JOHANNESBURG (miningweekly.com) – LSE-listed Petra Diamonds on Monday warned shareholders it was likely to breach lending covenants at the end of this year owing to labour disruptions at its South African mines and uncertainty around sales volumes from its Williamson mine, in Tanzania.
The company last month said two earnings before interest, taxes, depreciation and amortisation-related maintenance covenant measurements related to its senior debt facilities for the period to December 2017 remained sensitive to diamond prices, exchange rates and expected production from its mines.
Since then, the risk of Petra breaching its covenants has heightened.
The company’s 2017 annual report and accounts will be published on October 16 and will include a going concern statement to this effect.
On September 19, employees at Petra’s Finsch mine, as well as at its Kimberley Ekapa Mining joint venture operations downed tools in dispute over wage negotiations. Employees at the company’s Koffiefontein mine joined the labour strike on September 21.
The company and the National Union of Mineworkers settled on a wage agreement on September 29, bringing an end to the strike.
Meanwhile, the Tanzanian government on September 28 agreed to allow Petra to resume the export and sale of diamonds recovered at the Williamson mine.
This followed the seizure, by government officials, of a parcel of diamonds earlier in September, owing to allegations that the company had underdeclared the value of the diamonds to be exported.
At the time, Petra said it was the responsibility of the government’s diamonds and gemstones valuation agency to provisionally valuate the diamond parcels from the mine before they are exported to Antwerp for sale.
Two government ministers have since resigned after they were allegedly implicated in the government’s investigation into the diamond industry, while the head of the State-run diamond and gemstone valuation unit and a government gemstone valuer have been charged with economic sabotage for their role in allegedly undervaluing the parcel of diamonds.