Petra Diamonds warns of market pressures

Petra Diamonds said revenues had been propped up by its recently acquired Finsch mine in South Africa, which largely offset falling diamond prices.

The firm said it expected the diamond market to remain under pressure in the near future because of economic uncertainty, but added that the medium to long-term outlook for the rough diamond industry was robust due to forecasts of demand outstripping supply.

Petra reported revenue of $316.9m for the year, an increase of 44% on the $220.6m previously.

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The increase in revenue was primarily due to the contribution from its Finsch mine in South Africa, which added $136.9m to revenue for the year.

The Finsch acquisition was completed in September 2011.

Pre-tax profits plunged to £8.4m, from £64.4m the year before, with earnings per share coming in at a loss of 0.48c.

The company was hit by a 16% increase in costs, due to the cost of labour and electricity, as well as increased treatment volumes.

Profits were also hit by unrealised foreign exchange losses of $38.6m.

The company offered reassurance on the recent unrest in the South African mining sector, which has seen workers killed and a number of mines closed.

"With regards to Petra, it is important to note that the majority of the group's employees are skilled and semi-skilled workers, as block cave mining is a highly mechanised process," it said.

"Petra has a strong track record of stable labour relations and has not over recent months experienced any disturbances related to employee unrest or external intimidation of employees."

The firm said its expansion plans were on target to increase production to five million carats by the end of its 2019 financial year.