This morning, the shares of Petra Diamonds fell heavily after the prices fell at the mine which produced the two largest diamonds of the British crown jewels.
A revenue increase that amounted to eight percent to $207 million was apparently not enough to boost the confidence of investors after the like-for-like diamond prices dropped by four percent after it was affected by lower-quality outputs from its Cullinan and Koffiefontein mines.
The firm also fell short of the expectations of analysts as net debt bloated by $93 million from the full year, even as the capital expenditure declined by 41 per cent to $44 million, sending the shares down by 9.2 percent this morning to 40.8p.
An analyst at Panmure Gordon, Kieron Hodgson, stated: “Petra’s trading update, despite the strong production growth, will disappoint many, if the strong rally in the share price in recent weeks is anything to go by.”
The production rose by 10 percent to 2 million carats year-on-year in the first half, while Petra is anticipating its production to reach between 3.8 million and 4 million carats in the financial year.
Johan Dippenaar, the outgoing chief executive of the company, stated: “Petra has delivered solid production in the first half of the 2019 financial year underpinned by a continued improvement in safety performance.”
He added: “We are seeing production reaching consistent levels while our focus remains on the delivery of operational and capital expenditure efficiencies in order to generate positive free cash flow and subsequent debt reduction.”
The stock of Petra had increased from approximately 37.3p at the start of the year to close at 44.94p last Friday. However, this is well below its 81p per share price in May during the previous year.