PETRA Diamonds forecast production of between 3.8 million to four million carats (cts) in its 2019 financial year excluding its Kimberley Ekapa Mining Joint Venture (KEM) from which it is divesting in order to focus on higher value assets in its portfolio.
This compares to production of 4.6 million cts for the 2018 financial year, announced today in a trading update. Petra’s full financial results for the period are scheduled to be issued on September 17. Including KEM, production would be 4.6 to 4.8 million cts, it said.
“The future focus of the group will be on the continued optimisation of production volumes and cost structures across our portfolio in order to maximise cash generation,” said Johan Dippenaar, CEO of Petra Diamonds. He added that today’s production results represented a “solid progression” on the previous year.
Petra has been through some troubled waters lately owing to missed production targets which have placed pressure on the group’s balance sheet exactly at a time when capital expenditure peaked and the rand strengthened against the dollar. The company struck an agreement with lenders to relax covenants on debt, but has undertaken to release the highest cost assets in order to boost cash and pay down debt.
Net debt as at June 30 was $436.1m which compares to $513.9m as of June 30, 2017. Petra’s capital profile was also easing following a programme of acquisitions, expansions and optimisation in an effort to reach production of five million cts/year. Capex for the firm’s 2019 financial year will be $100m and $72m in the 2020 financial year.
In the year under review, Petra raised $175m via a rights issue with the proceeds used in order to pay down debt.
