Petra Diamonds Limited has announced strong results for the six months to 31 December 2016 (H1 2017), with rough diamond production, revenues and carats sold all seeing substantial increases. Revenues were up 48% to US$228.5 million (H1 FY 2016: US$154.0 million) or US$217.6 excluding exceptional diamonds, with net profit after tax up more than 35% to US$35.2 million (H1 FY 2016: US$2.2 million loss) and an EBITDA margin of 38% (H1 FY 2016: 31%), indicating increased profitability. Petra's carats sold in the first half jumped 47% to 1.9 Mcts. Production was up 24% to 2,015,087 carats (H1 FY 2016: 1,629,403 carats). The company cites improving ROM grade profiles achieved as a results of accessing undiluted ore: +20% to 54.5 cpht (H1 FY 2016: 45.3 cpht) at Finsch and +34% to 34.5 cpht (H1 FY 2016: 25.7 cpht) at Cullinan.
Looking forward, Petra Diamonds expects continued production growth, as rough diamond recovery of +24% to 2 Mcts and 10Mt treated confirms their target of approximately 5.3 Mcts for FY 2019. Their expansion programs are also on track, as the execution of their underground expansion projects at Finsch and Cullinan continue as expected; both Finsch’s Block 5 SLC and Cullinan’s C-Cut Phase 1 projects delivered initial production during H1, in line with earlier guidance, and both projects remain on track to deliver ca. 1 Mt each in FY 2017. Commissioning of new Cullinan plant is set to commence at the end of Q3 FY 2017, as disruptions from labor stoppages were resolved and construction work resumed at the end of January 2017.
Commissioning of the new Cullinan plant is expected to commence towards the end of March 2017, some 8 weeks later than originally planned, with ramp-up to full production during Q4 FY 2017; it is also envisaged that the old plant at Cullinan will continue to operate until the end of March / early April 2017 (previously planned to be decommissioned at the end of February 2017). Petra says it remains on track to deliver full year production of ca. 4.4 – 4.6 Mcts, but is mindful of the potential to be towards the bottom end of this range, due to the above influencing factors associated with the new Cullinan plant, and will monitor this situation as commissioning progresses. The company says signs of stabilisation in the rough diamond market are evident and Petra expects conditions to remain stable in H2 FY 2017 (January to June 2017), though prices were flat during H1 FY 2017
Johan Dippenaar, CEO of Petra, commented: “Petra has achieved strong operational and financial results for H1 FY 2017, owing to the increased contribution of undiluted ore and continued stabilisation in market conditions. We are now reaching an exciting inflection point in the Company’s development and are on track to start benefitting from a declining Capex profile, a significant increase in ROM grades and product mix, and the associated improvement in margins and cashflow. The team is highly committed to maintaining momentum and continuing to achieve operating efficiencies throughout the ramp up of each project in order to accomplish our stated goal of ca. 5.3 million carats by FY 2019, whilst upholding safety as our number one priority.”
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