Petra CEO Richard Duffy
Photo by: Creamer Media
LSE-listed Petra Diamonds has reported a year-on-year increase in revenue and production for the financial year ended June 30, even though production dipped in the fourth quarter.
Production for the fourth quarter dropped by 6% quarter-on-quarter to 745 790 ct owing to less tonnes being treated at the Cullinan mine, in Gauteng, following depletion of the CC1E mining area and the makeup of kimberlite in the C-Cut.
Nevertheless, production for the full year increased by 3% year-on-year to about 3.35-million carats, mainly as a result of the resumption of mining at the Williamson diamond mine, in Tanzania.
Full-year revenue increased to $585.2-million, compared with $406.9-million in the prior financial year.
This includes revenue from diamond sales of $584.1-million, up from $406.9-million in the 2021 financial year, and additional revenue from profit share agreements of $1.1-million.
“This year’s performance completes the successful turnaround of Petra and includes the implementation of our new operating model, incorporating continuous improvement . . . [in] efficiency, capital discipline and strong cash generation.
“Progress on these fundamentals has enabled us to expand our focus to executing our . . . growth strategy, including the two projects at Cullinan mine and Finsch, while incorporating our recently developed sustainability framework,” Petra CEO Richard Duffy said on July 19.
The company said the 44% year-on-year increase in diamond sales revenue for the year under review was driven by improved rough diamond market fundamentals, with like-for-like prices having improved by 41.5% year-on-year as a result of record jewellery retail demand out of the US following the easing of Covid-19 restrictions.
Additionally, the sale of a high number of exceptional diamonds recovered from Cullinan and one from Williamson contributed $89.1-million to overall revenue for the year under review, compared with $62-million in the 2021 financial year.
To put this result in perspective, the average contribution from exceptional diamonds is $50.7-million over three years and $39.2-million over five years.
During the fourth quarter, polished diamonds cut from the 18.30 ct type II blue partnership stone were sold, with the most notable being a 7.09 ct radiant cut diamond, which sold for $5.8-million.
Petra sold the 18.30 ct rough diamond in August last year into a partnership for $3.5-million, while retaining a 50% share of profits. The final polished diamonds realised a net profit to the partnership of $2.13-million, contributing additional revenue of $1.07-million for Petra’s 50% profit share.
Meanwhile, the company reported a lost time injury frequency rate improvement of 20% quarter-on-quarter to 0.28 for the fourth quarter and 52% year-on-year to 0.21 for the year.
Duffy said the company had enjoyed a safe and robust operating performance into the fourth quarter, recovering over 3.35-million carats for the year, in line with guidance.
He said the company reaffirmed its production and cost guidance through to the 2025 financial year.
The company’s guidance is for production of 3.3-million to 3.6-million carats for each of the 2023 and 2024 financial years and 3.6-million to 3.9-million carats in the 2025 financial year.
However, an increase in the lead-time for some capital items will shift some 2022 capital expenditure (capex) to 2023, with no expected impact on the anticipated project timing or overall capex spend.
“We are monitoring cost increases in our operations very closely, but our relatively low fuel consumption, disciplined cost management, three-year labour agreements to June 2024 and exposure to a weaker rand will assist us in better absorbing these cost pressures,” Duffy said.
He said the company would continue to closely monitor macroeconomic uncertainties, particularly the impact of inflation on the company’s cost base, the war in Ukraine and sanctions on Russian producers, as well as the ongoing implications of Covid-19.
The backdrop of structural changes to the supply and demand fundamentals in the diamond market remains unchanged, Petra said, adding that it expected it to remain supportive going forward, although there may be some volatility in the short to medium term.