Petra Diamonds (LON:PDL) has released robust Q1 2016 production results, up 30% YoY and up 2% QoQ. At 1.1mnct in Q1 2016 PDL is on track for guidance of 4.1-4.4mnct in 2016. The large annual increase in production is largely as a result of the contribution of the 76% stake in Ekapa Mining. PDL is also benefitting from accessing higher grade, undiluted ore at Cullinan and Finsch. This should also benefit margins in the period.
Although there were no comparative tenders in Q1 FY 2016, PDL achieved revenues of US$94.7m in Q1 FY 2017. PDL stated that prices were firm in Q1 2017 in line with those achieved earlier in the calendar year. We note, however, that De Beers and Alrosa both reported stronger pricing at their most recent October sights whilst the operational improvement has been expected for some time which may explain some of the recent strength in the shares.