Profits sparkle at Petra

MINER Petra Diamonds yesterday revealed it swung robustly back into the black over the first half of the year, turning a $34m (£22m) profit on the back of stronger diamond prices and a step up in production volumes.

Petra’s pre-tax profit for the six months to December compared to a stark $94.8m loss over the same period in 2008, in the depths of the slump in demand in the recession.

Chief executive Johan Dippenaar said prices were now showing strong signs of recovering to near pre-crisis levels.

“I wouldn’t say the increase will be like a hockey stick, motoring on upwards in a straight line, but I am cautiously optimistic,” he said.

Petra said it had $65m of cash in the bank at the end of the first half, a balance that is likely to be boosted this week by the sale of its 507 carat Cullinan Heritage rough diamond.

The group said it would use the cash to invest in expanding production at its major mining assets, taking annual production at its operations from 1m carats to over 3m carats.

RBC Capital Markets analyst Des Kilalea said Petra was on track to achieve its targeted production increase given its strong balance sheet, which was boosted by a $120m fund raising and debt repayment in December. But he added: “While rough prices remain vulnerable to the pace of recovery in global growth, our major concern revolves around costs driven by the strength of the South African rand and higher electricity costs.”