After entering into a sales process for the Koffiefontein diamond mine, in South Africa’s Free State province, London-listed Petra Diamonds is on track to deliver $75-million of cash savings in the 2024 financial year.

The company has also increased its cash savings target for the 2025 financial year to more than $30-million as a result of other cost-saving initiatives, including possible retrenchments.

Petra entered into a sales agreement with rough diamond trader Stargems earlier this year, after exploring a responsible exit from the Koffiefontein mine since April 2022.

The sale allows Petra to rebase its cost structure towards a smoother capital profile and to streamline operational requirements.

As a result of the transaction, Petra avoids incurring closure-related costs of between $15-million and $18-million.  

In Petra’s interim results for the first half of the 2024 financial year, provisions totalling $23.1-million were made for liabilities, costs and commitments associated with Koffiefontein.

FURTHER REDUCTIONS

The company is realigning its group structure to meet the requirements of its remaining operations.

Regrettably, as a result of this group restructure, Section 189 notices, setting out details of proposed retrenchments, under the South African Labour Regulations Act, have been issued to all group employees to start consultations with regard to affected roles.

At the Finsch mine, a proposal to revise throughput tonnages from about 2.8-million to 2.2-million tonnes a year has required a review of the current continuous operations shift configuration.

At the Cullinan mine, cost savings targets have been set assuming currently planned throughput tonnages going forward.

Collectively, the measures outlined above are expected to deliver more than $30-million of sustainable annualised operating cost savings from the 2025 financial year onwards. 

The company will provide more details on its revised life-of-mine plans and capital profile at the end of June.

Petra’s Finsch and Cullinan mines are based in South Africa, while it has another operation – Williamson – in Tanzania.