Petra shares slammed as Cullinan fails to shine
Increased net debt and low diamond prices make the company the worst-performing stock in London.
Petra Diamonds recorded the largest decline on the London bourse after an interim production report showed an increase in debt and low prices for diamonds from its capital-intensive and newly developed Cullinan mine.
Petra, a major source of diamonds from SA, has redeveloped the Cullinan mine to access fresh ore with limited dilution from waste rock, but the full benefits of this investment have yet to be felt.
“The significantly lower realised Cullinan pricing and the impact on cash-flow generation sees us take renewed caution,” said RBC Capital Market’s analysts, who noted Petra’s general operational performance was “in line, but at $96/carat Cullinan is not paying its way”.
The concern was that the base price for Cullinan’s rough diamonds, excluding the special, large diamonds, would be lower than the company and the market were expecting, they said.
Petra’s shares fell 13% in London to 39p.
Read the full story on: Business Day.