Revenue from sales of rough at Petra Diamonds fell in the third quarter as the miner presented a weaker product mix from its Cullinan mine in South Africa.
Sales slipped 13% year-on-year to $41.6 million for the three months that ended March 31, the company said last week. The decline came even as sales volume increased 45% to 558,651 carats. The result stemmed in part from the lower-quality rough available at the specific area Petra mined at Cullinan, it noted. Also affecting the total was the company’s decision to delay the sale of certain goods that it intended to present at its fifth tender, in April, due to the uncertainty the US government’s tariff announcement caused.
Sales also fell 61% from the previous three months, which benefited from rough deferred from the miner’s first tender to be sold in the second quarter. However, while Petra believes it will continue to experience short-term volatility in product mix from Cullinan, it expects a recovery over the long term as it ramps up production from its new CC1E sublevel cave region and continues to extend the high-value C-Cut portion of the site. Additionally, Petra began mining from the 81L block at its Finsch deposit in South Africa, which it said should result in the recovery of higher-quality, higher-value rough. Output for the period rose 4% to 609,795 carats.
In the third quarter, Petra completed its labor restructuring, which it undertook to cut costs in the down market. It is now working on a refinancing plan for its debt, which increased to $258 million as at March 31, compared to $225 million at December 31.
“Alongside the broader diamond sector, Petra has been navigating a very difficult diamond market,” said interim joint CEOs Vivek Gadodia and Juan Kemp. “Despite this, Petra has shown considerable resilience by delivering on its production and cost targets, while undergoing unprecedented changes in the business, including the regrettable loss of jobs. We believe the steps we have taken over the past 12 months position Petra well for a successful refinancing. We will now look to commence engagements without lenders on the refinancing of our debt.”
In June, the company will hold its sixth tender, which will include the goods held back from its previous sale. The miner remains on track to meet its production guidance of between 2.4 million and 2.7 million carats for the year, it said. It currently holds a diamond inventory of 397,182 carats, valued at $31 million.
Image: The Finsch mine. (Petra Diamonds)
