Petra Diamonds (LON:PDL) warned over its full year results for 2015 after a drop in production from the Cullinan mine and a softening of the diamond market.
Nevertheless, it has proposed a maiden dividend of 2p per share.
The company said the customary ‘seasonal softness’ in diamond prices has this year been exacerbated by liquidity issues, the size of polished stone inventories and a stronger US dollar.
Petra, in today’s trading update for its first half, said these impacts may lead to full year results being below the current market consensus.
Chief executive Johan Dippenaar described the current financial period as “a transitionary period”.
“It marks the last financial year in which the company is so reliant on production from the mature mining areas at Finsch and Cullinan.
“From FY 2016 onwards, we will start seeing significant and increasing input from undiluted ore, which is both higher grade and higher margin.”
Overall group production was down 2% to 1.6mln carats in the six months to December 31, though output from Cullinan decreased 15% to 391,398 carats as grades reduced due to an increased volume of ‘development waste’ material being processed.
Output from tailings operations at the Finsch and Koffiefontein mines also reduced, though the impact was partially offset by increases for other operations.
Petra said it had a robust financial position with US$129mln cash in the bank, net debt reduced to US$45.8mln from US$108mln, and it had US$66.9mln of undrawn debt available.