Canaccord Genuity reiterates 'buy' on Petra Diamonds

Canaccord Genuity reiterated a ‘buy’ rating and target price of 165p on Petra Diamonds after the miner reported its first quarter trading update.

Petra reported a 30% increase in production to 1,097,523 carats for the three months to 30 September, boosted by an increased contribution from undiluted ROM ore, improving ROM grades and additional tailings production from Kimberley Ekapa Mining.

First quarter revenue was $94.7mi from 745,447 carats sold, compared to nil in the first quarter of last year as no tender was held.

Net debt at period end was $463.9m - up from $384.8m at the start of the period, but within expected levels and excluding cash from the October diamond tender.

Chief executive Johan Dippenaar said the group continues to expect full year production of 4.4 to 4.6 Mcts, in line with earlier guidance.

Canaccord expects the full year to be weighted towards the second half when increasing volumes of higher grade ROM ore are produced.

Petra said new caves being installed at Cullinan and Finsch are starting to deliver undiluted ore and will result in a continued increasing ROM grade profile and improved product mix.

“These results were very much in line with expectations, and we see no need to change our fiscal year 2017 estimates," Canaccord said.

“We currently forecast full-year earnings before interest, tax, depreciation and amortisation of $274m, net profit of $82m and earnings per share of 15.2 cents.”

Shares rose 6.87% to 149.40p at 0942 BST.