Petra Diamonds lowers production guidance

Petra Diamonds has lowered its production guidance for the current financial year, largely as a result of a revision of the mining scope at the Finsch site and the slightly lower production levels at the Williamson asset.

The firm said it remains on track to deliver five million carats per year by 2019, with a target of 2.85m carats in 2013, 30% higher than that delivered in the previous year. Disappointingly for investors, this is 0.25m carats lower than previously stated.

At Finsch, which the company took over in September 2011, the company is applying a mining scope change to improve the long term economics and to optimise the production plan from a geotechnical and mining perspective.

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The guidance for Williamson has been adjusted to around 2.5 million tonnes (mt) per annum for 2013, which is set to increase to 3.6mt by 2015. The firm said it still intends to significantly increase production above these levels.

Diamond prices are expected to remain flat for the rest of the 2012 calendar year, with increases expected in the following 12 months due to the effects of production decreases by major producers and the re-stocking of inventories in the pipeline, combined with a gradual improvement in global financial conditions. While current rough prices remain under pressure, the firm said it continues to believe that the outlook is positive in the medium term.

Expansion capital expenditure for the year ended June 30th 2013 is expected to be around $160m in South Africa, a year-on-year decrease of $27m, while capital expenditure in Tanzania will be reduced by $29m to $8.6m.

The share price declined 1.46% to 98.50p by 09:18.

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