Petra Diamonds produced over 974K Ct in Q1
Petra Diamonds Limited announces the following unaudited Trading Update for the three months ended 30 September 2020, Q1 FY 2021. Q1 production down 10% to 974,346 carats against the same period-Q1 FY 2020 had remained of 1,082,764 carats, mainly due to the Williamson mine remaining on care and maintenance.
Q1 revenue increased 33% to US$82.0 million over the Q1 FY 2020 of US$61.6 million, mainly due to the release of inventory carried over from Q4 FY 2020. Although diamond prices increased ca. 21% on a like-for-like basis at the September 2020 tender in comparison to the prices obtained following the Covid-19 outbreak, with a further ca. 2% increase at the October 2020 tender post Period end, prices are still down around 10% in comparison to pre-Covid-19 levels.
Due to ongoing uncertainty around the impact of Covid-19, production guidance for FY 2021 remains suspended. While the mines are generally operating at planned levels, there remain risks to production relating to the impact of the stringent Covid-19 measures in place.
As previously announced, five high quality Type IIb blue diamonds of significant colour, clarity and size were recovered at the Cullinan mine in September 2020 and have since been named the Letlapa Tala Collection. Petra is planning a special, standalone tender for these diamonds which, as previously announced, is due to be finalised around the end of November 2020.
The diamond market has shown some modest improvement in FY 2021 but there is still uncertainty around further disruption due to Covid-19 related restrictions. Sales post Period end indicated like-for-like price movements up ca. 2% from the September tender.
The Company is continuing its flexible approach in planning its upcoming tenders in light of the Covid-19 challenges. Risks to tender timing remain as a result of possible restrictions that may be re-imposed following a second wave of Covid-19 infections currently being experienced in a number of countries, including Belgium.
Richard Duffy, Chief Executive of Petra Diamonds, commented, “The Company continued to perform well during the Period, with record carat production at Cullinan during August and September, an excellent achievement given the Covid-19 mitigation measures, which now form part of our standard working conditions. However, Group production was down, mainly due to the Williamson mine remaining on care and maintenance.
We are working very hard to improve our safety performance, with a continued emphasis on awareness campaigns, retraining and management-led interventions and, despite the regression in our LTIFR rate, it was encouraging to see that overall the number of total injuries during the Period reduced.
We will retain flexibility around the timing and method of our sales tenders for the remainder of the financial year, given the COVID-19 related risks. Sales will be boosted by the special tender for our Letlapa Tala Collection of blue diamonds towards the end of November 2020.
Finally, last week’s announcement with regards to reaching agreement in principle with our ad hoc group of bondholders and South African lender group around a financial restructuring will provide us with a considerably more manageable level of debt going forward and marks a significant milestone in putting the Company on a viable footing going forward.”