Specialists conducting a safety inspection at Finsch diamond mine, near Lime Acres in the Northern Cape, before commencing with production drilling. File picture: Supplied
PETRA Diamonds, which mines for the precious stones in South Africa and Tanzania, has reported that it lowered its net debt by $11 million (over R199m) during the half-year period to the end of June while carats sold for the full year rose by 36%.
The company is gearing up to deliver an annual cost-savings of as much as $30m. This would help to generate net free cash from the current financial year onwards and allow the company to “continue to deleverage and provide flexibility with regard to refinancing” its 2026 notes.
Petra Diamonds CEO Richard Duffy said on Tuesday that the company’s “net debt decreased by $11m to $201m at June 30, 2024, compared to $212m” at December 31, 2023.
This reflected Petra Diamonds’ “agility in exceeding the cost reduction, capital savings and deferral targets” programme it announced in November.
Despite raising the amount of carats sold during the year to June by 36%, Petra Diamonds has been affected by low diamond prices currently obtained on world markets.
Petra Diamonds added that revenue for the year grew by 13% for the period. Nonetheless, the company expects diamond prices to improve in its new operating year.
Petra Diamonds’s production for the year under review however dipped below its revised guidance to 2.73 million carats.
Ore processed rose marginally to 3 million tons from 2.9 million tons a year earlier, with the ramp-up at Williamson increasing production by 100 000 tons.
The improvements in grade recovery continued at the Finsch Mine while work to resolve the winder issues and the transition from continuous operations to a two-shift, five-day configuration lowered the amount of carats recovered.
During the quarter to end June, operational capital expenditure totalled $18m, in line with the company’s updated guidance announced following the decision to defer certain capital project expenditure
“The current weakness in the diamond market is expected to continue through to the end of the calendar year with some price volatility,” said Duffy.
“We expect diamond prices to show modest recovery in the new year with market fundamentals providing pricing support in the medium and longer term.”
In June, Petra Diamonds received average prices of $111 per carat compared to $118 per carat attained last month. It also sold 9% lesser carats in diamonds at about 337,000 carats compared to its sales volumes for May.
The increase in carats sold for the year was driven by the Williamson mine which “ramped up to steady-state operations” as well as the “benefit of the delayed sale of the final tender” for the 2023 full year.
“We are looking forward to addressing the challenges ahead of us from a position of strength, with world-class assets that have long-term potential, strong sustainability credentials and an ability to withstand market and capital cycles,” Duffy said.
Financial resources drawn under the R1.75 billion revolving credit facility with Absa Bank remained unchanged, leaving an outstanding balance of R450m as at June 30, 2024, down from R850m as at December 31, 2023.
Petra Diamonds said last month it had struck a long-term deal for the supply of renewable energy to its South African diamond mines as it seeks to secure sustainable power supply for its operations.
– BUSINESS REPORT