Diamond miner Petra Diamonds’ share price on the LSE rose more than 25% on Tuesday after CEO Richard Duffy assured shareholders that it would not need to raise further equity to refinance its bond.

The company’s share price had fallen since it published a trading update for the 2019 financial year and guidance for the 2020 financial year.

“We are executing our plans and delivering to budget as we launch Project 2022. We expect that this will deliver significant incremental cash flow over the next three years, further improve our net debt position and provide us with future growth options,” Duffy said in a statement.

The trading update introduced Project 2022, an initiative that would identify and drive efficiencies and improvements across all aspects of the business to enable the company to deliver an initial target of $150-million to $200-million free cash flow over a three-year period.

Project 2022 would be used to enhance cash flow generation and reduce net debt to provide optionality to address the refinancing of the bond.

The company assured that it was not considering raising equity to refinance the bond.

Project 2022 was a bottom-up assessment of the business, Petra explained on Tuesday.

Petra stressed that the project was based on prudent assumptions of flat nominal diamond prices over the three-year period; the exclusion of any exceptional stones from Petra’s Cullinan diamond mine; and an exchange rate of R14 to the dollar in full-year 2020, R14.49 to the dollar in the 2021 financial year and R14.99 to the dollar in the 2022 financial year.

“Therefore, the initial target of $150-million to $200-million of net free cash flow in the years 2020 to 2022 has potential upside in additional cash generation from improved rough diamond prices, a weakening in the rand beyond the assumptions above and the continued recovery of exceptional diamonds from Cullinan,” Petra pointed out.

Further, Petra noted third-party commentary in relation to the capital expenditure (capex) guidance published in the trading update that raised concerns around potential increases in capex spend beyond the 2020 financial year.

Petra indicated that is had been able to lower its capex budget for 2020 by bringing forward some spend to the 2019 financial year, as well as by reprioritising all projects across the group’s operations.

“The reduction in the full-year 2020 capex guidance, nevertheless, provides for the ongoing sustainability of the business,” it said.

Further, it pointed out that, as it had effectively completed its significant capex programme across its asset portfolio, there would be no requirement to invest any significant expansionary capital between the 2020 and 2022 financial years.

Petra is in the process of updating its life-of-mine plans, taking into account current diamond prices, which will be presented to the board in September.

Petra will publish capex guidance for the 2021 and 2022 financial years when it publishes its preliminary results on September 16.

“Our business remains robust as evidenced by our full-year 2019 results. We have cash resources of $90-million, together with a R1-billion ($70.4-million) revolving credit facility and R500-million ($35.21-million) in working capital facilities,” Petra said.

Furthermore, Petra said it had the third-largest global diamond resource (in excess of 250-million carats as at June 30, 2018), providing organic growth opportunities well beyond 2030.