Petra Diamonds Limited today announced its Trading Update (unaudited) for the six months ended December 31, 2019 (H1 FY 2020/H1), which, the Company said, will be followed by the publication of the Company's Interim Results for the period on February 17, 2020.

Production for H1 FY 2020 reached 2,070,240 carats, marking an increase of 3% over H1 FY 2019 production of 2,019,147 carats. “Petra is currently on track to meet or exceed FY 2020 production guidance of ca. 3.8 Mcts, as some of the Project 2022 throughput benefits are starting to deliver,” the Company underlined.

Revenue for H1 revenue, however was down by 6% to US$193.9 million realised from the sale of 1,743,807 carats; this compares with US$207.1 million earned from the sale of 1,736,357 carats in H1 FY 2019. This, the Company explained, was mainly due to lower diamond prices; as well as the “adverse product mix” at Finsch and Williamson (reported previously). The impact of this was partially offset by the sale of the exceptional 20.08 carat Type IIb blue diamond from Cullinan, for US$14.9 million in the period.

“Q2 FY 2020 saw growing stability in pricing as the calendar year closed,” Petra remarked. “Post Period end, demand has continued to improve as the midstream looks to replenish inventory. Early indications are that rough pricing has improved modestly to date in Q3 FY 2020.”

The Company, has formulated a strategic plan -- dubbed Project 2022 – for the expansion and optimisation of its assets in order to “deliver significantly increased production, revenue and cashflow” in the coming years.

Now, as part of its trading update, Petra reported that the various works undertaken under Project 2022 both, at mine and Group level, “are progressing well”.

“The throughput work stream (comprising 75% of the Project 2022 target) has contributed to the improved production performance and assisted in the delivery of a record level of ROM tonnes mined in H1 FY 2020,” the Company stated.

Petra’s net debt as at December 31, 2019 stood at US$596.4 million; as compared to a net debt of US$592.8 million reported as at 30 September 2019. The Company’s diamond inventory stands at 992,425 carats valued at US$85.2 million at end of H1, as against an inventory of US$92.4 million held as on September 30, 2019.

“The Company's South African Lender Group has consented to a waiver of the EBITDA related covenant ratios associated with its banking facilities for the December 2019 measurement period (measured only in March 2020),” Petra announced.

The Company stressed that ZAR:USD exchange rate volatility continued during the Period (averaging R14.69/USD1) with some strengthening at the Period end, closing at ZAR13.99/USD1. Post Period end, the ZAR:USD exchange rate has weakened again to ca. ZAR14.42/USD1 as at 24 January 2020.

Richard Duffy, Chief Executive of Petra Diamonds, commented: "I am very pleased with the progress made in implementing Project 2022 across our operations and at corporate level. The buy in to this project from all of our Petra employees and contractors has supported the strong operational performance across all sites, resulting in us achieving our highest level of ROM tonnes mined and carats recovered over the last six months, and has positioned us to meet or exceed full year guidance.”

He added: "It is also encouraging that rough diamond pricing has modestly improved moving into our third quarter. The health of the market will depend on continued supply discipline from the majors as well as macro-economic conditions.

Duffy also announced the appointment of Thashmi Doorasamy to the Petra executive team.    Thashmi, he said, will assume the new role of Group Human Resources and Public Affairs Executive, effective February 1, 2020.