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Petra Drops After Weak Production Outlook
Jul 23, 2018 9:00 AM
By Rapaport News
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RAPAPORT... Shares in Petra Diamonds slipped on Monday after the miner lowered
its production forecast for fiscal 2019.
The company expects to produce between 4.6 million and 4.8
million carats in the fiscal year ending June 2019, it said. Excluding its interest in the Kimberley mine — which it sold earlier this month for $22
million — the miner will produce 3.8 million to 4 million carats in 2019, according
to the Monday statement.
In July 2017, the miner predicted production would reach 5 million
to 5.3 million carats for fiscal 2019. In May, Petra reported that output would
be lower than expected, but did not state what the new outlook was. Its stock price fell 11% Monday following the update.
Production for the fiscal year ending June 30 rose 15% to 4.6
million carats. Revenue climbed 21% to $576.4 million, with the miner selling
4.6 million carats at an average price of $127 per carat.
“Fiscal year 2018 represents a solid progression for the group
after the challenges of fiscal year 2017 and first half [of] fiscal year 2018,
and places our production on a firm footing, backed up by a strong safety
performance,” said Petra CEO Johan Dippenaar. “The future focus of the group
will be on continued optimization of production volumes and cost structures
across our portfolio in order to maximize cash generation.”
The company has been trying to pay off a large debt incurred
through impairment charges on two of its mines, which permanently lowered the
value of the assets, as well as a parcel of diamonds that was seized by the
Tanzanian government. Petra has been unable to sell those stones.
In May, Petra announced it would sell additional stock in a rights
issue to raise capital to pay its debt. During the year, the miner reduced its
debt from $513.9 million to $436.1 million.
Petra operates the Cullinan, Finsch and Koffiefontein underground
mines in South Africa and the Williamson open-pit facility in Tanzania.
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Tags:
Cullinan, Finsch, Johan Dippenaar, Kimberley Ekapa Mining Joint Venture, Koffiefontein, petra, Petra Diamonds, Rapaport News, Williamson
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