PETRA Diamonds has increased its revolving credit facility by R750m to a total of R1.75bn in preparation for a “weaker-for-longer diamond” market, the company said.
Richard Duffy, CEO of Petra, said in a statement that improving the company’s liquidity “improves our resilience and operational and sales flexibility”.
The RCF is with Absa Bank. A total of R850m of the facility has already been drawn down by Petra leaving a balance of R900m post the up-size.
In addition to boosting its financial headroom, Petra has recently announced capital project deferrals totalling $65m relating to extension programmes at the Cullinan and Finsch mines in South Africa.
The firm’s 2024 production guidance has been maintained although it is now expected to be at the lower end of the guidance range of 2.9 to 3.2 million carats. “The impact of the project deferrals on production and capex guidance for FY2025 and FY2026 will be provided on a mine-by-mine basis once the value re-engineering and re-planning work has been completed,” the company said in November.
Petra’s plans were to ramp up output by 1.3m carats over the next three years but, in September, Miningmx reported market concerns that this new production would co-incide with a structurally weaker diamond market because of weakness in the global economy and rising competition from lab-grown diamonds.
Duffy repeated his confidence in the long-term future of the diamond market but said the steps being taken at Petra were aimed at delivering “increased production into a stronger pricing environment.”
“While diamond inventories remain elevated in both rough and polished goods, we are confident that the discipline shown by diamond producers as well as the Indian diamond import moratorium to mid-December will lead to a recovery in pricing once demand strength returns.
“Through adapting our cost base and deferring two of our capital projects we are targeting cash savings of up to $75m by June 2024.”