Broker snap: Petra Diamonds achieves progress, but risks remain

24th Sep 2012 18:12

Africa focused miner Petra Diamonds has today reported full year results slightly below those forecast by Allison Turner, at Panmure Gordon. The company´s earnings before interest, taxes, depreciation and amortisation (EBITDA) have come in at 90.3m dollars, compared with her forecast for 99.2m dollars. In a similar vein, the company´s loss per share was 48 cents, considerably worse than the -25 cents penciled in by the analyst. Nevertheless, the company has made progress on its debt requirements (we estimate that Petra requires a further US$150-200m in long term funding), Panmure says. However, the broker adds that: "but there is no binding commitment from banks yet, with the process expected to complete by the end of this year."For that reason, it is of the opinion that: "Balance sheet uncertainty remains - discussions with banks ongoing. Whilst Petra has US$66m in short term debt headroom we expect the company to remain cash flow negative after capex until fiscal year 2015 and to require US$150-200m in longer term debt or equity funding. Petra is in discussions with banks regarding its longer term debt requirements, and today reports that the review is "progressing well" and that banks have given "provisional commitments" subject to legal documentation and due diligence with signed documentation expected in the next three months. In the absence of a binding commitment from the banks, we continue to see funding as a significant risk for Petra which is one of the key reasons for our negative stance on the stock."Shares of Petra Diamonds closed up by 7.57%, at the 118p mark. AB