Petra Diamonds Issues Warning Over Loans After Financial Hits

(IDEX Online) – Petra Diamonds Ltd may violate a key condition of its banking agreements this year after being hit by the temporary shutdown of its Williamson mine in Tanzania and a labor dispute at three of its mines in South Africa.

Its London-listed shares slumped as much as 6 percent earlier today after the miner announced to lenders that it was possible that it would break a core earnings ratio this financial year that is part of its banking arrangements.

The miner said it "remains sensitive to changes in diamond prices, exchange rates and expected production from the Group's mines, including total carats and mix".

Petra is one of the mining firms affected by a crackdown on miners in Tanzania as the government sought to secure a bigger benefit from the mining sector.

A month ago, the government confiscated a delivery of diamonds from the 75-percent Petra owned Williamson mine, saying the miner had under-declared the value of the diamonds by about half, a charge Petra denied.

The miner was also hit strikes at its mines in South Africa over higher pay and rent and housing allowances, as well as demands for medical expenses.

Petra added that its forecasts "indicate that the Group retains sufficient liquidity from existing cash resources, operating cashflows and existing facilities to meet its liabilities as they fall due under the forecasts and reasonably possible sensitivities".