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Petra Diamonds hails ‘solid start’ despite rising debt

Petra Diamonds, which operates in South Africa and Tanzania, reported a 17pc fall in revenue to $78.7m for the first quarter - Image © Petra Diamonds Limited
Petra Diamonds, which operates in South Africa and Tanzania, reported a 17pc fall in revenue to $78.7m for the first quarter - Image © Petra Diamonds Limited

Petra Diamonds has hailed a “solid start” to the year despite a fall in revenue and a rise in debt.

The diamond miner, which operates in South Africa and Tanzania, reported a 17pc fall in revenue to $78.7m (£59.7m) for the first quarter of its year, and a 4pc slip in production.

Petra blamed the fall in sales on the seizure of a parcel of diamonds by the Tanzanian government, which had claimed it was under-reporting the size of its exports. It was also hit by labour unrest at its South African mines.

Johan Dippenaar, chief executive, said these challenges together had “unfortunately tripped up what would have been a wonderful start to the year”. None the less, he added, the miner had made a “good solid start” to its financial year.

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Earlier this month Petra warned it may breach its debt covenants at the end of this year, having borrowed heavily to fund a multi-year programme to expand its mines. Net debt on September 30 was higher than expected at $613.8m, compared with $555.3m in June.

“We maintain there’s nothing to worry about because we are all the time posting improvements in our results,” Mr Dippenaar said. “We’ve always had very good support from our lenders… We are just flagging [the potential breach] up front.”

Petra expects to begin hacking away at its debt pile from January, as its capital expenditure declines and its sales ramp up; it holds more diamond auctions in the second half of its year.

However the global diamond market appears to have cooled fractionally, with Petra reporting a 3pc drop in prices in its first quarter.

Meanwhile it continues to negotiate with the government of Tanzania for the release of the seized shipment. It was able to export a second parcel to its office in Antwerp earlier this month.