Petra Diamonds launches 'immediate' cost review amid weak market pricing

(Sharecast News) - Petra Diamonds' share price slumped on Friday after the South Africa-focused miner said it had kickstarted an immediate cost review to "preserve liquidity" as pricing in the market continues to be weak.

The company reported sales of $68m for its third quarter, up from $49m the year before, mainly a result of the sale of a 41.82 carat Type IIb blue stone from the Cullinan Mine during the period.

However, pricing continues to be under pressure, particularly across smaller size fractions at both its Cullinan and Finsch mines. Diamond tenders also saw headwinds from the Middle East conflict which led to travel disruptions, while a stronger rand during the period further weakened cash generation.

"Against this backdrop, management has embarked upon an immediate cost and capital expenditure reduction assessment to preserve liquidity across the group," said joint interim chief executives Vivek Gadodia and Juan Kemp.

"We are currently reviewing the phasing of operating and capital expenditure, prioritising mining areas that offer the best near-term value, and minimising non-core operating and capital expenditure."

The company also said it was considering suspending further capital expenditure at its Finsch mine after recent weakness in mining results, with a review likely to conclude this month.

"Depending on the outcome of such assessment, the company will consider all options, including, but not limited to, operational cost cutting and other measures in respect of Finsch," the firm said.

Shares were 4.1% lower at 16.3p by 0956 BST, having dropped almost 6% earlier on.

Petra Diamonds