Petra Diamonds has deferred expansion projects at two South African mines and pushed back other planned expenses in response to weak trading conditions.
The miner is targeting cash savings of up to $75 million by June 2024, aiming to improve short- and medium-term liquidity until the market stabilizes, management announced Wednesday.
Measures include pushing off the “C-Cut” extension project at Cullinan and partially delaying the deposit’s “CC1E” expansion, both until the end of June 2024. Petra will also postpone an extension project at the Finsch mine, delay equipment deliveries and hold off on certain feasibility studies. The company will retain the flexibility to restart the programs earlier if market conditions improve, it noted.
The move comes amid India’s two-month voluntary freeze on rough imports, which went into effect on October 15.
“Actions announced today in response to the diamond-market weakness are aimed at ensuring Petra remains resilient and able to withstand weaker-for-longer market conditions,” said Petra CEO Richard Duffy. “While diamond inventories remain elevated in both rough and polished goods, we are confident that the discipline shown by diamond producers as well as the Indian diamond-import moratorium to mid-December will lead to a recovery in pricing once demand strength returns.”
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In addition to the changes to capital expenditure, the miner has also identified operating and group cost savings of $7 million to $10 million compared with guidance for the 2024 fiscal year, which ends in June.
The company has maintained its production plan of 2.9 million to 3.2 million carats for the current fiscal year, but now anticipates output to be at the lower end of that range. Petra expects the capital deferrals to have a negative impact on production guidance for the fiscal years ending June 2025 and 2026.
On Tuesday, Lucara Diamond Corp. also announced it had extended its working-capital facility.
Main image: The Cullinan mine. (Petra Diamonds)
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