Petra lowers pricing forecasts after mixed third diamond tender

The London-listed company sold 700,803 carats in tender three, up 17% compared to the combined 600,161 carats sold in tenders one and two.

However, sales revenue fell 7% to $71m, bringing year-to-date sales to $146m, down from $188m in the same period last year.

Average diamond prices for the tender dropped to $101 per carat, a 20% decrease from $126 per carat in the first two tenders of the financial year.

Mine-specific performance showed a varied picture, as the Cullinan mine reported an average price of $100 per carat in tender three, down from $146 per carat in earlier tenders but higher than the $112 per carat year-to-date average for the 2024 financial year.

The Finsch mine averaged $72 per carat, a decline from $84 per carat in the earlier tenders and $99 per carat year-to-date in 2024, while the Williamson mine saw a slight increase to $174 per carat in tender three, compared to $164 per carat in earlier tenders, though still below the $202 per carat year-to-date average a year earlier.

Petra also revised its pricing assumptions for the 2025 financial year downward due to softer market conditions.

The Cullinan mine’s forecast range was adjusted to between $120 and $130 per carat, while the Finsch and Williamson mines’ assumptions were lowered to $80 to $90 and $170 to $200 per carat, respectively.

Year-to-date like-for-like diamond prices were down 10% compared to the equivalent period in the 2024 financial year, which the company said was driven by declines in smaller-sized diamonds.

Petra emphasised that diamond pricing remained influenced by external factors, adding that it would continue to monitor market conditions closely.

“Our third tender cycle yielded $71m from the sale of 700,803 carats bringing year-to-date sales revenues to $146m from the sale of 1,300,964 carats,” said chief executive officer Richard Duffy.

“Like-for-like prices reduced by 7% from the previous tender cycle held in October reflecting a continued weak market across most size ranges, although we were encouraged by the 3% increase in the 5-10.8 carat category.

“As a result of the prevailing market weakness, we have revised our price assumptions for 2025.”

Duffy said that, despite the market backdrop, the company was encouraged by the majors’ ongoing discipline around restricting the volume of rough diamonds to support the market and initiatives by upstream, midstream and retail sectors to collaborate in the category marketing of diamonds.

“We remain committed to our target of net cash generation in the 2025 financial year, and have commenced additional cash generation and savings initiatives.

“This has regrettably required us to initiate a section 189 retrenchment process affecting our group and SA operations support functions.

“Vivek Gadodia has been appointed chief restructuring officer to lead the execution of this work.”

Refinancing discussions had been deferred to the 2025 calendar year, Richard Duffy added, to enable the cash generation initiatives to take effect and to benefit from greater certainty in market conditions.

“We remain confident of a successful refinancing of the 2026 2L notes and a further update will be provided at the time of our interim results in February 2025.”

At 0930 GMT, shares in Petra Diamonds were down 4.83% at 27.6p.

Reporting by Josh White for Sharecast.com.