Petra Shares Jump Most Since July on Higher Diamond Production

  • First-quarter diamond output rises 30% to 1.1 million carats
  • CEO Dippenaar says debt levels will start declining next year

Petra Diamonds Ltd. jumped the most in more than three months as diamond production increased and prices for gems held firm despite industry expectations of a weaker period.

Petra rose as much as 8.5 percent, the steepest intraday advance since July 4. The shares traded at 148.50 pence as of 10:17 a.m. in London, extending gains to 70 percent this year.

First-quarter production rose 30 percent from a year earlier to 1.1 million carats as the company mined higher-grade material at its Finsch and Cullinan mines in South Africa, Petra said in a statement Monday. Sales were $94.7 million in the period and the full-year target of 4.4 million carats to 4.6 million carats was maintained.

“For the last three years, we’ve been stuck in this 3 million carat production cycle. Now, the capital program is starting to show its first fruits,” Chief Executive Officer Johan Dippenaar said by phone. “The firmness of the market is also pleasing.”

Petra said the market is “holding firm” and prices match levels from the first half of 2016, showing that the diamond industry has so far defied expectations for a slowdown. While rough-diamond prices gained 7.4 percent this year, De Beers’s management and other executives had cautioned that the final six months of 2016 could be more difficult.

Petra “continues to deliver on its stated production goals,” Kieron Hodgson, an analyst at Panmure Gordon & Co. in London, said in a note to investors today. “Reassuringly, diamond prices achieved in the company’s recent tenders slightly outperformed wider market trends.”

Petra ended its financial first-quarter with higher debt of $463.9 million as the company invested in expanding production. CEO Dippenaar said debt will remain at current levels or slightly higher until early next year, and then start to decline as diamond output increases.

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