Price hikes help Petra

21st Feb 2011 08:07

Petra Diamonds tripled first half profit thanks to higher diamond prices which it expects to stay high through 2011. Profit from mining activity jumped to US$24.5m in the six months to 31 December, up from $8m the year before. Group revenue rose 86% to $90m, with South Africa's Cullinan mine contributing $57.8m, or 64%. Net profit dropped 35%.As flagged last month, Petra's gross production fell to 582,102 carats from 614,594 carats a year earlier, mostly due to the temporary closure of its Williamson mine in Tanzania for refurbishment. But chief executive Johan Dippenaar said the £132m acquisition of the Finsch mine in South Africa from De Beers "in due course will serve to immediately trigger a further step-change in group production and revenues."Targeted production of over 3 million carats by the 2019 financial year is now feasible by FY 2012 following the Finsch deal.Petra is already generating healthy margins at Cullinan, but expects revenue per tonne to increase significantly in the medium term once a new block cave has been propagated in the western side of the orebody. A healthy diamond market has continued to strengthen into 2011, the group added, and the outlook for the year remains "positive" as the firm expects demand for rough diamonds to remain strong. "Longer term fundamentals for the diamond market are compelling, characterised by supply constraints and rising demand in both mature and emerging markets," it said. "Petra's focus as a growing rough diamond producer places the company in a good position to benefit from this positive outlook."