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Petra Diamonds saw first quarter (Q1) production up 21% to 1.1 million carats, from 883,803 carats during the same period a year ago, with revenues increasing to $80.2 million, representing a 22% rise compared to last year.
Diamond prices in Q1 on a like-for-like basis were down by around 5% compared with the same period last year, making the company’s revenue growth more impressive and helping to put business on track to generate free cashflow in the second half of the financial year.
‘The first quarter of FY 2019 shows solid operational delivery, underpinned by strong safety performance, with the ramp up of our expansion programmes leading to a healthy increase in ROM carat production, thereby supporting our expectation of free cash flow generation and subsequent debt reduction,’ CEO Johan Dippenaar said in a statement.
The rise in Q1 production is welcome news for Petra Diamonds, which has mining operations in South Africa and Tanzania, as the company has seen its share price struggle, with shares in the business falling by 24% year-to-date to 38.5p a share.
The company’s past performance has posed challenges for the company to raise funds, with the business having to issue a discounted share sale in May 2018.
The state of the diamond market
The diamond market is showing signs of ‘seasonal weakness’, with several religious and other holidays observed by clients in the midstream.
But overall, supply discipline exercised by key diamond producers is expected to continue and will help ensure that an equilibrium is maintained between supply and demand of inventories in the midstream, the company said.
Diamond inventory as of September 2018 stood at around 970,000 carats with a market value of roughly $91.6 million.
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