Petra records lift in half-year core earnings but warns of Covid-19 operating risks

Richard Duffy, CEO, Petra Diamonds

PETRA Diamonds reported a one-fifth increase in first half core earnings, but warned that the Covid-19 pandemic could yet impact its ability to operate within its covenants.

The company, which has diamond mines in South Africa and one in Tanzania, recently restructured its balance sheet after last year looking for a possible buyer. Diamond price declines and lower than planned production, as well as the effects of the pandemic, put $650m in convertible bonds under enormous pressure.

The bonds were subsequently converted into equity.

“Restructuring marks a significant milestone in putting the company on a sustainable footing going forward,” Petra CEO, Richard Duffy, said in a statement in a report by Reuters. The company said it was relying on the successful completion of the restructuring to continue as a going concern, said Reuters.

Petra reported an 8% drop in revenue to $178.1m for the first-half ended December 31, while its core earnings rose 20% and came in above Peel Hunt estimates.

“We expect the restructuring to complete in the next few weeks, closing the recent chapter and allowing management and investors alike to look forward into recovering markets,” Peel Hunt analysts were quoted by Reuters to have said.

Petra said diamond pricing on a like-for-like basis increased by a further 8% at the company’s January 2021 tender, and that pricing has now returned to pre-Covid-19 levels. The company said it remained sensitive to the impact of Covid-19 and that despite a successful restructuring it required continued support from its South African lenders.