Petra Diamonds has reduced its rough-pricing forecast for the remainder of the fiscal year as it grapples with continued weakness across most of its size categories.
The miner now expects prices for rough from its Cullinan mine in South Africa to be between $120 and $130 per carat, rather than the $125 to $135 per carat it initially predicted, it said Friday. Meanwhile, diamonds from the Finsch mine in South Africa will sell for $80 to $90 per carat, down from $98 to $105 per carat, and production from the Williamson deposit in Tanzania will fetch $170 to $200 per carat, versus the original $200 to $225 per carat.
The cuts come as like-for-like prices for the company’s rough at its third tender fell 7% across most size categories from its combined first and second tender, which took place in October. Like-for-like prices since the beginning of the fiscal year are down 10% compared to the three equivalent tenders of the previous year, mainly because of weakness in smaller size categories, the miner explained.
At the third tender, in December, revenue fell 7% versus the combined first and second sale to $71 million, with a 20% drop in the average price to $101 per carat outweighing a 17% rise in sales volume to 700,803 carats. Sales for the first three tenders this year dropped 22% compared to the same period last year to $146 million. Sales volume slid 22% to 1.3 million carats, while the average price slipped 1% to $112 per carat.
However, Petra did note a 3% increase from October in rough between 5 and 10.8 carats, it said.
The company will also cut jobs from its group and South African operations support teams to decrease costs. To lead that effort, Petra has appointed Vivek Gadodia, previously its executive in charge of planning and development, as chief restructuring officer.
“We remain committed to our target of net cash generation in fiscal 2025 and have commenced additional case generation and savings initiatives,” said Petra CEO Richard Duffy. “This has regrettably required us to initiate a section 189 (retrenchment) process affecting our group and South African operations support functions. Refinancing discussions have been deferred…to enable these cash-generation initiatives to take effect and to benefit from greater certainty in respect of market conditions.”
Image: A rough diamond. (Petra Diamonds)
