London-listed Petra Diamonds reported higher diamond production for the quarter ended March 31 – the third quarter of the company’s 2023 financial year – following improved run-of-mine (RoM) grades and tailings production at the Cullinan mine, in South Africa, and increased throughput at the Finsch mine, in South Africa, CEO Richard Duffy says.
He adds that the company expects to deliver on its revised guidance of 2.75-million to 2.85-million carats for the full-year to end June 30.
With the Williamson mine, in Tanzania, expected to resume production in the first quarter of financial year 2024, Duffy highlights that Petra is well positioned to increase production by about one-million carats to 3.6-million to 3.9-million carats in financial year 2025.
“The key mitigating actions initiated over the last six months have been successful and occurred against a backdrop of recently improved diamond pricing, which we largely attribute to a post-Covid-19 recovery in demand from China.
“We continue to expect a supportive diamond market in the medium to longer term as a result of the structural supply deficit, while noting potential volatility in the near-term owing to recent geopolitical and macroeconomic uncertainty,” Duffy outlines.
Compared with the previous quarter, lost-time injuries and the lost-time-injury frequency rate increased to 8 and 0.47, respectively, owing largely to a single incident at the Cullinan mine in which four employees were injured. Petra has renewed its safety focus to address the quarter-on-quarter regression.
Total diamond production increased by 3% to 653 700 ct as production improved by 14% at Finsch following the introduction of new equipment, despite some ground handling challenges.
Production at the Cullinan mine increased by 7%, supported by higher tailings and RoM grades. Together, this more than offset the temporary suspension of production at Williamson and the placing of Koffiefontein on care and maintenance, Petra notes.
Ore processed decreased by 25% to 1.65-million tonnes, largely owing to the temporary suspension of production at Williamson.
At Koffiefontein, the Section 189(3) labour reduction process was completed during the quarter, resulting in the retrenchment of 382 employees at a cost of about R99-million with 80 to 90 employees retained for care-and-maintenance activities in the run-up to a responsible closure.
Support from a weaker rand and more stable diamond pricing continued throughout the quarter.
Revenue amounted to $67.8-million compared with $107.8-million in the previous quarter as higher pricing at the Cullinan and Finsch mines was more than offset by tender cycle timings; the resultant inventory build is expected to be released in the next quarter.
Gross debt increased to $248.5-million, reflecting the accrued interest charges for the three months to March 31.
Consolidated net debt of $124.7-million, compared with $90.8-million as at December 31, 2022, increased owing to the timing of the company’s diamond sales tenders, coupled with the previously announced capital expenditure programmes for the expansion projects at Cullinan and Finsch.
Ongoing actions taken to strengthen the business and improve cash flow generation, together with capital discipline, enable Petra to take advantage of the current supportive diamond market fundamentals, it posits.
Petra’s projects remain on track to deliver a one-million-carat-a-year increase in financial year 2025, with work beginning on the C-Cut extension to unlock a further 2.3-million carats from full-year 2025 through to full-year 2033, as the company develops the long-term potential of its resource base.
Petra adds that it continues to strive to create a zero-harm environment. The company is increasing its focus on identifying and mitigating safety risks with behaviour-focused intervention programmes. – (Mining Weekly)