Petra Diamonds shares fall on lower revenue warning

Petra Diamonds shares fall on lower revenue warning

Cullinam mine at dusk. (Image courtesy of Petra Diamonds)

Petra Diamonds (LON:PDL), usually an investors’ darling, fell out of grace Friday as it forecast full-year revenue below market expectations due to smaller than expected precious rocks at its Finsch and Cullinan mines in South Africa have sold at modest prices.

The announcement sent Petra’s shares down as much as 11% in early trade, as the miner said sales for the year to the end of June would be about $430m. The consensus of analyst forecasts had the company reporting revenues of $442m, compared with $470m last year.

The company, however, maintained its full-year production target of about 3.2 million carats and said its reliance on heavily diluted ore would be reduced in fiscal year 2016 as it ramps up production from new areas.

Petra owns and operates the Cullinan diamond mine, which produced the First Star of Africa, a diamond mounted at the top of the Sovereign's Sceptre on display in the crown jewels.

Last year, the UK miner found three major diamonds at the mine, which were sold at record prices.

The company said it expected to be mining better ore in 2016 and said its target for 5m carats of production by 2019 was on track.