Monday, April 22, 2024

Petra production down, but higher diamonds prices push revenues up

Despite a drop in production, Petra Diamonds saw its revenues go up, buoyed by the better diamond prices that have cheered miners coming out of the global economic recession.

The company, which has some concession areas within the CKGR, said gross mine revenues for the year ending 30, June 2011 were up 24 percent to US$221 million (about P1.5 billion) from US$178 million (about P1.2 billion) for the same period last year.

The AIM quoted mining outfit boasted that the turnover could have gone up by 55 percent if the exceptional sale of the US$35 million (about P229.7 million) Cullinan Heritage diamond was not included in the 2010 full year results.

Petra Diamonds Chief Executive Officer, Johan Dippenaar, praised the rough market situation that has left smiles on a number of diamond miners.

“Petra has once again recorded significant growth in revenue, reflecting the health of the rough diamond market. Whilst production was relatively flat for the Period, we will see a further step-change in output for FY 2012 as the Finsch acquisition is expected to complete shortly,” Dippenaar said.

The results showed its gross carats sold was up 4 percent to 1,174,825 compared to the 1,125,098 of the same period last year and the company is encouraged by an increasingly positive outlook for the diamond market as evidenced by the significant strengthening of diamond prices.

“Given the outlook for the diamond industry, where demand is forecast by most industry commentators and major producers to outpace supply, Petra’s exceptional growth profile will ensure the Group is in a strong position to capitalise on these very robust fundamentals,” he added.

However, the revenues do no supplement production, which was down 4 percent to 1,116,965 carats from 1,164,856 carats recorded in the prior year.

But the company remains bullish about growing the output despite production remained relatively flat for the period compared to 2010.

The company attributed the status of production to a number of factors including a strategic focus on ‘value production’ as opposed to ‘volume production’ which led Petra to raise the bottom-cuts in the treatment plants of the Cullinan, Koffiefontein and Kimberley Underground mines in H1 FY 2011.
The policy is part of the company’s core objective to maximise revenues.

It also the slow output was because of the planned cessation of main pit production at Williamson (whilst the expansion plan is underway) and the planned depletion of high grade Optical Sort Plant (OSP) material at Cullinan.

Petra also blamed lower than expected volumes from Kimberley Underground due to initial commissioning difficulties at the Joint Shaft plant, which have now been largely overcome; and unseasonably heavy rainfall.

The company like many other South African mining companies, was affected by the very high rainfall levels during the Period, especially where processing wet stockpile and tailings material
“This has been a year in which the company has confirmed its position as one of the world’s leading independent diamond producers. With the closure of the Finsch acquisition expected in the coming weeks, the Company remains on track to more than double production in FY 2012, and is targeting 4 million carats in FY 2014 and over 5 million carats by FY 2019,” Petra said.

Earlier in the year, the company agreed with De Beers in January 2011 to acquire the Finsch mine in South Africa.

Finsch will more than double Petra’s annual carat production and increase the Group resource base to over 300 million carats valued at circa US$56.5 billion (about P370.7 billion).

Petra has a number of mines in production in South Africa and an exploration project in the Botswana after acquiring 100 percent of Kalahari Diamonds Limited and subsequently became the holder of a large land area under diamond prospecting licence in Botswana.


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