Petra holds its ground on the operating and financial fronts as diamond markets remain flat

Richard Duffy, CEO, Petra Diamonds

Petra Diamonds showed some welcome operating stability in the March quarter while the company confirmed its production guidance for the financial year to end-June at between 2.75 million and 2.85 million carats.

The company also took decisive action on its debts repaying $23m of its revolving credit facility (RCF) to reduce interest costs while Petra also expects to avoid costs of $15m to $18m provided for in its balance sheet at end-December.

These related to the closure of the Koffiefontein mine which Petra announced on April 8 it had sold to the Stargems group for a nominal amount, but the sale meant the company would no longer be responsible for Koffiefontein’s environmental rehabilitation and care and maintenance costs.

According to Petra CEO Richard Duffy these actions – together with an increased cost savings target of more than $30m a year from the 2025 financial year “further enhances our business resilience.”

Providing an operating update today on the third quarter results Duffy added Petra expected to get about 50% of these savings from cutting back on operations at Finsch where it issued a restructuring notice to its employees on April 8. The balance will come from savings across operating costs and overheads “at group level and Cullinan mine.”

Despite this, consolidated net debt rose to $232m at end-March from $212m at end-December but Duffy said that resulted from the timing of the closure of Petra’s fifth diamonds sales tender cycle.

He commented, “the balance of sales receipts yielded $32m shortly after period end which exceeded the increase in net debt.”

The fifth tender sales yielded $49m from the sale of 362,000 carats (fourth tender $48m from the sale of 428,860 carats) with revenues boosted by the sale of a 14.76 carat “exceptional colour and clarity” blue diamond which brought in $8.2m.

That sale aside, “like for like” prices were “relatively flat” and were 0.8% lower than those achieved in tender four. Duffy commented it appeared that rough diamond prices had bottomed with some indications of price stability apparent.

He remained tight-lipped on further specifics of Petra’s restructuring programme and commented that, “we continue to update our life of mine plans to support our transition to a smoother capex profile. This includes a replanned ramp-up of the deferred capital projects from quarter one of financial year 2025.”

Asked by an analyst on a conference call specifically for details of the restructuring at Finsch Duffy replied, “we will only be able to provide that update in some detail over the medium to long-term. “