UPDATE: Petra Diamonds Rare Gem Sales Boost Revenue 88%

20th Jul 2010 09:25

(Adds executive comment and detail.) By Jason Douglas Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Diamond producer Petra Diamonds Ltd. (PDL.LN) Tuesday said the sale of an enormous 507-carat diamond to a Hong Kong jeweler for $35.3 million helped drive an 88% increase in fiscal-year revenue from its mines in South Africa and Tanzania. The company said plans to expand production to 3 million carats a year by about 2018 from its current 1.2 million carats are on track and fully-funded. Petra raised $120 million in a share sale in December 2009 and agreed new banking facilities of $78 million last month. Finance Director David Abery told Dow Jones Newswires Petra's expansion plans involve accessing the first parts of a resource called C-Cut at Cullinan in South Africa and installing a new processing plant at Williamson, its mine in Tanzania. Petra said gross revenue for the year to June 30 was $177.7 million and carats sold rose 11% to 1.13 million. Petra will book net revenue of $163.3 million from its mines for fiscal 2010 to reflect its stake in Cullinan, which it increased to 74% in November last year. All the revenue from the mine will be consolidated in future earnings. Revenue was aided by higher production and an improvement in diamond prices, which it said have recovered strongly from lows experienced during the worst of the global recession. Abery said demand for diamonds is recovering in the U.S. and sales are growing at a double-digit rate in India and China, echoing similar comments by London-listed peer Gem Diamonds Ltd. (GEMD.LN) Monday. Petra Diamonds' revenue was further boosted by sales of several rare gems, including the 507-carat Cullinan Heritage, the latest in a long line of rare gems recovered from the historic South African mine. The sale of the Cullinan Heritage set a record for rough diamonds when it was sold at auction in February. Also Tuesday, Petra said an insurance claim for $3 million of diamonds stolen at an airport in South Africa has been rejected. It said it is assessing its options with regard to the loss. At 0816 GMT, shares in Petra were flat at 62 pence, underperforming a 0.04% higher Alternative Investment Market. -By Jason Douglas, Dow Jones Newswires; 44-20-7842-9272; [email protected] (END) Dow Jones Newswires July 20, 2010 04:25 ET (08:25 GMT)