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Petra Diamonds’ Output Disappoints

Jul 24, 2017 7:57 AM   By Rapaport News
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RAPAPORT... Shares in Petra Diamonds slumped by 10% after the company reported production was well below planned for the fiscal year that ended June 30.

Petra said output rose 8% to 3.7 million carats for the year but that was below the 4.4 million carats it projected earlier as its expansion programs have taken longer than expected to ramp up, CEO Johan Dippenaar said in a trading update Monday.

Mining activity is back on track and the company expects production to reach between 4.8 million and 5 million carats in fiscal 2018, Dippenaar added.

Petra owns four mines in South Africa, including the iconic Cullinan and Finsch operations, as well as the Williamson mine in Tanzania. Revenue across its operations rose 11% to $477 million for the year, a record high, according to Dippenaar. The diamond market remained stable throughout the 2017 financial year, with rough prices on a like-for-like basis up around 2% from fiscal 2016, the company reported.

The miner said fiscal 2017 operating costs remained in line with expectations despite inflationary pressures. Production costs had been adversely affected by the slower-than-expected ramp-up of output, high fixed costs and the strengthening of the rand against the dollar, Petra explained.

The company also reported an increase in net debt as of June 30 to $554.4 million, from $382.8 million a year earlier.

“With Capex now on a declining trend, debt levels will start to fall in FY 2018 and the company expects to become free cash flow positive during FY 2018,” it said.

Petra’s shares were down 9.6% to 99.30 pence in Monday afternoon trading. Preliminary results for the year will be released on September 18.

Tags: Cullinan, De Beers, diamonds, Finsch, Jewelry, Petra Diamonds, Rapaport News
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