Source: Mining Weekly
Author: Henry Lazenby
With production up by 64% to 935 553 ct for the six months ended December 31, LSE-listed Petra Diamonds on Wednesday said it was on track to achieve two-million carats output during 2012.
In its six-month trading update, the miner said the increased production was mainly attributable to the acquisition of the Finsch mine in the Northern Cape, which it bought for R1.43-billion from De Beers on September 14.
Further production increases were expected in the second half of the financial year, as Finsch would then be contributing for the full six-month period, and two additional run-of-mine (ROM) treatment plants would be coming on stream at the Kimberley Underground Wesselton plant and the Williamson plant.
The miner reported a 13% increase in revenue to $101.4-million, on the back of a 16% increase in diamond sales, with 678 772 ct sold.
“The early sales cycle cut-off for all the South African mines due to the December holiday period meant that closing stock was on average higher than June 2011,” it said in a statement.
Petra expected a significant sales increase during the second half of the 2012 financial year, owing to increased production from Finsch and the net release of about 100 000 ct of closing stock from the end of the first half of the financial year.
Further, the company, which has eight operational assets, said it expected revenue growth to be affected by weaker prices during the period.
“The market stabilised in the later part of the first half of the financial year, and we expect this trend to continue during the second half, although some volatility may be experienced due to global economic conditions,” it said.
The medium- to long-term outlook for the diamond market is expected to be stable, with the possibility for marginal growth.
Meanwhile, Petra completed a step-up from the secondary Aim listing to the main market of the LSE, and expected to enter the FTSE 250 index from March.
The company also appointed Dr Patrick Bartlett and Gordon Hamilton as independent non-executive directors to its board.
“Petra's position as London’s largest quoted diamond mining group, with a premium listing on the main market of the LSE, positions the company to benefit from investors looking to gain exposure to these fundamentals,” said CEO Johan Dippenaar.
He also reaffirmed the long-term outlook for rough diamonds, despite a weakening in prices since July 2011.
Petra is targeting production of four-million carats in 2014 and over five-million carats by 2019.
The company’s 74%-owned Cullinan operation performed well in terms of throughput, with ROM tons mined from underground increasing by 3%, when compared with the first half of financial year 2011. The ROM grade of 34.8 carats per hundred tons (cpht) was slightly lower than the previous guidance of 36 cpht. Grade for the two months to the end of August temporarily ran below expectations, but following an upgrade of equipment in the final recovery processing plant, ROM grades returned to expected levels for the four months to the end of December.
During the period, the company sold three exceptional diamonds recovered at Cullinan, comprising a 129.5 ct white diamond for $3.35-million, or $25 858/ct; a 61.7 ct white diamond for $2.60-million, or $42 139/ct; and a 4.8 ct blue diamond for $1.45-million, or $301 300/ct, being the highest amount achieved on a per carat basis for any rough diamond sold by the company.
At the Koffiefontein operation, underground ROM operations continued as expected with production constrained owing to limited access to undiluted ore. ROM grades for the period improved owing to increased production from the higher grade 52 level.
As at Cullinan, Petra's development plan at Koffiefontein will establish new production levels where the company will eventually have access to undiluted ore by 2014.
It was a difficult operational period for the Fissure mine, marked by various Department of Mineral Resources work stoppages and a significant winder repair at Helam impacting production. The average fissure grade was affected owing to a reduced contribution from the higher-grade Helam mine. Owing to the nature of mining at the lower tonnage fissure mines, there is less flexibility in terms of making up lost production.
At the Williamson operation in Tanzania, there was no treatment of main pit material, as planned, while the project to rebuild the three-million-ton-a-year plant was under way. Petra had anticipated lower alluvial production in the current financial year, owing to the depletion of available alluvial gravels and exacerbated by power and water constraints.
The rebuild of the plant had been completed and commissioning started towards the end of January.
Edited by: Mariaan Webb