Petra reports record Q1 but warns of 'softness' in diamond market

Petra mined 833,744 carats of diamonds in the three months to 30 September, up just 2% over the first quarter of last year, but the highest quarterly production in history.

Meanwhile, revenues for the quarter surged by 55% to $100.8m on the back of the recent $23.5m sale of an 85% interest in a 122-carat blue diamond found at its Cullinan mine in South Africa.

Since the end of the first quarter, the company has also sold a 232-carat Cullinan white diamond for $15.2m.

However, the company said that the diamond market is "exhibiting customary seasonal softness in the post-summer period".

Nevertheless, it maintained its full-year production guidance of 3.2m carats and said that the market is expected to "firm up as usual" towards the end of the calendar year.

In other news, Petra has agreed with its banks to increase its financial facilities at reduced rates by $40.4m to $260m, "thereby providing additional funding headroom, financial flexibility and further strengthening of the balance sheet".

Analysts Yuen Low from Shore Capital said the first-quarter update revealed "no major surprises", but highlighted Petra's cautious view on current conditions.

"We wonder therefore whether the company should have waited a little bit rather than selling the 232ct Cullinan white diamond $15.2m post-period end," Low said.

The stock was 1.2% lower at 173.1p in early trading in London.