Petra Diamonds has reduced its rough-pricing forecast for the remainder of the fiscal year for the second time in two months as market weakness persists.
The miner now expects rough from its Finsch mine in South Africa to sell for between $70 and $80 per carat, rather than the $80 to $90 per carat it predicted last month, it said Tuesday. At the start of the year, rough from the mine was expected to yield between $98 and $105 per carat.
The cuts come as sales at the company’s most recent tender, which took place in December, showed “ongoing weakness,” Petra noted. Like-for-like prices for the first half of the fiscal year fell 10% from the same period a year ago, as the miner offered smaller size categories, it said.
For the six months that ended December 31, revenue slipped 22% year on year to $146 million as sales volume fell 22% to 1.3 million carats. However, that figure compares to a strong showing during the same period a year ago when the miner sold an additional 456,000 carats of rough that was deferred from sale in fiscal 2023. Production decreased 2% to 1.4 million carats.
The company’s net debt increased to $225 million as of December 31, compared to $201 million on June 30, primarily due to the continued weak diamond market and the timing of tender sales, Petra explained. The miner scheduled three tenders during the first half, while four will occur in the second half.
Petra sees demand picking up in the near term, it noted.
“We are encouraged by recent reports of stronger online jewelry demand in the US and stronger jewelry demand in India over the festive season and Diwali,” said Petra CEO Richard Duffy. “This, together with reduced supply from the major producers and industry-wide marketing efforts, should help rebalance inventories.”
Image: The Finsch diamond mine. (Petra Diamonds)
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