Petra Diamonds Limited said that it had achieved record levels of production and revenue in the financial year ended June 30, 2017 with production rising by 8% to 4 million carats (FY 2016: 3.7 Mcts) and revenue up 11% to US$477.0 million (FY 2016: US$430.9 million). The Company also said that its absolute operating costs remained in-line with expectations, but its net debt was higher than at the same period last year.

Carats sold for the year increased 16% to 4,006,856 carats (FY 2016: 3,448,084 carats), while rough prices increased by ca. 2% on a like for like basis.

Petra has operations at five locations, the Finsch, Cullinan, Koffiefontein and Kimberley Ekapa Mining Joint Venture in South Africa and at Williamson in Tanzania.

Though both the production and revenue figures represented record levels for the Group, the actual production was below the guidance of ~4.4 Mcts mainly due to the delay bringing the new plant at Cullinan into full operation and the slower than expected ramp-up of the SLC at Finsch, Petra said.

It also reported that the rise in revenue due to increased production and increased volumes sold, was partially offset by a reduction in revenue from Exceptional Diamonds which yielded US$10.9 million during FY 2017 (FY 2016: US$36.3 million).

The Company also noted that with Capex now on a declining trend, debt levels will start to fall in FY 2018 and it expects to become free cashflow positive during FY 2018. Petra clarified that due to tender cycles impacting working capital requirements (three tenders in H1 and four in H2), net debt is expected to remain broadly in line with current levels during H1 and is expected to reduce thereafter.

Looking forward, Petra said that FY 2018 production is expected to rise ~23% to 4.8 - 5.0 Mcts; and to 5.0 - 5.3 Mcts for FY 2019 and that its mine planning process continues to be focused on maximising overall value, as opposed to maximising production volumes.

It also said that it expects a a marked increase in the proportion of higher value ROM carat production (~85%) (FY 2017: 71%) in FY18 as opposed to lower value tailings carat production this year, leading to an improved product mix resulting in a higher average value per carat.

Johan Dippenaar, CEO of Petra Diamonds, commented, “Record levels of production and revenue have been reached in FY 2017 and, whilst certain expansion programmes have taken longer than expected to ramp up, we have now attained the required production levels which will see production rise again substantially in FY 2018.”

Dippenaar added that improvement in ROM grades across operations demonstrated the increasing contribution of undiluted ore from the new production areas. He said, “FY 2018 will mark the first year where Petra will source the majority of its underground tonnages from undiluted ore, leading to a further improvement in grades, product mix and consequent higher average value per carat, without the need for improved market conditions.”