Petra revenue and production drop on diamonds seizure, labour disruptions

Petra Diamonds posted a 4% drop in production and a 17% decline in revenue for the first quarter.

In a trading update on Monday, the company said production fell to 1,053,817 carats from 1,097,523 in the first quarter of the previous year, mainly due to a planned reduction in tailings production at Finsch and Kimberley Ekapa Mining Joint Venture.

Meanwhile, revenue dropped to $78.7m from 711,277 carats sold from $94.7 million from 745,447 carats sold, including $10.9m revenue from exceptional diamonds. Petra highlighted the fact that no sales from the Williamson mine in Tanzania were included due to a parcel of diamonds being detained by the Government of Tanzania.

Another factor weighing on revenue was the decline in diamond prices, which fell 3% in the first quarter on a like-for-like basis versus the second half of the previous year, and by a further 2% at the company's second tender held in October 2017.

Still, the company maintained its full-year production guidance of between 4.8m and 5m carats.

Chief executive officer Johan Dippenaar said: “Despite the labour disruptions at Finsch, Koffiefontein and KEM JV, the group has made a strong start to FY 2018, delivering close to 1.1 Mcts for Q1. The group is continuing its production build up and it is encouraging to see the increasing contribution of run-of-mine production."

RBC Capital Markets said Petra’s first-quarter production beat its 890kct forecast despite the loss of around 70kct of production due to labour disruptions in the quarter.

At 0925 BST, the shares were up 2.5% to 83.75p.