Notwithstanding the recent softening of the diamond market and issues that have affected production at the Cullinan and Finch diamonds mines, Petra Diamonds remains in a strong position, being considerably more resilient through its strengthened balance sheet and the implementation of its operating model, together with ongoing cash generation.

Petra CEO Richard Duffy highlighted this before reiterating guidance for the company’s financial year 2023 (FY23) and taking comfort from the underlying fundamental market support as a result of the structural supply deficit, regardless of any short-term volatility relating to prevailing macroeconomic challenges. (Also watch attached Creamer Media video.)

The London Stock Exchange-listed Jersey-headquartered diamond mining and marketing company produced 763 220 carats in the three months to the end of September, when 3 147 731 t were treated, 520 000 carats sold, and $104.3-million worth of revenue generated.

At the Williamson diamond mine, in Tanzania, ore processed in the three months to the end of September increased 22% year-on-year.

Finsch production was 2% higher than in the last quarter of the 2022 financial year and Cullinan production was down 13% year-on year to 763 220 carats owing to lower grades.

Options for a responsible exit at Koffiefontein diamond mine are being explored as the mine approaches the end of its mine plan. This is being done in close consultation with its stakeholders, in particular the workforce.

The company has maintained its production guidance for the year, although this will likely be towards the lower end of the range for Cullinan Mine and Finsch, the company stated in a release to Mining Weekly.

Lost time injury frequency improved 48% year-on-year, ore processed rose 22%, and gross debt reduced by $143.6-million during the quarter.

Cullinan mined and treated 1.1-million tonnes for the quarter and run-of-mine grades at 33.2 cpht were in line with those achieved in the last quarter of FY22.

This is attributable to a lower run-of-mine (ROM) grade resulting from the previously announced change in the ore make-up of the C-Cut block cave footprint as the production progresses from south west to north east due to cave maturity with a higher proportion of cave waste. Various options are being considered to mitigate this impact.

Finsch tonnes from underground were negatively impacted by a safety stoppage notice and lower tunnel availability on 73 and 75 levels. ROM grade benefitted from enhanced drill, blast and draw controls previously reported on, as well as certain changes effected in the treatment plant.

“We continue to benefit from the operational improvements we have made across the business which provide for greater stability and resilience.

“We will continue to seek to mitigate the impact of the recent challenges experienced at Cullinan Mine and Finsch and remain confident in our ability to generate cash to fund capex, allow further deleveraging and the payment of dividends,” said Duffy.

“While our operations have benefitted from a weaker rand, we continue to closely monitor the current macro-economic uncertainties, particularly the impact of inflation on our cost base, and the impact of sanctions on Russian producers as well as the ongoing implications of Covid on demand in China.

“ The backdrop of structural changes to the supply and demand fundamentals in the diamond market remains unchanged and we anticipate it to remain supportive going forward, although we expect some short-term volatility driven largely by the ongoing lockdowns in China,” he added.

Petra has extended the closing of its second sales tender for FY23 for a portion of its gem and near gem quality goods as a result of unusual market conditions.

These are Duffy’s answers to questions put to him by investors:

What do you see as realistic options for Koffiefontein mine as you look to exit?

As we announced, we had been through a process in looking at options for us to exit Koffiefonte...