South Africa-focused diamond producer Petra Diamonds was set to boost its production by 12% to three-million carats in the 2014 financial year and remained on track to achieve its long-term production target of five-million carats a year by 2019, Petra Diamonds CEO Johan Dippenaar said last week during a conference call after the company had announced its updated guidance for the year to June 30, 2014.
The company produced 2.67-million carats in the 2013 financial year, with its new Finsch mine, in the Northern Cape, delivering more than half of the total output.
Dippenaar said Petra would treat about 17.5-million tons during the 2014 financial year, which would equate to an 18% increase from the 14.8-million tons treated during the 2013 financial year. This would include 10.7-million run-of-mine (RoM) tons treated in 2014, an increase of 18% compared with the 9.1-million RoM tons treated in 2013.
“The increase is mainly because of an expected increase in RoM tons throughput at our Cullinan, Williamson and Kimberley Underground operations,” he said.
Total operating costs are expected to remain well controlled; however, certain cost categories, such as labour and electricity are expected to increase above the South African consumer price index (CPI), owing to South African mining inflation running above CPI and the weakening rand, resulting in increased costs associated with imported components.
With regard to cost increases relating to labour, Petra Diamonds FD David Abery said the negotiation process was ongoing and the company was looking forward to a positive result.
Expansion capital expenditure across South Africa for the 2014 financial year is expected to amount to R1.545-billion, an 8% increase when compared with previous guidance, which forecast expansion capital expenditure (capex) of R1.43-billion for the period.
“This increase is due to timing differences in capex from the 2013 financial year to the 2014 financial year and detailed planning revisions at the Cullinan, Koffiefontein and Kimberley Underground operations. This was partially offset by a decrease in capex at the Finsch mine as a result of revisions to the ore-handling system,” he stated.
Dippenaar expected that pricing in the diamond market would be supported by constrained supply and a firmer US market.