Petra Diamonds revealed that its core earnings had increased as a result of a rise in production at its continuing mines. The company also revealed the CEO would be stepping down. This development increased Petra’s London listed shares- which has been down 40 percent this year, by more than 6 percent, its highest in over a month.
A stronger South African rand, operational delays in the first half of the year and confiscation of diamonds in Tanzania, left the company strapped for cash and in debt. However an improved performance in its diamond mines in the second half, a cash raise in June and a reversal in rand strength have helped the company cut debt and raise core earnings.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $195.4 million from $142 million in 2017. Petra did not name a successor, but outgoing CEO Johan Dippenaar, who has been the head since Petra merged with Crown Diamonds in 2005, said “its been a hard 13 years, we have made six acquisitions, a substantial rebuild and redesign and that was quite a job”.
He also noted that the company had faced a lot of challenges in the June 2017 financial year. Reuters reports that the Tanzanian government has not yet returned a consignment of diamonds that its confiscated from Petra in 2017. This happened at the same time the company was hit with a two week strike in South Africa.
Adonis Pouroulis, Petra’s chairman said the company was in the final stages of its expansion plan and is set to enjoy the benefits. Production rose 19 percent to 3.8 million carats when excluding the KEM Joint Venture.
Petra forecast a lower than estimated production for 2019 in July 2018. Canaccord Genuity Limited analyst, Des Kilalea said “these results paint an underlying picture of operational improvements and the development of a corporate structure more in keeping with a miner moving from being Capex-intensive to a stable and larger producer, and hopefully a strong free cash flow generator”.