Petra Returns to Profit as Debt Deal Nears

RAPAPORT... Petra Diamonds reported a profit in the six months ending December 31 thanks to a stronger South African rand and lower costs.The miner, which is in the midst of a capital restructuring, posted a profit of $2.7 million for its fiscal first half compared to a loss of $10.2 million for the same period the year before. The appreciation of the South African currency against the US dollar resulted in a $65.1 million foreign-currency gain for the period, the company said Tuesday. Petra reduced its operating costs by 25% year on year to $131.3 million, resulting in better margins, since sales fell at a lower rate. Revenue declined 8% to $178.1 million for the six months. The $40.4 million sale of the Letlapa Tala collection, comprising five blue diamonds, could not fully offset weak rough prices in the market. Prices returned to pre-pandemic levels in January following the reporting period, Petra noted."The continued improvement in the diamond market, with prices now back at pre-Covid-19 levels, is encouraging, and the recovery of the Letlapa Tala stones and other high-value stones from Cullinan supported strong [earnings] growth over the comparative reporting period in fiscal 2020," said Petra CEO Richard Duffy.The Cullinan mine remains Petra's growth driver, as the company continues to face operational issues at Finsch and Koffiefontein and the Williamson deposit in Tanzania remains closed. The miner is withholding its production guidance for fiscal 2021 due to the ongoing uncertainty surrounding the impact of Covid-19, it added. Production slid 16% to 1.7 million carats for the half yearPetra recently sold a majority stake to its lenders in exchange for a reduction of debt, which stood at $700.4 million as of December 31. The company expects the deal to close in March, but reiterated that it was reliant on the restructuring for it to continue as a going concern. Image: A truck hauling ore at the Finsch underground mine. (Petra Diamonds)