Africa-focused Petra Diamonds (LON: PDL) posted on Tuesday $367 million revenue for its fiscal year 2024, slightly higher than the $325 million achieved last year, despite weak market conditions, higher costs and lower diamond prices.
The average realized price for the diamonds Petra mined in the year ending June 30 was $116 per carat, down 17% from $139/ct last year, the company said.
Total on-mine cash costs in FY 2024 increased 11% compared to FY 2023, largely due to the ramp-up at Williamson mine in Tanzania, as well as cost inflation.
A build-up of diamond inventory in FY 2023 of $34 million and a subsequent release in FY 2024 of $37 million contributed to adjusted mining and processing costs increasing from $202 million in 2023 to $296 million this year, Petra said.
The results, according to chief executive officer Richard Duffy, reflect the company’s successful response to weaker market conditions, which included strategic adjustments to reduce cash expenditure by $75 million. This was achieved by deferring capital expansion projects and implementing sustainable cost-reduction measures.
Duffy noted that that operational shift at its Finsch mine in South Africa also helped the bottom line. The mine transitioned from a 2.8 million tonnes per annum (Mtpa) operation to a more streamlined 2.2Mtpa, with increased focus on planning and maintenance.
Petra believes prices will stabilize through the end of calendar year 2024, helped by seasonal higher demand, with some improvement expected in CY 2025.
Despite market challenges, Petra remains confident in its FY 2025 outlook. The company’s South African mines, now accessing fresh ore from newly developed project areas, alongside the Williamson mine in Tanzania, which is operating at full production, are central to this optimism.
Petra’s efforts to smooth its capital expenditure profile, coupled with a $44 million annual reduction in operating costs, position it for free cash flow generation starting in FY 2025. This cost reduction includes $30 million in savings from its South African operations and $14 million from Williamson.
The diamond producer did not announce dividends, but said the board will review this decision by the end of fiscal year 2025.
Addressing market conditions, Duffy expects some the sector will see improvements in CY 2025 as increased discipline among diamond producers should help re-balance inventory levels across the supply chain.
Petra is advancing its technological capabilities, with a focus on traceability. The company is rolling out technology at its South African operations that will allow for the traceability of gem-quality diamonds over 0.5 carats, from mine to retail. This initiative is designed to offer consumers greater assurance regarding the provenance and sustainability of the diamonds they purchase.
“We believe traceability technologies will further differentiate natural diamonds by highlighting their rarity, uniqueness, and the benefits to stakeholders,” Duffy said. The technology will also emphasize Petra’s sustainability efforts, including social and community projects funded through diamond sales.
