Petra Diamonds Limited, the owner of the historic Cullinan Mine in South Africa, said it is expecting a pickup in progress after revenue growth was stalled in the first six months of its current financial year by a drop in production.
It was also hit by a lack of exceptional stones, though this streak was broken in the first weeks of the second half after it uncovered two blue diamonds sold for US$7mln and US$2mln respectively.
In the update, the digger set out its production guidance for the remainder of the year as it said it expected to unearth 1.35-1.45 million carats, giving a total of 2.75-285 million carats for the 12 months.
After that, output is set to grow to 3-3.3 million in 2024 and 3.6-3.9 million carats the year after.
“Actions taken to strengthen our business and improve cash flow generation, together with our capital discipline, means that Petra is well placed to take advantage of the supportive diamond market fundamentals,” the company said in its results statement.
“Our projects remain on track to deliver around a one million carat annual increase in full-year 2025, with work commencing on the C-cut extension to unlock a further 2.3 million carats from full-year 2025 through to 2033, as we continue to develop the long-term potential of our resource base.”
Turning to the six months ended December 31, revenues fell to US$212.1 million from US$264.7 million in the same period 12 months earlier. This resulted in a sharp drop in the adjusted underlying earnings (EBITDA) to US$77.4 million from US$150.9 million. Unrestricted cash was just over US$130 million.
“Petra’s new culture and ongoing focus on continuous improvement through our operating model has enabled the Company to respond swiftly and efficiently to the operational challenges experienced in [the first half],” said Petra’s chief executive, Richard Duffy in the statement.
“We are optimistic that the fundamentals of the diamond market will continue to support prices, with demand for luxury goods remaining robust in the USA, notwithstanding recent economic volatility. We also expect that the ending of lockdown restrictions in China will benefit diamond pricing in the near to medium term.
“We remain on track to meet recent production guidance, while our cost guidance remains largely unchanged despite inflationary pressures as a result of our ongoing focus on costs, supported by a weaker Rand,” he added.