Petra to Focus on Cash-Generating Diamond Production

Diamond miner Petra Diamonds plans to reduce its annual exploration program by some $25 million and focus its resources, instead, on the development of cash-positive producing operations. The only place Petra will continue to explore is at its Kalahari Diamonds claim in Botswana.

The decision to reduce the exploration budget reflects the global weakness in the world’s financial markets, the diamond miner said. It prefers to instead focus on the medium-term production and revenue growth that can be achieved by investment in production.

Petra has made a strategic decision, however, to continue its exploration at its Kalahari Diamonds operations in Botswana, albeit at reduced levels. Moreover, the company has not relinquished any license areas of interest. The company’s budget for this exploration activity until June 2009, has been cut to half a million dollars. Thereafter, Petra has earmarked an annual expenditure of half a million dollars in the country.

In Sierra Leone, Petra's joint venture partner at Kono, Stellar Diamonds Limited, has assumed sole funding of the Kono advanced exploration project. Petra has until December 2009 to decide whether to refund its partner for the 51 percent of the 2009 exploration spending, or to dilute its interest in Kono. 

In Angola, Petra previously announced its withdrawal from the Alto Cuilo project and has now also withdrawn from the neighboring Luangue project. Petra’s interest in Luangue will now revert to Endiama as care and maintenance is not an option that is permissible under the Angolan contractual conditions.

“The decision to focus on cash generative production at our world-class assets is the right move to enhance our growing business momentum. As one of the lower cost diamond producers, our portfolio of world-class assets, low levels of debt and our robust management team places the group in a strong position to benefit as soon as diamond prices normalize,” says CEO Johan Dippenaar.