Petra Diamonds FY production, sales rise

In a trading update for the year ended 30 June, Petra Diamonds said revenue was up 1% to $430.9m, mainly due to an increase in volumes sold, even as diamond prices fell 6% on the year.

Full-year production was up 16% to 3.7m carats – above company guidance of 3.6m to 3.65m carats – and the company said it is now on track to hit its long-term target of 5m carats per year a year earlier than expected, in 2018.

Chief executive officer Johan Dippenaar said: "Our peak capex year is now behind us and due to the advanced nature of our development programmes and the new mining areas coming on stream, we expect the group as a whole to start generating free cashflow from FY 2017 onwards.

"Petra is fully financed to completion of its expansion programmes, all of which remain on track, and its financial position is in line with expectations, including the related debt facility covenant measurements."

Petra said it expects full-year 2017 production of 4.6m to 4.8m carats, up 25% to 30% on 2016.

The rough diamond market faced challenging conditions in the first half of the year due to excess polished inventory in the pipeline, liquidity issues in the midstream, the strong US dollar and a slowdown in retail demand from China.

However, Petra said further to reduced supply from the major diamond producers, the market stabilised in early calendar 2016, with good sales demand from the midstream of the diamond pipeline leading to improved sales volumes of rough diamonds.

At 0940 BST, Petra shares were up 1.7% to 121.50p.