JOHANNESBURG (miningweekly.com) – London-listed diamond mining group Petra Diamonds has declared its maiden dividend of 3c apiece for the year ended June 30, despite depressed markets and mature, diluted mining areas dragging down financial performance.

The diamond producer on Friday posted basic earnings a share from continuing operations of 9.46c during the year to June, a decline on the 12.80c recorded in the prior year.

Petra’s profit for the year contracted from $67.5-million in 2014 to $59.6-million in 2015, while revenue for the period was impacted on by a 10% lower average diamond price, the impact of mining heavily diluted areas on grade and product mix, as well as a weaker diamond market.

The weaker rand had partially offset the negative influences on the company’s financial performance and was expected to favourably impact on the results in 2016, said Petra CEO Johan Dippenaar.

During the year under review, group revenue decreased 10% to $425-million from the sale of 3.1-million carats.

The sale of exceptional diamonds contributed $38.7-million to revenue during the 2015 financial year, with a 232 ct white diamond sold for $15.2-million and a 122 ct blue diamond sold into a beneficiation partnership agreement, which netted Petra $23.5-million on the sale of an 85% share in the stone. The diamond producer retained a 15% interest in the polished yield, which consisted of four polished stones that would be sold in due course.

Petra's first tender of the 2016 financial year will be held in early October.

“The group still recorded a number of important achievements, with increased tonnage throughput for the year, the continued delivery of our mine expansion projects, the strengthening of our balance sheet, [owing] to the $300-million notes issue and increase in bank facilities, and the [start] of construction of a modern processing plant at Cullinan . . . in the first quarter of 2016,” Dippenaar said.

The new $142.8-million plant, which would be fully operational by the end of the 2017 financial year, was expected to improve the chances of successfully recovering large and exceptional diamonds, increase the overall recovered grade and significantly reduce operating costs.

PRODUCTION
After experiencing what Dippenaar described as Petra’s “toughest operational year”, the company made a solid production start in the new financial year, with the operations as a whole performing according to expectations, including achieved grades at Finsch and Cullinan.

“[Owing] to . . . our expansion programmes having remained on track, we are anticipating undiluted ore from the new mining areas to start contributing significantly to our production profile from the second half of the 2016 financial year . . . ” he said, adding that the company remained on track for its 2019 target of five-million carats.

Petra expected to produce between 3.3-million carats and 3.4-million carats during 2016, a 3% to 6% increase on the 3.2-million carats produced in 2015.

MARKET OUTLOOK
The rough diamond market was subjected to challenging conditions in 2015, with headwinds, including current liquidity and profitability issues affecting the midstream of the pipeline, the impact of the strong US dollar and a slowdown in retail demand in China, which was expected to continue in the short term.

However, a positive longer-term outlook was expected, underpinned by continued growth in demand from developed and emerging markets and constrained supply, with worldwide production declining 4% to 124.8-million carats in 2014.

“While there are some new mines due to come into production over the next three years, none are sufficiently sizeable to address the declining production profile of some of the world's largest diamond mines, and there have not been any major diamond discoveries since the 1990s,” Dippenaar concluded.