Diamond miner Petra Diamonds continued to perform well during the three months to September 30, with record carat production at the Cullinan mine in South Africa during August and September, an “excellent achievement” given the Covid-19 mitigation measures, which now form part of the group’s standard working conditions, says CEO Richard Duffy.
Petra notes that its Project 2022 continued through the lockdown period, despite the resultant reduction in manning levels, although the emphasis shifted from throughput initiatives to cost optimisation.
The implementation of the throughput improvement initiatives has resulted in more stable operations and a thorough understanding of the bottlenecks in the company’s mining and recovery processes, it says.
This has facilitated a rapid ramp-up back towards full production. The process of ‘rewiring’ the business to ensure that these revised processes are both replicable and sustainable is now all but complete.
Duffy notes, however, that overall group production for the quarter decreased by 10% year-on-year to 974 346 ct, mainly owing to the Williamson mine, in Tanzania, remaining on care and maintenance.
Revenue for the period, nevertheless, increased by 33% to $82-million as a result of the release of inventory carried over from the quarter ended June 30.
Although diamond prices had increased by about 21% on a like-for-like basis at the September tender in comparison to the prices obtained following the Covid-19 outbreak, prices are still about 10% lower than pre-Covid-19 levels.
“We will retain flexibility around the timing and method of our sales tenders for the remainder of the financial year, given the Covid-19-related risks. Sales will be boosted by the special tender for our Letlapa Tala Collection of blue diamonds towards the end of November.
“Finally, last week’s announcement with regard to reaching agreement in principle with our ad hoc group of bondholders and South African lender group around a financial restructuring will provide us with a considerably more manageable level of debt going forward and marks a significant milestone in putting the company on a viable footing going forward,” Duffy comments.
Owing to ongoing uncertainty around the impact of Covid-19, Petra’s production guidance for the 2021 financial year remains suspended.
While the mines are generally operating at planned levels, there remain risks to production relating to the impact of the stringent Covid-19 measures in place, the company notes.
September and October production at the company’s Finsch mine was impacted on by the arrangements to operate continuous operations (Contops) to offset the impact of Covid-19 mitigation measures, coming to an end.
Post period-end, an agreement was reached with organised labour to reinstate Contops for the nine-month period to June 2021. Production is therefore expected to revert to planned levels for the duration of the 2021 financial year.
Meanwhile, Petra’s Organisation Design Project (a subset of Project 2022) is being implemented and is expected to be completed by the end of March 2021.
This is expected to provide for a cleaner structure and revised role descriptions with clear accountabilities that will result in better support to its operations.
Further, Petra reiterates that it is taking steps to address the allegations of human rights abuses at the Williamson mine and has established an independent board committee to oversee an investigation, which is being carried out by a specialist external adviser in conjunction with the company’s lawyers.
The investigation is scheduled to be completed during the second quarter of the 2021 financial year. The committee will review the outcome of the investigation and will make recommendations to address any findings.
This may include required remedies or corrective action to be taken as a result of the investigation’s conclusions.