Petra Diamonds, which bagged $49 million (R932m) from its latest diamond tender, will commission additional production tunnels at its Finsch mine by June this year despite a reduction in ore processed during the quarter to the end of March.
This comes after the diamond miner issued retrenchment notices to employees at its South African operations earlier this month as it intensifies cost-cutting initiatives.
Finsch is one of the world’s most significant diamond mines and South Africa’s second-largest diamond operation by production.
Petra Diamonds has also announced that it was forging ahead with the disposal of its stake in the Koffiefontein diamond mine.
The company’s fifth diamond tender was completed during the period under review, achieving $49m from the sale of 362 000 carats.
Average diamond prices per carat received for the period grew by 22% compared to the previous tender.
This was supported by the sale of a 14.76-carat “exceptional colour and clarity blue diamond” recovered from the Cullinan Mine in South Africa, and which was auctioned for $8.2m under a partnership agreement.
On a like-for-like basis, which excludes exceptional sales, Petra Diamonds’ prices for the latest tender were relatively flat by 0.8% “through this seasonally weaker period” compared to the previous sale.
Despite this, Petra Diamonds’ total revenue for the year to date period is down to $285m compared to $316m in the first five tenders of 2023 full year, excluding Koffiefontein, which has now been disposed of by the company.
“Year-on-year volume variances were affected by the deferral of certain FY 2023 sale parcels sold as part of Tender 1 of FY 2024,” the company said.
Petra Diamonds CEO Richard Duffy said the company’s production for the quarter was consistent with the preceding quarter and in line with expectations for the period.
“The company has completed and commissioned production tunnels at its Finsch mine and plans further commissions before the end of June, keeping its production guidance for the 2024 full year at up to 2.85 million carats,” Duffy said.
“At Finsch, the first of the 78-Level Phase II production tunnels was successfully commissioned in March 2024, with commissioning of the remaining six tunnels expected to be completed by June 2024. We confirm our FY 2024 production guidance of 2.75 to 2.85 million carats.”
During the quarter period under review, Petra Diamonds repaid $23m of of its revolving credit facility to reduce interest costs.
This left it with available liquidity of $104m as at the end of March.
“While net debt had increased at the end of Q3 FY 2024, proceeds from the recently closed Tender 5 have more than offset this increase,” it said.
“Together with the actions taken to sustainably reduce costs, this further enhances our business resilience.”
During the March quarter period under review, ore processed from Petra Diamonds’ operations reduced marginally to 2.9 million tons against 3 million tons as continued ramp-up of production at Williamson, and a steady quarter at Cullinan Mine was offset by lower volumes at Finsch.
This was due to the previously announced winder issues, which have, however, now been resolved.
There was an 18% improvement in grades at Finsch which has been attributed to the company attaining first production tons from the 78-Level Phase II, while lower diamond production at Cullinan Mine has been ascribed to reduced tailing volumes and grade variations.
Revenue for the quarter amounted to $66m compared to $90m in the previous quarter.
Petra Diamonds blamed the decrease in revenues on lower production and the timing of receipts from its fifth diamond tender.
Support from the rand weakness continued throughout the period, although capital expenditure for the quarter totalled $15m, “in-line with updated guidance announced earlier following the decision to defer certain capital project expenditure” by the company.
At the Finsch mine, Petra Diamonds has proposed a revision of throughput tonnages from 2.8 to 2.2 million tons per year.
This means that the company will be reviewing its “current continuous operations shift” configuration.
BUSINESS REPORT