Petra Diamonds Share News (PDL)

(Sharecast News) - Petra Diamonds updated the market on the year ended 30 June on Thursday, reporting a 7% fall in production to 3.59 million carats.
The London-listed firm said positive throughput improvements driven by 'Project 2022' had led to the highest run-of-mine production recorded in its history for the nine months ended 31 March, although overall performance for the full year was negatively impacted by the Covid-19 measures affecting production in the third and fourth quarter.

It said revenue fell 36% to $295.8m, reflecting weaker prices during the period to February, exacerbated by "significant" price reductions and "major" disruptions to the planned sales cycles following the outbreak of Covid-19.

Group total on-mine cash costs were expected to be largely in line with guidance, the board said.

Operational capital expenditure, excluding capitalised borrowing costs, was down 58% to $34.2m, lower than its original guidance of $43m, which the board put down to its response to Covid-19.

Net debt as at 30 June totalled $658m, up from $601m at the end of March, due to lower sales and the capitalisation of the deferred $23.6m coupon payment on ktis $650m loan notes.

Unrestricted cash was $53.6m at year-end, down from$64.2m at the end of March, including $52m further to it drawing down ZAR 400m under its revolving credit facility, and ZAR 500m under its working capital facilities.

At the end of March, Petra had $28m drawn under its bank facilities.

For the year, the company's lost time injury frequency rate was 0.29, compared to 0.21 in the 2019 financial year, with 19 lost time injuries recorded in the 2020 year, as opposed to 16 in 2019.

Total injuries, including those that did not result in a lost shift, were down 27%, the board noted.

Following the year-end, Petra sold 574,000 carats for $36.4m, bringing the total sales across the South Africa operations for the June and July tender cycle to $40.6m, $4.2m of which was included in its June numbers, from 581,900 carats sold.

The board said that was mainly through agreements with long-standing customers, with payment terms agreed, which would see the cash from those sales being received during July and August.

It said the next tender was planned for September, subject to prevailing market conditions and any Covid-19 related regulations.

The company's Project 2022 plan had resulted in the implementation of various initiatives which "eliminated or mitigated" the impact of bottlenecks in the production processes at its various mines, resulting in the increased throughput recorded for 2020, prior to the disruption of Covid-19.

Petra said the focus of the project now also included a sustainable optimisation of its cost structure during the current period of reduced revenue generation.

The board said that due to the ongoing uncertainty around Covid-19, production guidance for 2021 would be provided once a sustainable level of operational stability was reached.

It did note that 39 employees were confirmed Covid-19 positive at the South African operations to date, and while the majority of those affected were only experiencing mild symptoms, and some were now back at work, the firm did experience a death at Cullinan related to the disease.

"Petra's operations have again delivered strongly in an extremely challenging environment that continues to be severely impacted by the Covid-19 pandemic," said chief executive officer Richard Duffy.

"Despite our robust underlying business, significantly reduced revenues that are the result of a disrupted diamond market have required us to formally engage with our note holders and consider other strategic options to deliver a more sustainable capital structure going forward."

At 1154 BST, shares in Petra Diamonds were down 7.23% at 1.53p.