London-listed Petra Diamonds is on track to achieve its full year production target of about 3.8-million carats, despite a challenging diamond market.
CE Richard Duffy on Monday stated that the company’s cashflow would benefit from the sale of an exceptional 20.08 ct Type II blue diamond recently recovered from its mine in Cullinan, South Africa, and implementation of the company’s Project 2022.
He explained that Project 2022 was progressing well, with implementation under way at the Cullinan and Finsch mines, in South Africa, while diagnostics were being completed at the Koffiefontein mine, also in South Africa, and at the Williamson mine, in Tanzania.
Duffy expected to realise benefits from the project, which included between $150-million and $200-million of free cashflow being generated over the next three years, from the second half of the 2020 financial year.
The areas of focus for Project 2022 are throughput improvements at all operations, cost efficiencies and strategic sourcing, as well as the sale of equipment.
Meanwhile, Petra produced 1.08-million carats of diamonds in the quarter ended September 30, compared with the 1.06-million carats produced in the quarter ended September 30, 2018.
Owing to lower diamond prices in the market, the company’s revenue was down 23% to $61.6-million from 603 626 ct sold in the quarter under review, compared with revenue of $80.2-million for 626 541 ct sold in the prior comparable quarter.
“The rough diamond market remains quiet ahead of the start of the seasonally busier retail sales period. There was a slight increase in activity in the Indian manufacturing centres ahead of the Diwali holiday; however, polished prices and exports remain under pressure, with softer demand and lower prices for rough diamonds.
“Supply discipline by the major diamond producers, combined with increased advertising spend targeting the festive retail season, is expected to help establish a balance of supply and demand in the midstream,” Petra noted in a statement on Monday.