PETRA Diamonds has abandoned regular diamond tenders in favour of opportunistic sales as the market for unpolished goods continues to struggle.
Commenting in a sales update for its fifth and sixth tenders of the year, Petra said it would only report its sales numbers quarterly. “In response to fluctuations in diamond prices and demand, the company no longer follows regular tender cycles and may postpone portions of tenders or sell goods as run-of-mine,” it said.
This shift to opportunistic sales bears a similarity to De Beers “secret” sale of diamonds at heavy discounts to selected customers – a development that irked the diamond industry, according to a report by Bloomberg News in May. The secret deals were aimed at reducing De Beers’s ballooning inventories without openly cutting prices, the newswire said.
Petra said it said 613,747 carats for the two tenders representing a 29% improvement over fourth tender sale in February. The diamonds were sold for $53m at an average price of $86 per carat – some 4% higher than its fourth tender in February.
On a like-for-like basis, prices are 16% lower compared to the equivalent six tenders of 2024, mainly from smaller size categories, said Petra. Petra’s revenue totalled $239m representing year-to-date sales of about 2.39 million carats. This compares with revenue of $329m for the corresponding period of Petra’s 2024 financial year.
One of the reasons Petra delayed the sale of its fifth and sixth tenders was owing to a decline in the product mix at its flagship Cullinan mine in South Africa. The group said previously that this was due to the mature nature of the C-Cut orebody.
Commenting today, the group said it “expects the product mix to improve, as we continue to ramp up production from the CC1E and from the Western side of the C-Cut block”.
Petra badly needs a revival in both Cullinan’s product mix and the diamond market in general. It said in May it was to begin discussions with financiers on refinancing a $273m bond that matures in March next year.
Ratings agency S&P downgraded the company’s credit to CCC on the increased likelihood of default, and maintained a negative outlook.
“S&P believes the company faces mounting liquidity challenges amid uncertainty regarding the recovery of the rough diamond market and approaching debt maturities in 2026, with increased likelihood of default – including distressed exchange or debt restructuring – over the next 12 months, if Petra is unable to refinance its debt maturities on time,” said analysts at Berenberg Bank on the ratings downgrade.
Petra drew on a further $33m as consolidated net debt increased to $258m as of end-March, which it put down to working capital requirements.
“The continuing challenges in the diamond market and the weaker sales do not bode well given the ongoing negotiations to refinance Petra’s debt obligations,” said Raj Ray, an analyst for BMO Capital Markets.
Shares in Petra fell about 3.5% in London today taking losses for the year to about 53%.
