Petra Diamonds Posts Revenue Rise But Profit Slashed In Fiscal Year

(IDEX Online) – Despite an 11 percent rise in revenue to $477.0 million, Petra Diamonds reported net profit down 69 percent to $20.7 million for the year ended June 30.

The financial results were negatively impacted by the delayed ramp-up of expansion programs, rising on-mine cash costs and the stronger rand versus the dollar.

Production was up 8 percent to 4.0 million carats.

Outlook

The miner reported that operations at the Williamson mine in Tanzania resumed after a four-day stoppage, but the company's parcel of 71,654 carats of diamonds has not been released for export. Discussions with the government are ongoing.

The company has made a solid start to FY 2018 and remains on track to meet production guidance of 4.8 million carats - 5.0 million carats in FY 2018 and 5.0 million carats - 5.3 million carats by FY 2019 (including 0.3 million carats from Williamson).

The diamond market is stable but showing signs of seasonal weakness, with like-for-like pricing achieved by Petra at its first tender of FY 2018 down about 3 percent in comparison to those achieved in H2 FY 2017.

Johan Dippenaar, CEO, said: "While Petra remained in growth mode in FY 2017, achieving record production and revenue, the shortfall against guidance, in conjunction with the significant strengthening of the rand on our predominantly rand-denominated cost base, impacted our financial results for the year.

"However, the challenges related to the commissioning of the Cullinan Plant have now been overcome and it is ramping up in line with expectations, plus the new mining areas at our two biggest mines, Finsch and Cullinan, are set to deliver double the amount of undiluted ore in FY 2018. The impact of a rising contribution of undiluted ore has already seen ROM grades at both mines rise ca. 30 percent in FY 2017.

"While the diamond market has shown some softness at our first tender of FY 2018, this appears to be attributable to normal seasonal factors, as our assessment of the wider market is that it remains stable. We view the big push in diamond marketing now being made by the Diamond Producers Association, as well as De Beers, as very positive in terms of supporting future consumer demand."