London-listed Petra Diamonds has posted a net loss of $223-million for the financial year ended June 30 – an improvement on the net loss after tax of $258-million reported for the 2019 financial year.

The loss included a non-cash impairment charge of $91.9-million, whereas the loss for 2019 had included a non-cash impairment charge of $246-million. 

The impairment charge for the reporting year was largely driven by an increase in the discount rates used and reduced pricing assumptions.

Petra’s adjusted loss a share from continuing operations was $0.049 apiece in the year under review, compared with an adjusted loss a share from continuing operations of $0.026 apiece reported in the prior year.

The global spread of Covid-19 and resultant low demand for diamonds contributed to a 58% year-on-year decrease in Petra’s earnings before interest, taxes, depreciation and amortisation (Ebitda), to $64.8-million in the reporting year. 

The adjusted Ebitda margin also worsened to 22%, compared with 33% in the prior financial year.

Meanwhile, Petra produced 3.59-million carats of diamonds for the year under review, a 7% decrease on the prior year’s output of 3.87-million carats.

Although the company’s Project 2022 was driving run-of-mine (RoM) efficiencies, with Petra achieving its highest RoM production in history during the nine months to March 31, overall performance for the full-year was negatively impacted by Covid-19, particularly in the third and fourth quarters of the company’s financial year. 

Since the end of the reporting year, in the quarter ended September 30, the company’s production had been down 10% year-on-year to 974 346 ct, owing to the Williamson mine, in Tanzania, being on care and maintenance.

The mine has been on care and maintenance since April owing to unsupportive market conditions. Additionally, the company is in the process of conducting an investigation into human rights abuse allegations over the last decade at the mine. The investigation was launched in September.

Meanwhile, Petra points out that its revenue for the first quarter of the new financial year had increased by 33% year-on-year to $82-million owing to the release of inventory carried over from the preceding quarter.

“Although diamond prices increased around 21% on a like-for-like basis at the September 2020 tender in comparison to the prices obtained following the Covid-19 outbreak, with a further 2% increase at the October 2020 tender post the end of the first quarter, prices were still down around 10% in comparison to pre-Covid-19 levels,” the company explains.

The company continues to keep its guidance for the 2021 financial year suspended, owing to ongoing uncertainty amid Covid-19.

While diamond market conditions have been improving in recent months, further to a period of constrained supply and restocking ahead of the seasonally stronger jewellery retail season, all participants in the industry recognise that risks to a sustained recovery remain, particularly in light of the current resurgence of Covid-19 in key diamond markets, which could result in additional restrictions on international travel.  

CE Richard Duffy says much will depend on the level of consumer activity in the coming months, especially in the major US market.

The longer-term market outlook remains positive owing to the trend of constrained and falling production supply which is demonstrated in part by the closing of the Argyle mine, in Australia, earlier this year.

Further, Petra on October 20 announced that it had reached an agreement in-principle, on a common set of commercial terms, with respect to a long-term solution for the recapitalisation of the group, with each of the ad-hoc group holders of the $650-million, 7.25% senior secured second lien notes and the providers of the company’s bank debt facilities in South Africa.

In terms of the company’s total payments to government in its operating countries, Petra in the year under review paid the South African government $17 789 and the Tanzanian government $6 949 in taxes and royalties.

The company has three underground diamond mines in South Africa and one openpit mine in Tanzania.

Petra in the year under review reported no fatalities and no major environmental incidents. Its percentage of procurement spend with local suppliers in South Africa increased to 60% in the reporting year, compared with 49% in the prior year.

The company’s total water consumption improved by 27% year-on-year to 9.2-million cubic metres, compared with 12.7-million cubic metres of water consumed in the prior year, while its energy consumption also improved by 32% year-on-year, using 2.01-million gigajoules in the reporting year and 2.96-million gigajoules in the prior year.

The company employs 5 019 people in South Africa, Tanzania, Belgium and the UK.