Petra Revenue Jumps Despite Sharp Drop in Rough Prices

Revenue at Petra Diamonds rose in the third quarter, receiving a boost from an increase in sales volume and a stronger product mix.

Sales grew 64% year on year to $68 million for the three months that ended March 31, the company said last week. Sales volume climbed 40% to 781,797 carats, while the average price improved 17% to $87 per carat. A higher level of goods available for sale and an improved product mix contributed to the revenue jump, outweighing a slump in the overall value of like-for-like prices across all product sizes.

The sale of a 41.82-carat blue diamond the company recovered in January also helped offset the reduction in like-for-like prices. Petra sold that stone into an offtake agreement during a “competitive tender process,” resulting in the company receiving an initial consideration for the value of the rough as well as a “significant economic interest” in the profit from the sale of the polished. The miner did not disclose who purchased the stone or the value of the initial consideration, but it said it had added those funds to its third-quarter revenue.

Manufacturing of the blue diamond will occur in South Africa, and the sale of the polished could take up to 12 months, Petra commented.

Prices for rough from the Cullinan mine gained 43% year on year. However, the large quantities of small sizes the company recovered from the Finsch deposit led to a 22% drop in prices.

For the first nine months of the year, revenue rose 8% to $168 million. Sales volume improved 4% to 1.7 million carats, and the average price advanced 4% to $96 per carat.

Looking forward, Petra doesn’t anticipate much improvement in the near future. It expects prices for rough from Finsch to be between $60 and $70 per carat, compared to its initial estimate of $75 to $85 per carat.

“While Finsch continues to ramp up production from the new project area, which should lead to an improved product mix, we don’t anticipate the improvement from this product mix to fully mitigate the much weaker prices across the smaller size ranges currently being experienced in the market,” the company said. “The recent Middle East tensions have also dampened sentiment, with travel disruptions through the [area] directly impacting tender participation for our goods.”

Image: The 41.82-carat blue Cullinan diamond. (Petra Diamonds)