Interim revenues in Petra Diamonds slump despite strong output from SA mines

A visitor holds a 17-carat diamond at a Petra Diamonds mine in Cullinan, near Pretoria. Photo: File

A visitor holds a 17-carat diamond at a Petra Diamonds mine in Cullinan, near Pretoria. Photo: File

Published Jan 17, 2024


Higher diamond production from Petra Diamonds’ South African mines and a weaker rand helped lift its output and provided financial support for operations in the half-year period to the end of December although revenues declined to $188 million (R3.6 billion).

Production for the period was 2% stronger at 1.43 million carats mainly as a result of stronger contribution from the Cullinan and Finsch mines in South Africa, the company said yesterday. However, lower grades at Cullinan “partially offset” the contribution to overall productivity.

“We continue to make good progress on the CC1E development project at Cullinan Mine and the 78-Level Phase II development project at Finsch, and the resumption of the deferred capital programmes remains on target for July 2024. The re-planning and value-engineering work associated with the deferred capital projects continues,” said Richard Duffy, CEO for Petra.

The diamond miner had also been aided by “support from a weaker South African rand (which) continued” throughout the period. The rand had averaged R18.69 to the dollar compared with R17.32 to the greenback in the same period a year earlier.

Duffy added that there were currently some “encouraging indications of price recovery and some stabilisation in the rough diamond market” globally. However, the company is continuing to “adopt a cautious approach to the market” in the near-term.

It expects that once completed, additional headroom from its increased revolving credit facility will enable Petra Diamonds to continue on its “flexible sales approach and position” to take advantage of any pricing and market improvements.

During the period under review, there had also been notable stabilisation in operations at the Finsch and Cullinan Mines in South Africa. The Williamson in Tanzania had continued to ramp up to full production.

As a result of this stronger production for the first-half period under review, Petra Diamonds said it is on track to meet its full-year guidance of 2.9 million to 3.2 million carats. However, in November it announced that it expected to meet the lower end of its guided production.

Revenue for the period under review lowered to $187.8m from the $208.5m in the year earlier same period. This was on the back of a 13.3% lowering in diamond prices realised for the period.

The company’s consolidated net debt increased to $212.3m as at December 31, 2023, from $176.8m.

Petra Diamonds has attributed this to “the timing of closing the company’s sales tenders, the continued lower diamond pricing environment, working capital funding for the resumption of mining at Williamson and the increasing capex spend profile”.

There has been stronger demand for capex to fund the life of mine at the company’s South African mines.

Petra Diamonds missed its production targets for 2023 on the back of weaker demand which muzzled sales. Its output for 2023 was 20% lower compared with the previous year at 2.67 million carats and missed its projected guidance of between 2.75 million carats and 2.85 million carats.

“With an operational turnaround under way at Finsch, the restart of Williamson ahead of schedule and our capital projects on track to deliver incremental growth, we are reiterating guidance for annual group production to increase by up to one million carats in fiscal 2025 and issuing further guidance of up to an additional 300 000 carat increase for fiscal 2026,” the company said in July.