Canaccord sees upside to forecasts at Petra after blue diamond find

13th Jun 2014 10:47

Forecasts for next year at Petra Diamonds now look conservative after the discovery of an "exceptional" 122.52-carat blue diamond, according to Canaccord Genuity.The broker maintained a 'buy' rating and 195p target price for the diamond miner.Petra said on Friday that the "exceptional" stone, found at its Cullinan mine in South Africa, will require further analysis in order to work out its potential value. Therefore, it will not be sold before the end of the current financial year ending June 30th.Canaccord said that while estimates for the value of the diamond would at this stage be speculative, it sees "meaningful upside" to its current $523m revenue estimate for the year ending June 2015.The broker said: "Cullinan continues to prove itself one of the world's largest producers of exceptional blue stones. Production is currently coming from diluted ore blocks and the ongoing recovery of exceptional stones indicates that Petra is doing a good job managing mining and processing from this mature production area."Analysts believe that as the mine transitions to production from the undiluted ore from 2016 at the C-Cut, the frequency of recovering exceptional gems may rise, providing upside to its estimates. However, it highlighted that exceptional stones are excluded from its projections due to the "unpredictable nature of their recovery".The stock was trading 6.3% higher at 177.69p by 10:58.BC