Despite a decrease in revenue and an increase in debt, Petra Diamonds has applauded a “solid start” to the year.
The diamond miner, which operates in Tanzania and South Africa, reported a 17pc drop in revenue to $78.7m (£59.7m) for the first quarter of the company’s year, and a 4pc decrease in production.
Petra blamed the drop in sales on the Tanzanian government’s seizure of a parcel of diamonds, which had claimed that the company was under-reporting the volume of its exports. It was also struck by labor unrest at its mines in South African.
Its chief executive, Johan Dippenaar, said that together, these challenges had “unfortunately tripped up what would have been a wonderful start to the year.” None the less, Dippenaar continued, a “good solid start” was made by the miner to its financial year.
Earlier this month, Petra warned that at the end of 2017, it might breach its debt covenants, having borrowed massively to fund a multi-year programme to develop its mines. On September 30, net debt was higher than anticipated at $613.8m, compared with June’s $555.3m.
“We maintain there’s nothing to worry about because we are all the time posting improvements in our results,” said Dippenaar. “We’ve always had very good support from our lenders… We are just flagging [the potential breach] up front.”
From January, Petra plans to start hacking away at its debt pile as its capital expenditure drops and its sales increase; more diamond auctions are held in the second half of its year.
However, the global diamond market seems to have reduced fractionally, with Petra reporting a 3pc decrease in prices in its first quarter.
Meanwhile, it continues to negotiate with the Tanzanian government for the release of the shipment that was seized. Earlier this month, the company was able to export a second parcel to its office in Antwerp.