Petra Diamonds Ltd, earlier this week released its Trading Update for the six-month period ended December 31, 2018, stating that its production rose 10% to 2.02 million carats (H1 2018: 1.84 mn cts) and sales were up 15% to 1.74 mn cts (H1 2018: 1.51 mn cts). The Company said that production was now reaching “consistent levels” and its focus would now be on delivering “operational and capex efficiencies” to “generate positive free cash flow and subsequent debt reduction”.

The Company also reported that its interim revenue for H1 had risen by 8% to US$ 207.1 mn (H1 2018: 191.7 mn).

However, the positive operational cash flow in H1 was offset by payments to its BEE partners largely for servicing bank debt, a recoverable advance to the KEM JV and an ~ US$ 25 million revenue shortfall due to the volatility in Cullinan’s product mix and a 4% downward movement in like-for-like pricing as well as disruptions at the Koffiefontein project.

Overall, the product mix during H1, especially at Cullinan, yielded prices at the lower end of historical ranges. Also, rough diamond prices on a like-for-like basis reduced by ~4% compared to H2 FY 2018 due to usual seasonal weakness.

As a result, net debt increased to US$ 557.2 mn on Dec 31, 2018 (30 June 2018: US$ 520.7 million and 30 September 2018: US$ 538.9 million).

Further, Petra reported that its Williamson mine registered a strong operational performance and two good quality pink stones were recovered post Period end which are expected to be sold in February 2019.

Johan Dippenaar, Chief Executive Officer, commented: “Petra has delivered solid production in the first half of FY 2019 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 capex efficiencies in order to generate positive free cashflow and subsequent debt reduction.”

Guidance for FY 2019 has been maintained at between 3.8 mn and 4.0 mn cts (FY2018: 3.8 mn cts).