Cycle of Petra diamonds fallout by 27%
Petra Diamonds said in its’ market update that with regards to the impact on the Company of the global Covid-19 pandemic. Focussing on rough diamond sales said, as noted in the previous announcement, Petra experienced depressed and opportunistic bidding for its diamonds at its fifth sales cycle of FY 2020, particularly in the larger size and higher quality, greater value categories.
The Company therefore chose to only sell a portion of its South African goods, representing ca. 75% by volume and ca. 50% by value. The remaining goods were exported to Antwerp and of these, ca. 75% were subsequently sold at the Company’s Antwerp marketing office.
Rough diamond prices achieved at Petra’s fifth sales cycle were down ca. 27% overall on a like-for-like basis in comparison to those achieved at the fourth sales cycle in February 2020.
A total of 24,254 carats, comprising higher value +10.8 carat single stones as well as parcels across the size and quality (gem and clivage) ranges, were withdrawn and will be sold privately or at a subsequent sales cycle, when market conditions allow.
As previously noted, Petra was due to hold two further sales in May and June before the end of its financial year. The Company will continue to monitor marketing conditions before taking any decision on the continuation of the planned May tender while the outlook for the June sale remains uncertain and will depend on travel and export conditions at the time, as well as activity levels in the key diamond buying centres of India, Israel, China and the US.
At Operations said, Petra remains focused on taking all actions necessary to support the measures to limit the outbreak of COVID-19 in the countries in which the Company operates and to decrease the threat to our employees, contractors and other local stakeholders.
The Company’s operations in South Africa remain operating at significantly scaled down levels in order to comply with the requirements of the 21-day lockdown period in South Africa. The lockdown period is due to end at midnight Thursday 16 April 2020, but the operational outlook is uncertain and will depend upon the Governmental approach with regards to managing the spread of COVID-19 in the country.
In light of the unprecedented depressed market environment, the Company has declared force majeure at the Williamson mine in Tanzania and will be placing the operation on care and maintenance from the middle of April, with only essential services to be carried out in order to protect the mine’s assets and resources.
This decision is necessary to preserve the Williamson mine’s cash position in order to protect the long-term sustainability of the operation. The Company will look to resume operations once diamond prices are at levels that make it operationally sustainable.
Discussions with the Government in relation to various issues, including the overdue VAT receivables and the blocked diamond parcel, are ongoing but have been interrupted by the COVID-19 outbreak.
Richard Duffy, CEO of Petra Diamonds, commented: “Given the unprecedented trading conditions, we are taking all steps necessary to preserve the Company’s liquidity position in order to withstand this very difficult period until market conditions improve. We remain committed to protecting the ongoing viability of our operations, to the benefit of all our stakeholders.”
