Petra Diamonds' shares dropped heavily this morning after prices fell at the mine which produced the British crown jewels' two largest diamonds.
A revenue increase of eight per cent to $207m was not enough to boost investor confidence after like-for-like diamond prices dropped four per cent, hit by lower-quality output from its Koffiefontein and Cullinan mines.
The company also fell short of analyst expectations as net debt ballooned by $93m from the full year, even as capital expenditure decreased 41 per cent to $44m, sending shares down 9.2 per cent this morning to 40.8p.
“Petra’s trading update, despite the strong production growth, will disappoint many, if the strong rally in the share price in recent weeks is anything to go by,” said Kieron Hodgson, an analyst at Panmure Gordon.
Production grew 10 per cent to 2m carats year-on-year in the first half, while Petra expects production to hit between 3.8m and 4m carats in the financial year.
Outgoing chief executive Johan Dippenaar said: “Petra has delivered solid production in the first half of the 2019 financial year underpinned by a continued improvement in safety performance.
“We are seeing production reaching consistent levels while our focus remains on the delivery of operational and capital expenditure efficiencies in order to generate positive free cash flow and subsequent debt reduction.”
Petra's stock had increased from around 37.3p at the beginning of the year to close at 44.94p on Friday. However, this is well below its 81p per share price in May last year.