Finsch mine helps Petra double diamond output
THE strategy to focus on and expand the pipeline of its diamond-mining operations that yields high tonnages is starting to show positive results, Petra Diamonds CEO Johan Dippenaar said yesterday.
The miner, which is listed in London but predominantly operates out of SA, doubled output and surpassed its annual production target of 2-million carats, largely due to the strong operational performance by the Finsch mine, which Petra acquired from De Beers last year.
In a trading update yesterday, Petra reported that production for the 12 months to June increased by 98% to 2.2-million carats, and that revenue was up 44% to $616.9m.
Fourth-quarter production was up 143% to 632‚800 carats‚ primarily due to Finsch contributing 1.105-million carats for the year and 347‚004 carats for the quarter.
The company said that cash operating costs remained well controlled, and capital spending had risen to $134m from last year’s $110.6m, in line with the roll-out of its planned expansion programmes.
Although prices fell as a result of the economic slowdown in Europe, Mr Dippenaar was con- fident that this would be unlikely to affect the company’s capital expenditure project, aimed at raising production to 5-million carats a year by 2019.
“The group’s various expansion projects have also progressed according to plan during the year and this‚ together with the production growth recorded‚ puts the group in a strong position to deliver on its longerterm objectives,” he said.
Petra and its empowerment partner, Sedibeng Mining, have agreed to put their fissure diamond mining operations — which comprise Sedibeng, Helam and Star mines — up for sale.
According to the company’s website, the mining operations have a resource of about 5-million carats and 15 years’ life of mine remaining.
The average value per carat of the fissure mines was high for kimberlite operations‚ and ranged from $150 to $500 a carat, with a full-year average of $255 a carat, compared with the global average of $90 a carat.
Mr Dippenaar said the potential transactions arising from the sale process would be subject to detailed scrutiny and‚ apart from financial objectives‚ Petra would consider prospective purchasers’ approach to employment‚ health and safety‚ environmental management and other issues fundamental to the long-term success of the fissure mines for all stakeholders.
“The fissure mines were Petra’s first producing mines we acquired further to the Crown Diamonds merger in 2005‚ but given Petra’s development and growth over recent years‚ the fissure mines are no longer core to the group,” Mr Dippenaar said.
The sale process is expected to start shortly.
Reuters reported that Petra’s revenue of $316.9m was lower than analysts’ expectations of $324.26m. Petra’s shares closed at 127p on Monday on the London Stock Exchange.