HAILEYBURY (miningweekly.com) – RBC Capital Markets analyst Des Kilalea has lowered his target price for Aim-listed Petra Diamonds, to reflect declining prices for rough gems, but said in a research note that the company was “well positioned” for when diamond prices recover.

RBC Capital Markets reduced its target for Petra from £1,07 to £0,78 a share, and has reduced its recommendation on the stock from 'outperform speculative risk' to 'sector perform speculative risk'.

However, the company's Cullinan and Koffiefontein mines, in South Africa, plus production from the Kimberley Underground and Williamson mines, which it bought from diamond giant De Beers, would stand the firm in good stead when conditions improved.

Petra announced on Friday that it would cut exploration expenditure in Angola, Botswana and Sierra Leone, and indicated that it may place two fissure mines, Star and Helam, on care and maintenance, to conserve cash.

Slowing economic activity and mounting pessimism around the world has weighed on prices and demand for diamonds, and several producers, including De Beers, have announced plans to curtail production.

RBC's Kilalea said earlier this month that there was little hope of any significant improvement in the price of diamonds until well into 2009.

Shares in Petra Diamonds rose 0,7% on Monday, to 73p apiece.

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