Shares in Petra Diamonds climbed around 5% on Wednesday after the South African miner said shareholders had approved a rights issue to raise about $170 million to help cut its debt burden.
Petra Diamonds has more than $600 million of debt it accumulated by building a new plant and digging deeper at its flagship Cullinan diamond mine.
Petra Diamonds is owner of the iconic Cullinan mine, where the world’s biggest ever diamond was found in 1905, has accumulated a hefty debt in the last 18 months as it borrowed heavily to expand its mines, known for some major recent findings,
Petra Diamonds has more than $600 million of debt it accumulated by building a new plant and digging deeper at Cullinan. Its lenders waived covenants for December 2017 and relaxed them for this year’s measurements.
Petra Diamonds also faced illegal mining at its operations, weak prices, a surging South African rand and setbacks in Tanzania, where the government seized last year a diamond parcel from it Williamson mine of about 71,000 carats. The move, part of the country’s ongoing probe into alleged wrongdoing in the diamond and tanzanite sectors, has been costly for Petra, as it shares lost around half of their value last year after the incident.