Aastha Agnihotri
PETRA Diamonds warned yesterday that full-year results would come in below analysts’ average forecasts, citing the impact of softness in the diamond market.
Shares in the company, which has four producing mines in South Africa and one in Tanzania, fell as much as 9 percent on the London Stock Exchange (LSE).
Petra said it had made certain adjustments to guidance for second-half grades and diamond pricing. “These adjustments may lead to full-year results being below current market consensus.”
It estimated that diamond prices on a like-for-like basis were down on average by 8 percent to 9 percent in the first half.
Prices of diamonds slumped after the 2008 financial crisis and have still to recover fully. Increased exports from major rough diamond supplier Russia could hurt prices further, analysts said.
The mining firm also revised its full-year production guidance to about 3.3 million carats from about 3.2 million carats. “Revenue guidance was reduced after prices continued to decline, in line with the trends currently impacting the diamond industry as a whole,” Kieron Hodgson, an analyst at Charles Stanley Securities, said.
The company said it had mitigated the impact of soft diamond market in the first half via strong sales.
“While the rough diamond market may be under short-term pressure, retail demand for diamonds remains solid,” Petra said.
Sales in the six months to December rose 16 percent to $214.8 million (R2.5 billion).
“Results for H1 (first half) include sales proceeds for two exceptional diamonds for combined revenue of $38.7m,” Petra said.
The weaker rand had a favourable effect on Petra’s operating costs in US dollar terms.
Petra also lowered its full-year average price per carat guidance for diamonds at its Finsch, Cullinan and Koffiefontein mines.
Petra listed in 1997 on the LSE’s AIM market and moved to the main market in 2011, according to its website. It plans to pay a maiden dividend of 2 pence a share for the 2015 financial year, which it said was a milestone in its development.
The mining firm’s shares closed 8.48 percent down at 165.2 pence (R28) London. Petra’s shares have fallen nearly 7 percent so far this year, underperforming a 5 percent fall in the FTSE Mining index. – Reuters