Johan Dippenaar is adept at understatement. “It’s just these things on the side, which placed some pressure on us,” was how the Petra Diamonds (PDL) chief executive characterised a recent period in which the miner faced strikes, a strengthening rand and the blocked sale of a $20m (£14m) parcel of rough diamonds. All this, amid a shift in the mining plan and the (ultimately well-founded) faith that Petra’s lenders would waive year-end covenants and agree to re-set measures for June and December.
Two of those “things on the side” will remain in sharper focus for everyone else. The inauguration of the nominally mining-friendly President Ramaphosa might have boosted sentiment in South Africa’s extractive industry, but it has also boosted the rand. That’s been bad news for Petra’s cash flow, as on-site mine cost increases have outstripped the uptick in dollar-denominated diamond sales. Slim margins at Koffiefontein and Kimberley have also resulted in impairments of $118m, equivalent to more than half of those mines’ combined carrying value.
On the blocked parcel, there can be “no certainty” of it leaving the custody of Tanzanian officials, although the incorporation of its sale into full-year revenue expectations points to quiet confidence of a resolution. Prior to these results, Canaccord forecast adjusted cash profits of $189m and EPS of 4¢ for the June year-end (from $157m and 5¢ in FY2017).
| PETRA DIAMONDS (PDL) | ||||
| ORD PRICE: | 71.5p | MARKET VALUE: | £ 381m | |
| TOUCH: | 71.5-71.8p | 12-MONTH HIGH: | 153p | LOW: 59p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 103¢ | NET DEBT: | 111% | |
| Half-year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2016 | 229 | 51.6 | 5.3 | nil |
| 2017 | 225 | -95.2 | -17.6 | nil |
| % change | -1 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.40 | ||||
