Petra Diamonds reports mixed results from latest tender

The London-listed company sold 371,104 carats in tender 6 - a 2% increase from the 362,132 carats sold in tender 5.

However, despite the rise in sales volume, total revenue for the tender fell to $44m - an 11% decrease from the $49m generated in the prior tender.

The average price per carat dropped 13%, from $136 in tender 5 to $118 in tender 6.

Petra attributed the decline in price per carat to the absence of exceptional stones in the latest tender, which previously included a 14.76-carat blue diamond that fetched $8.2m in tender 5.

Year-to-date revenue for 2024 stood at $329m, up from $316m in the first five tenders of 2023.

The increase was partially due to the deferral of certain diamond parcels to tender 1 of 2024, impacting the volume variance year-on-year.

Petra also reported a 2.6% drop in like-for-like rough diamond prices compared to tender 5, attributing that to seasonal weaknesses across various size categories.

On a year-to-date basis, like-for-like prices had fallen 8.6% compared to the same period in the 2023 financial year.

The product mix played a significant role in the latest tender's outcomes, with lower average prices per carat due to fewer high-value single stones, influenced by the current mining areas being accessed.

That situation was expected to be temporary, the board said.

The company’s pricing assumptions for the rest of 2024 remained unchanged, with estimated prices per carat as follows at the Cullinan Mine of between $105 and $125, from Finsch of between $95 and $110, and at Williamson of between $200 and $225.

Petra cautioned that the estimates were internal, and subject to factors beyond its control.

“Our sixth tender cycle yielded $44m from the sale of 371,000 carats,” said chief executive officer Richard Duffy.

“Like-for-like prices were marginally down through this seasonally quiet period, being 2.6% lower than tender 5, with demand slightly muted due to Indian holidays and the continued slow recovery in the Chinese market.”

Duffy said the company was still seeing evidence of stabilisation in the market, and was “cautiously optimistic” that demand and pricing would improve towards the end of the calendar year.

“We plan to conclude a seventh sales cycle closing before the end of June 2024.”

At 1228 BST, Petra Diamonds shares were down 2.33% at 42p.

Reporting by Josh White for Sharecast.com.