malins, corporate communications manager, describes as ‘a challenging time operationally [for the company] in the last financial year.’
But with ‘the positive long-term fundamentals of the business’ remaining intact, the two-strong team went on a corporate access offensive.
IR in the diamond mining sector presents its own, general challenges, notes Malins in the company’s entry for the IR Magazine Awards – Small Cap Europe. ‘The IR team’s overriding aim is to set out the investment case for the business in a way that is easy to understand, using simple language and consistent messaging across all of its IR materials,’ she explains. ‘[That] can be challenging given the technical nature of our diamond mining operations. By providing a high level of transparency, Petra aims to outline a clear picture of past performance and its potential future prospects.’
When you’re operating in a challenging environment, nothing beats face-to-face contact. Detailing the time the company assigns to roadshows, one-on-one investor meetings, site visits and more, Malins notes that ‘Petra is increasingly finding that direct engagement with institutions is required, further to the structural changes underway in the investment industry led by Mifid II, and therefore the IR team assigns considerable time to this.’
In the last financial year, the firm met with more than 260 institutions from 17 countries; met with all of the active managers within the group’s top-20 shareholders at least once; attended nine investor conferences in the UK, the US, Spain and South Africa; hosted a number of site visits; incorporated ESG into all IR activities and published extensive guidance; and published public consensus for the first time. It also held regular results webcasts, ‘as well as scheduling an additional investor conference call later in the day to cater for international investors (specifically those in North America).’
So has the year of intensive IR activities paid off? ‘Petra’s IR efforts have not resulted in an improved share price, as the company is currently perceived to have balance sheet issues, relating to operational delays and the impact of a strong rand on Petra’s cost base in South Africa,’ says Malins.
But it’s not all about the share price, of course. Malins’ focus on ‘very regular contact’ means Petra has ‘maintained support from shareholders in the equity market and bondholders in the fixed-income market,’ she says. It also won the company an IR Magazine Award for best IR by a small-cap company (€250 mn-€500 mn).