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South Africa’s Petra Diamonds has found yet another big rock at its iconic Cullinan mine, the third coloured diamond over 100 carats since March that has been unearthed at the operation.
“It is the third Type II D colour gem quality diamond weighing more than 100 carats recovered at Cullinan since March”
The 209.9 carat, D colour, Type II gem quality diamond is also the fourth such stone discovered by Petra so far this financial year.
Shares in Petra Diamonds jumped more than 8% on Friday after the miner announced it had dug up a 425.1 carat, D colour, Type II gem quality diamond at its iconic Cullinan mine in South Africa.
The discovery comes less than a month after Petra found a 100.83 carat gem-quality white diamond at the same mine, source of the world’s biggest ever diamond, which was unearthed in 1905.
“Earlier in March, Petra had recovered a 100.83 carat, white D-colour type II gem-quality stone”
The company, which appointed last month former gold miner Richard Duffy as chief executive, said both recoveries demonstrated the frequency of such large stones at Cullinan.
Petra, which has been seeking to turn around its fortunes after piling up debt to expand the operation, plans to sell the 425.1 carat diamond during the June quarter.
Diamond miners are struggling across the board, especially those producing cheaper and smaller stones where there is too much supply. In December, some of Rio Tinto’s customers refused to buy cheaper diamonds, while De Beers has been forced to cut prices and offer concessions to buyers.
South Africa’s Petra Diamonds is keeping founder Adonis Pouroulis as chairman, despite some shareholders voting against his renewal at the 2018 annual general meeting.
The company, which last month appointed former gold miner Richard Duffy as chief executive effective in April, said the appointment of a new chair was “not appropriate” at this time.
Petra said the board and nomination committee had considered the 22.12% vote against Pouroulis’ re-election as chairman in the context of Petra’s ongoing three-year succession plan.
Despite concerns raised by some shareholders, the diamond miner said the current chairman continued to “demonstrate the independence of thought and challenge required for his role, notwithstanding the number of years he has served as a director.”
Pouroulis founded Petra in 1997 and has been its chairman ever since.
The company has been seeking to turn around its fortunes after piling up debt to expand its iconic Cullinan mine, in South Africa, where the world’s largest-ever diamond was found in 1905.
Source:mining.com
Petra Diamonds has appointed former gold miner Richard Duffy as chief executive as it grapples with a heavy debt load following a period of expansion.
Mr Duffy was previously chief financial officer and head of African operations at AngloGold Ashanti before setting up a company that develops renewable energy projects in Africa.
Mr Duffy “will be critical to drive Petra’s transition from a phase of intensive capital expenditure and expansion to a focus on steady-state, cash-generative operation,” Petra’s chairman, Adonis Pouroulis, said. The appointment comes as Petra faces lower diamond prices and $559m of net debt that it needs to pay off.
Diamond prices were about 4 per cent lower in the six months ending December due to “industry wide lower prices for lower quality” small stones, the company said on Monday. Average pricing for diamonds at the company’s flagship Cullinan mine in South Africa fell to $96 a carat, the lowest six-month level since 2010.
Petra said adjusted earnings before interest tax and other items, or ebitda, fell 6 per cent to $75.6m in the second half of last year. It reported a net loss of $57.9m, from a loss of $117.7m in the same period a year earlier. Revenues rose by 8 per cent to $207.1m as diamonds sold increased by 15 per cent to 1.74m carats. The company said reduction of its debt is a priority.
It has $90.7m in cash at the bank and said net debt is expected to be “largely flat” during the first half of this year if diamond prices remain at the same levels.
Source: ft.com
Shares of Petra Diamonds Ltd slid as much as 10 percent on Monday after lower diamond prices at its flagship Cullinan mine and an increase in net debt took the shine off higher half-year revenue.
The company has been trying to keep a lid on debt after heavy investments and a stronger South African rand had burdened the miner, which pays in rands and earns in dollars.
Petra’s net debt jumped to $557.2 million (422.06 million pounds) in the six months to Dec. 31 from $538.9 million as at Sept. 30. The company was forced to raise $178 million last May by issuing equity to cut its debt burden.
Rough diamond prices fell to $96 per carat from $140 per carat in the previous year at the Cullinan mine, which in 1905 yielded the Cullinan diamond the largest rough gem diamond ever found and now part of the Crown Jewels of the United Kingdom.
“The significantly lower realised Cullinan pricing and the impact on cashflow generation sees us take renewed caution,” said RBC, which cut the miner’s price target to 40 pence from 65 pence after the company’s half-year report.
Petra posted an 8 percent jump in revenue to $207.1 million, about 10 percent below RBC forecasts of $230 million, hurt by lower pricing at Cullinan. The company stuck to its production forecast 3.8 – 4.0 million carats for fiscal 2019.
Shares of the miner, which runs four mines in South Africa and one in Tanzania, were 8.5 percent lower at 41.12 pence.
Source: Euronews
Tough times in some parts of the diamond-mining industry has prompted an innovative solution, a four-way merger to create a new southern African diamond specialist.
The proposal, from the London office of the German bank, Berenberg, could see Gem Diamonds, Petra Diamonds, Lucara Diamond Corporation and Firestone Diamonds emerge as a single business with enhanced financial metrics courtesy of cost savings and a focus on big, high-quality gems.
If the deal happens, and at this stage it is just a proposal from Berenberg and not something the diamond-miners have embraced, the new business would have mines in South Africa, Botswana, Tanzania and Lesotho.
3% By Volume, 8% by Value
Collective diamond production would total five million carats a year, which is equivalent to 3% of global output, but more importantly the proposed business would account for 8% of diamond supply by value.
The difference between volume and value is the key to Berenberg’s plan which has been published at a time when miners of small and low-grade diamonds are battling a flooded market whereas companies able to supply high-quality gems are generating strong profits.
An uncut 25 carat diamond mined in Botswana.
Values At Trough Levels
Berenberg said in a research report titled “Consolidating African diamond mining” that current valuations of diamond mining companies were at trough levels with lacklustre enthusiasm for the sector.
“We think something new is needed to return this sector to its former glory,” Berenberg said.
The bank said the logical way to start the process would be for a transaction between Lucara and Gem, which would create the go-to business for large diamonds, followed by a transaction with Petra and then with Firestone rolled into the structure.
Each company has its own production profile but Lucara is the best known for big diamonds having given the world the monster Lesedi La Rona in 2015, an 1109 carat stone which sold for $53 million and has since been cut into 67 smaller gems by Graf Diamonds.
Strong Cash Flow
According to Berenberg’s multi-stage merger proposal the new business would emerge with annual revenue of around $1.1 billion and free cash flow of $200 million.
The merged business would overcome problems which hurt investor interest in smaller diamond miners including low stock-market value, high debt levels, project risk, limited growth options and a lack of return to shareholders.
“Our $1.3 billion market capitalization business would have listings in Canada, London and Sweden and, through the ability to pay an attractive dividend (we calculate a possible yield of 7%-to-8%) and the potential to attract investment from a range of global investors,” Berenberg said.
Mining firm Petra Diamonds said it aims to raise $178 million to help cut its debt burden, and warned it could run low on working capital and breach its debt covenants if shareholders do not back the proposed rights issue.
Petra, which last month finalised an agreement with its lenders for a waiver of its December 2017 debt covenant and a resetting of debt agreements for this year, said it would offer new shares at 40 pence.
That marks a 35.6 percent discount to the theoretical ex-rights price of 62.15 pence calculated in reference to the closing price of its shares on Wednesday.
Shares in the London-listed company tumbled as much as 19 percent after the company’s statement.
“If the resolutions to be proposed at the special general meeting are not passed, the rights issue will not take place and the company will not receive the net proceeds from the rights issue of approximately US$170 million,” Petra said in a statement announcing the new share issue.
“In such circumstances, the company is of the opinion that the working capital available to the group will not be sufficient during the working capital period based on the reasonable worst case scenario.”
Investors will vote on the rights issue in a special general meeting set for June 13.
Petra has been hit by production delays, strikes, a confiscated consignment of diamonds and a strong South African rand and has sought waivers from its lenders three times.
There were also no refunds on value-added-tax (VAT) from the Tanzanian government.
Petra said it would use up to $120 million from the cash call to pay down debt and the balance would buffer its working capital against the strength in the rand.
Petra’s debt had risen to $622 million as of last month, from $500.2 million at the end of March 2017.
The company targets a reduction in the leverage of 2 times or less net debt to core earnings or EBITDA by the end of 2020.
The fund raising is underwritten by RBC Capital Markets, BMO Capital Markets and Barclays.
“We expect the share price to trade down towards the ex-rights price, but our view is that once the refunding is completed price appreciation is likely,” said Canaccord Genuity analyst Des Kilalea.
“This is because the risk from the balance sheet will be reduced and returns from improved operations will flow through to equity.”
Reporting by: Zandi Shabalala
Shares in Petra Diamonds climbed almost 8% on Monday after the miner reported a significant revenue increase in its third quarter driven by record production in the first three months of 2018.
The South African diamond producer, owner of the iconic Cullinan mine, which produced the diamonds for the British crown jewels, said revenue for the quarter ended March 31 climbed 44% to $172 million, from $119 million a year earlier.
Petra Diamonds saw third-quarter revenue grow by 44% after it produced and sold more gems.
The company, known for some major recent findings, attributed part of the revenue growth to the fact it sold 1,373,771 carats of diamonds compared to 1,069,886 sold in the same period a year earlier.
While production jumped 20% to a record quarterly volume of 1,194,947 carats, Petra said illegal mining at its Kimberley Ekapa Mining JV dented output during the quarter by restricted access to high grade dumps at the surface re-treatment operation.
It also said its full year 2018 revenue continued to be impacted by the inability to sell a blocked diamond parcel from it Williamson mine of about 71,000 carats. The shipment was seized by the Tanzanian government in September last year, as part of the country’s ongoing probe into alleged wrongdoing in the diamond and tanzanite sectors.
Chief executive Johan Dippenaar said the company’s focus would move away from volume targets to value optimization.
‘While we are very encouraged by the operational delivery against our long-term expansion plans, risks to performance continue to relate to increased volatility in the ZAR/US$ exchange rate, grade and pricing variability at Cullinan,” Dippenaar said in the statement, adding that the outlook for its Williamson mine as well as the blocked diamond parcel were also weighing on the company’s future.
The Diamond Producers Association announced the launch of their operations in the country to build confidence among consumers.
India polishes 85 90 percent of the diamonds today accounts for only seven percent of the global polished diamond consumption. DPA believe this is a huge opportunity to build the India market by promoting the integrity and reputation of diamonds and ensuring the sustainability of the industry.
DPA has reached out to 3,000 retailers and will offer training and education in diamonds. DPA will expand training across the country.
The DPA is an alliance between ALROSA, De Beers, Dominion Diamond, Gem Diamonds, Lucara Diamond, Petra Diamonds and Rio Tinto. These are the leading diamond miners globally. Which together produce over 75 percent of the world’s rough diamond production.
DPA is also working with the Gem and Jewellery Export Promotion Council to build trade relationships and best trade practices.
Rapaport Group has been appointed as the marketing and sales agent of the Peace Diamond by The Government of Sierra Leone.
The 709 carat Rough Diamond was recovered by diamond diggers in the village of Koryardu in Sierra Leone West Africa.
50% of the Peace Diamond sale value will directly go to benefit the community where the diamond was discovered, and the people of Sierra Leone.