Petra Diamonds production up, four fatalities reported

The FTSE 250 firm put that down to an to increased contribution from undiluted ROM ore, improving ROM grades and additional tailings production from Kimberley Ekapa Mining.

Q1 revenue was $94.7mi from 745,447 carats sold, compared to nil in the first quarter of last year as no tender was held.

Following the period end, Petra closed its second tender of FY 2017 yielding $66.4m, with a third and final tender for the first half scheduled for early December.

The board said prices achieved during the second tender held firm with year-to-date rough diamond prices remaining flat on a like-for-like basis compared to the second half of the prior year.

Expansion programmes, including the Cullinan plant project, remained on track and in line with expectations, Petra reported.

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

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.

The Company had undrawn bank facilities of $70m, down from$110m, with an additional unrestricted cash balance of $30m, reducing from $36.7m.

Petra said it remained on track to become free cash flow positive from H2 FY 2017 onwards.

The company also announced “with deep regret” that three unrelated incidents led to four Petra employees being fatally injured during the period.

“Operationally, the group has made a strong start to FY 2017 delivering close to 1.1 Mcts for Q1 and we continue to expect full year production of 4.4 to 4.6 Mcts, in line with earlier guidance,” said chief executive Johan Dippenaar.

“The newly established caves at both Finsch and Cullinan, accessing higher grade undiluted areas, are starting to meaningfully contribute to ROM production, which is continuing to ramp-up in line with expectations.”

Dippenaar said Petra had always taken pride in excellent safety results posted by its operations.

“It is therefore with deep regret that we report fatal injuries suffered by four of our employees.

“Across the group, we have embarked upon renewed safety drives to reiterate our zero-tolerance approach to unsafe acts and working conditions with an aim of zero harm to our workforce and contractors.”

He said Petra's focus remained on the health and safety of its workforce, maintenance of a healthy balance sheet, the tight control of costs and the successful roll-out of its expansion plans.

“[These plans] will continue to deliver increased contributions from higher quality production areas.”