Petra Diamonds Ltd (LON:PDL) said it was on track to meet or exceed full year production guidance after the debt-laden miner unearthed its highest level of tonnage mined and 2.07mln carats of diamonds for the past six months.
Production in the first half of the group’s trading year was up 2.5% on the same period the year before as management said its 'Project 2022' operational improvement programme was now implemented across all mines.
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However, lower diamond prices and an adverse mix of diamonds, meant revenues fell 6% to US$193.9mln despite the sale of the exceptional 20.08 carat Type IIb blue diamond from Cullinan.
Cash stood at US$53.6mln at the period end, down 42% year-on-year, while consolidated net debt was roughly flat at US$632.9mln as Petra said it has "sufficient cash reserves and banking facilities to meet its working capital and capital development requirements under its forecasts including sensitivities".
Chief executive Richard Duffy said it was “encouraging” that rough diamond pricing has modestly improved moving into the company’s third quarter, after a challenging 2019.
“The health of the market will depend on continued supply discipline from the majors as well as macro-economic conditions,” he added.
Petra said that supply discipline by the major diamond producers in the second half of the calendar year played an important role in moving towards more balance between supply and demand in the ‘midstream’ and is expected to be a key factor in terms of the health of the market in 2020.
Petra shares fell 8% to 9.81p on Monday morning, down around 90% over the past three years.
"Higher than expected levels of ore mined, driving better production of diamonds, plus higher than expected levels of diamonds sold show Petra’s operations are running well," observed analysts at Peel Hunt.
"While net debt flatlined, a large chunk of this was down to a build in diamond debtors and inventories, which tend to be seasonal."