It took a deeply discounted 5-for-8 US$170mln rights issue to cut the debt carried by Petra Diamonds LTD (LON:PDL) from US$514mln to US$436mln during the financial year to 30 June 2018.
Perhaps not surprisingly, given the complicating factor of January's profit warning, the company’s share price is now trading at an eight-year low, even though it’s reporting diamond market conditions to be “stable.”
There’s still over US$200mln cash on the balance sheet however so this is a company that’s clearly allowing itself some room for manoeuvre as it continues to work over the suite of second-hand mines it acquired from De Beers and others some years ago.
Margins narrowing
In particular, margins at the Koffiefontein mine have been under pressure.
Overall, though, revenues during the period increased to US$576mln (US$477mln), a rise of 21%. Stripping out the operations at Kimberley, the subject of a recently agreed sale, and the percentage increase in revenue year-on-year goes even higher.
The sale of Kimberley will likely incur a non-cash impairment charge of between US$35mln and US$40mln.
For 2019, Petra is guiding for production of between 3.8mln and 4mln carats, excluding the Kimberley mine. Absolute on-mine cash costs are expected by Petra to be “largely flat” versus 2018.