Petra rides out rough year
PETRA Diamonds, one of the country’s largest diamond producers, paid a maiden dividend as it expected weakening markets to moderate next year.
PETRA Diamonds, one of the country’s largest diamond producers, paid a maiden dividend as it expected weakening markets to moderate next year.
Petra, which has been the main beneficiary of mine sales by De Beers, has set its sights on reaching 5-million carats by 2019 as its projects to source fresh ore as two of its key mines gather momentum.
The Finsch and Cullinan mines contributed 65% and 23% respectively of Petra’s 3.19million carats in the year to end-June. Group diamond output was up 2% year on year, while revenue was down to $425m from $472m the year before.
Its net profit fell to $59.6m from $67.5m — however, the company declared its maiden dividend of $0.03 for the year, marking the start of its progressive dividend policy.
“The 2015 number should not be a surprise to the market. The maiden dividend is helpful and should give holders of the shares some support,” said SP Angel analyst John Meyer.
Petra had $422m in cash and debt facilities available, allowing it to complete its projects. It also had $33m in diamond inventory and $58m in diamond debtors, which would be paid into Petra’s accounts in coming days.
“We have the ability to defer 40% to 50% of our capex should the market put us under any kind of pressure. We don’t foresee that. We think our headroom and our ability to negotiate a more difficult market in the next six months means we will not be required to take any drastic steps,” CEO Johan Dippenaar said on Friday.
Petra expects rough diamond prices to remain under pressure and volatile for the balance of this year to end-December.
“From talking to our clients, we feel things will sort themselves out during these six months to December and we’ll see a more stable market in January to June. I don’t suggest it will roar away, but it will probably experience stability,” Mr Dippenaar said.
Petra’s realised prices fell 10% in its financial year to end-June from its four mines in SA and one in Tanzania.
Petra’s reliance on surface material to find diamonds will fall next year, with 4% of dia
The maiden dividend is helpful and should give holders of the shares some support
monds coming from retreating tailings in 2019 compared to 30% last year.
This means Petra would produce higher value carats from the 17-million tonnes a year of material it treats, boosting revenues as the fresh underground ore it is developing comes into production and replaces lowervalue tailings material.
“Not a great result but a key tough year, as management anticipated and flagged before investment being made delivers growth. The share price has already fallen considerably due to weak news flow on diamond outlook; key milestones will be delivery of investment and confirmation of diamond pricing,” said Investec.