Petra Diamonds shares tick up as it maintains full-year guidance while the market stabilises

 
Courtney Goldsmith
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Diamond prices are on the rise and Petra said the market shows signs of stabilising (Source: Getty)

Petra Diamond's shares edged up after it maintained its full-year guidance in a trading update for the three months to 31 March.

The figures

The FTSE 250 diamond miner said quarterly production was flat at 999,768 carats, while production for the nine months to 31 March was up 15 per cent to 3,014,856 carats.

Petra's full-year guidance is unchanged at around 4.4m carats, but Richard Hatch, analyst at RBC Capital Markets said this could be a stretch.

Read more: Petra Diamonds warns it will be at the low end of production expectations

Revenue for the quarter was down one per cent to $119.1m as there was no revenue from exceptional diamonds. Adjusting for this, revenue jumped 13 per cent. For the nine months to the end of March, revenue increased 27 per cent to $347.6m.

Although sales lagged behind analyst estimates, like-for-like rough diamond prices were up two per cent.

Shares in the firm lifted 2.25 per cent at 129.9p in late afternoon trading.

Why it's interesting

Petra said there are "signs of stabilisation" in the rough diamond market "evident with steady demand across all size ranges, including goods which were previously impacted by Indian demonetisation".

Market conditions are expected to remain stable in the fourth quarter, traditionally its strongest sales period, Petra said.

Commissioning of the firm's new Cullinan plant started around the end of the third quarter, and first production is expected in May. Full commissioning is expected to be reached by end of the fourth quarter.

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What Petra Diamonds said

Chief executive Johan Dippenaar said:

Further progress has been made with our expansion programmes during the period, as evidenced by the higher [run-of-mine] grades achieved as a consequence of the increased contribution from undiluted ore.

The significant strengthening of the company's balance sheet following the recent debt restructuring, as well as the positive signs we are seeing in the diamond market, position us well as we continue to ramp up production from our capital programmes.

Read more: Petra Diamonds unearths 121 carat white diamond

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