Revenue Slump as Petra Defers Sales

Petra reported a revenue slump for Q1 2025 after deferring the sale of almost all its South African goods because of persistent weak demand.

The UK-based miner said its only revenue for the quarter ending 30 September was $8.5m for an 18.85-carat blue diamond recovered at Cullinan Mine, South Africa, and $14m for goods from its Williamson mine, in Tanzania.

Total revenue for the quarter, including profit share arrangements, was $23m, down 77 per cent compared to Q1 FY 2024 and 80 per cent compared to Q4 2024.

Petra said its combined tenders 1 and 2, which took place this month, after the end of Q1, brought in $76m.

Average per carat prices were up 13 per cent to $113, compared to the last tender it held, in June. But like-for-like prices were down 9 per cent. Higher prices were due to a better product mix. The company said it had withdrawn 88,000 carats (worth around $3m) of brown goods because of poor demand.

“Our combined first and second tenders indicate continued weakness in the rough diamond market, more than offset by Petra’s product mix,” said CEO Richard Duffy in the Q1 FY 2025 operating update and final sales results for Tenders 1 and 2 FY 2025.

He said Petra was further reviewing cash generation opportunities in the face of ongoing market weakness and a stronger rand.

“We remain committed to our target of net cash generation for the full year in FY 2025,” he said.

“We continue to expect prices to show some improvement in CY 2025, with market fundamentals being supportive in the medium-to-longer term.”

Source: DCLA

Petra defers another diamond tender amid weak demand

Petra Diamonds has once again postponed the sale of roughs, holding on to the diamonds from its South African operations that would have been offered during the August/September event of the year, amid low demand.

The tender of diamonds from Petra’s Williamson mine in Tanzania will proceed as planned, the company said. It noted that this decision aimed to “support steps taken by major producers to restrict supply during this period of weaker demand.”

Rough diamond parcels from the miner’s South African operations, originally earmarked for sale as part of the first tender of fiscal year 2025, are now planned to be offered in the second tender, expected to close mid-October 2024.

Petra will sell diamonds from its Williamson mine in Tanzania during August/September as planned.

Petra’s South African producing operations include the Cullinan and Finsch mines.

“Our expectation is that supply discipline, together with the expected seasonally stronger demand as we head towards the festive season, will provide some pricing support later in the calendar year,” chief executive Richard Duffy said in the statement.

Petra had differed in June the majority of what would have been its sixth sale for its 2024 fiscal year to the August/September offering, or tender one of fiscal 2025.

The company said recent steps taken to improve its financial position have provided it with the ability to adjust the timing of its tenders based on market conditions.

Source: DCLA

Petra Diamonds focusing on refinancing $250-million loan notes

Having reset its cost base, delivering new life-of-mine (LoM) plans with a smooth capital profile, the focus of Petra Diamonds is very much on refinancing its $250-million loan notes.

“We plan to get that done before the end of this calendar year,” Petra Diamonds CEO Richard Duffy outlined to Mining Weekly in a Zoom interview. (attached Creamer Media video.)

The refinancing of the loan notes will place the London-listed, Africa-active diamond mining company in a position to execute on the growth potential of its long-life assets.

These are Petra’s historic Cullinan diamond mine, located 100 km north-west of Johannesburg, its Finsch diamond mine, which is 160 km north-west of Kimberley, and the Williamson mine, 140 km south-west of Mwanza, in Tanzania.

It will also allow the company to begin to execute on its value-led growth strategy presented by not only its existing asset base, but also through other opportunities.

“We’ll be able to deliver and leverage what we believe will be a much more supported market from next calendar year,” Duffy commented.

The main focus of Petra’s recent investor day was to demonstrate the resilience of the business through steps implemented over the recent months.

The key features were cutting the cost base by $30-million on a sustainable annualised basis.

Through mine replanning, Petra has also smoothed its capital profile going forward basis to around $100-million a year or less.

The main reason is to ensure that the business is cash generative from this financial year (FY) 2025 and to refinance its loan notes, which mature in March 2026.

Mining Weekly: What, specifically, were the LoM updates?

Duffy: In the case of Cullinan mine, we have a board-approved mine plan that goes through to 2033, and the potential through further extensions in the mine itself to be mining beyond 2050. At Finsch mine, we highlighted that the board-approved mine plan sees mining through to 2032 but with the potential to continue mining below the current Block 5 through to 2040. Williamson has an approved mine plan to 2030 with extension opportunities and growth opportunities well into the 2040s. We also provided guidance for the next five years so that we could create some visibility in terms of our production, which we see growing from the current levels of around 2.8-million carats annually to around 3.5-million carats a year by 2028. Most of that growth comes from increasing grade, both at Cullinan and at Finsch.

When you speak of a lower-for-longer diamond market, how does that impact Petra?

What we’re seeing is a diamond market that we expect will continue to remain a little softer through to the end of this calendar year. We took measures towards the end of last year in recognition of what we expected to be a weaker-for-longer market. The steps we took back in October 2023 around deferring some of our capital spend and initiating that cost savings programme meant that we were able to reduce net debt by $11-million from the end of December 2023 to the end of June 2024, the end of our FY 2024. The measures taken ensured that we stopped any cash burn in the business, even in a tougher market. The steps we’ve taken around costs and smooth capital profile mean that we’ll continue to be resilient as a business, and be cash generative from this financial year 2025 onwards. So, we’re well placed to benefit from an improving market, which we expect to see from next calendar year.

What makes you more confident about the market in the medium- to long-term?

What we’ve seen in the market is the culmination of a number of factors that have created some headwinds for us, and that really has been on the back of the higher interest and inflation rates that have been a little more stubborn than expected, the slower return of demand from China, which is an important market for diamonds, and the disruption caused by the rapid growth of lab-grown diamonds. Those were the factors that led to the softer market, which we expect to continue through to the end of December. Why we’re more encouraged in the medium to longer term about what we expect to be a supportive diamond market is around some of the underlying supply-demand fundamentals. If you look at projected supply, or global production of diamonds, all the way through to 2033, the projections are that we’ll see an average 1% decline on an annual basis over that period. When you look at the demand side, there’s projected growth to 2033, of 2% to 4%, so from a fundamental supply-demand perspective, there’s a structural supply deficit. The US buys around 50% of all diamonds, and the projections are that US demand will continue to grow through to 2033. Interestingly, China isn’t projected to grow at the same rate as the US, but India is emerging as a very strong consumer, with 30% growth forecast through to 2033. We see India and its growing middle class as a new, increasingly important market for diamonds that is likely to overtake China.

How are natural diamonds faring against laboratory-grown diamonds?

If you look at lab-grown diamonds, the disruption they caused initially was largely the result of consumers not properly understanding this new lab-grown diamond category. Over the last few years, we’ve seen the price of lab-growns collapse to now sell at a discount of 80% to 90% of a natural diamond. As a result, lab-growns are now firmly established as a different product category in the diamond space. They’re a cheap early entry point and that differentiation will become more discernible and clearer over time. Also, importantly, retailers, jewellers are shifting back to natural simply because the price of lab-grown has collapsed. The margins have collapsed, and it doesn’t make economic sense for them to continue to push lab-growns. We see, in a sense, some reversal of the displacement of lab-grown that we saw previously, in favour of natural diamonds. Another important point is a number of lab-grown producers have stated that they’re moving out of producing gem lab-grown diamonds, and they’re shifting their lab-grown production to industrial applications, around semiconductors, etc. This is led by De Beers’ Lightbox business, where they’ve indicated they’re no longer going to be producing gem lab-grown diamonds, and the same is true of a number of other large lab-grown producers. For all of those reasons, we see inventory levels starting to come down across that value chain going into next year, a shift away from lab-grown back to natural, and the general economics starting to shift in favour of diamonds with the structural supply deficit providing the support.

How do you see traceability unfolding?

We see traceability technology as being part of the differentiation between lab-grown and natural diamonds. What this technology allows us to do, and we’re busy piloting this at the moment, in collaboration with De Beers’ Tracr™ and Sarine Diamond Journey™ technology, is to map all of our half-a-carat gem-quality diamonds, and half-a-carat in the rough and larger. The data around a diamond gets block-chained in a register, and we then trace that diamond through the cutting and polishing. Our clients link the polished diamonds back to the original rough, and that enables traceability all the way through to the retail jeweller – essentially from mine-to-finger. For a consumer who then walks into a jewellery store in New York to buy a one-carat engagement ring, there would be a certificate associated with that, stating that the diamond was recovered from, for example, Cullinan mine in 2020. It would set up the number of employees that the Cullinan mine employs, provide details on all of the social and community projects undertaken by the mine, and include the carbon footprint associated with that polished diamond. So, there’s a whole story around the diamond that reinforces that purchase experience for the consumer, creating an opportunity to grow margin as part of that story, around the mine-to-finger journey.

DIAMOND VERACITY

The traceability that Petra expects to implement during the course of this calendar year will enable it to clearly verify that the diamonds:

are from a Petra mine;
are natural and not lab-grown; and
are not subject to any sanctions.
The application of Tracr™ means that the diamonds from these mines will be subjected to the Internet of Things, AI and blockchain technology to provide comprehensive supply transparency.

In addition, the application of Sarine Diamond Journey™ begins with three-dimensional scanning to establish a verifiable image of the physical diamond and a definitive link to its digital report.

This enables the creation of an unbroken chain of authentication at every stage of the diamond’s journey – from rough to rough, rough to polished, polished to report.

Securely stored in the cloud, this data provides the foundation of end-to-end traceability.

Source: DCLA

Petra Diamonds cuts targets and costs in tough market

Petra Diamonds revised on Thursday its guidance for the next two fiscal years and appointed a new finance leader as part of its plans to lower expenses and debt in a clear sign the diamond market remains in bad shape.

The South African miner had anticipated in December that the sector was beginning to recover. Six months later, Petra has instead cut its production targets. It now expects to produce between 2.8 million and 3.1 million carats in fiscal 2025 and between 2.9 million and 3.3 million in fiscal 2026. This represents a reduction of 18% and 19%, respectively, on the prior target-ranges’ midpoint.

The company also said it expected total carat recovery to be at the lower end of its target range of 2.74 million to 2.78 million for the current fiscal year.

These downgrades, announced in an investor day presentation, coincide with Petra’s plan to reduce operating costs by $30 million annually starting in the fiscal year that ends on June 30, 2025. Total capital spending will be reduced this year to $100 million from the total spent in 2023, which was $117.1 million.

“We have worked hard to deliver an updated business profile in response to ongoing market challenges and to further enhance our resilience to future market and capital cycles,” chief executive Richard Duffy said in a statement.

Petra’s revisions come just a day after the world’s largest diamond producer by value, De Beers, posted disappointing results for its latest sales for the second time this year, and as Anglo American (LON: AAL) plans to sell it off. 

Petra announced it had appointed Johan Snyman to take on the role of chief financial officer starting from October 1. Snyman will replace Jacques Breytenbach, who will leave his position as CFO and director at the end of September due to personal reasons. 

“[Snyman] has played a crucial part in the progress of Petra since joining in January, and I am excited to collaborate with him in his new capacity,” Duffy said.

The new CFO joined Petra this year as financial controller, having worked as vice president for financial reporting at AngloGold Ashanti (NYSE: AU). He has also previously held various financial roles in the mining sector.

Despite the challenging market, Petra remains committed to expanding its Finsch and Cullinan mines in South Africa, it said, and it is projecting production to reach between 3.4 to 3.7 million carats by 2028.

Cullinan is Petra’s flagship mine and the source iconic diamonds, including the famed 3,106-carat Cullinan diamond, which was cut to form the 530-carat Great Star of Africa. They are the two largest diamonds in the British Crown Jewels.

39.34-carat blue diamond at Cullinan mine

Petra’s planned output increase, equivalent to 15% to 17% over three years, will require about $100 million annually. Duffy stated the plans will be financed internally.

Cullinan mine-life can be potentially extended beyond 2048. Finsch, South Africa’s second largest diamond operation by output, could be producing until around 2038.

Shares in Petra experienced high volatility in London after the announcements and were last down 1.96% to 40 pence. This leaves the miner with a total market capitalization of £78.63 million (about $100m).

Source: DCLA

Petra Sales Fall Amid Slow Market Recovery

Revenue at Petra Diamonds declined in the first fiscal half as slow demand and India’s two month buying halt affected the miner’s rough sales.

Sales slipped 9% year on year to $187.8 million in the six months that ended December 31, the company said Tuesday. The drop came despite a 27% increase in sales volume to 1.7 million carats, as like for like prices during the period dropped 13% and the miner offered a weaker product mix, it explained.

Group production grew 2% to 1.4 million carats for the first half, partly reflecting the ramp up to full output at the Williamson deposit in Tanzania. Exceptional rough stones those fetching $5 million or more didn’t contribute any revenue during the period, the miner noted.

Petra is on track to meet its production guidance of between 2.9 million and 3.2 million carats for the full fiscal year ending June 30, it said. However, the miner expects output to come in at the lower end of that range.

The company’s net debt rose to $212.3 million as at December 31, compared to $176.8 million on June 30, it noted. The increase is due to the timing of tenders, the continued lower prices for rough, and the need for capital to resume operations at Williamson and extend the life of the Finsch and Cullinan mines in South Africa, Petra added.

Source: DCLA

Petra Believes Rough Prices Have ‘Bottomed’

Petra Diamonds’ rough prices started to bounce back at its latest tender, indicating the market has “likely bottomed,” it said Thursday.

The company’s third trading session brought in $67.9 million from the sale of 519,397 carats, at an average price of $131 per carat. Prices were 19% higher on a like-for-like basis — comparing similar categories of diamonds — than at the fiscal year’s second tender, which ended in October.

Last week, the miner reported early results from the tender of $58.7 million from 462,794 carats, at an average price of $127 per carat. During the remainder of the tender, it sold an additional 56,600 carats for $9.3 million. That comprised 25,200 carats from the Cullinan and Finsch mines in South Africa, which yielded $3.1 million, and 31,400 carats from the Williamson mine in Tanzania, bringing in $6.2 million.

Total rough-diamond revenue for the first fiscal half, which included three tenders, came to $187.8 million, down 7% year on year, the company noted. Like-for-like prices for the six months fell 13% compared to the equivalent three tenders the year before.

Source: DCLA

Tanzania Reports Record $63 Million in Diamond Exports Despite Williamson Mines Closure

 

                  Tanzania Diamond mines

The Bank of Tanzania announced that the country’s diamond exports increased significantly to $63.1 million (USD) in value by November 2022. This is more than seven times of the $8.4 million export value that was recorded in the year-over year analysis since November 2021.

The good performance of the company has been attributed to the country’s diamond producer Williamson Mines which has temporarily shut down operations due to a recent tailings breach on November 7, 2022. The mine is an open pit operation located on the 146-hectare Mwadui kimberlite pipe, which is one of the world’s largest economic kimberlites.

The company belongs to the parent company Petra Diamonds, which owns 75 percent of the company, and the Tanzanian government owns the remainder. According to Petra’s official statement, production at the Williamson mine will resume in the 2024 fiscal year.

Source: DCLA

Petra Diamonds halts Williamson mine in Tanzania after dam breach

          Petra Diamonds halts Williamson mine

Petra Diamonds said on Monday it had halted operations at its Williamson mine in Tanzania after a tailings storage facility burst, causing flooding in nearby areas.

The company, which also operates three mines in South Africa, said the eastern wall of Williamson’s tailing dam was “breached”, but said in an email that the pit was not affected.

Petra noted that there were no injuries or fatalities confirmed so far, adding that the government and mine emergency response teams had been mobilized to the site.

“While no injuries have been reported, any impact on the local communities would be viewed as a material negative from an ESG standpoint,” Berenberg bank analysts said in a note.

The diamond miner has worked hard to clean up its image in Tanzania. Last year, it achieved a £4.3 million (about $4.9m) settlement with claimants alleging widespread human rights abuses, including beatings and detentions, at Williamson —the country’s biggest diamond mine.

Petra, which has repeatedly denied the involvement of its own employees in the incidents, admitted that “regrettable” incidents took place at the mine in the past. 

The clashes between locals and police resulted in “the loss of life, injury and the mistreatment of illegal diggers” within the mining license, it said last year.

Watchdog World Mine Tailings Failures (WMTF) said Williamson’s is third diamond tailings failure in a year and the 19th of this decade (2015-2024).

The organization’s executive director, Lindsay Newland Bowker, noted that in terms of mineral production, this decade is already the worst in terms of catastrophic tailings failures in recorded history.

Source: DCLA