Petra Diamonds swings to loss as sales, prices dropped

Petra Diamonds (LON:PDL) swung to a loss in the first half of its financial year as fewer sales demand and a glut of supply pushed rough diamond prices down by 9%.

The miner, known for major findings in recent months, saw its sales drop by 7% in the six months to the end of December. That resulted in a $2.2m loss after tax for the period, compared with a $39.1 million profit a year earlier.

Sales in the period fell by 28% to about $218 million (£154m), the London-listed diamond producer said Monday.

Petra is extending the life of its iconic Cullinan mine in South Africa. The new pit is due to come on stream in the second half of 2016, with a full ramp-up next year.

Net debt almost doubled from $172m in June 2015 to $324 million at the end of the year, as the company increased investment in its Cullinan mine in South Africa, which produced the First Star of Africa, a diamond mounted at the top of the Sovereign's Sceptre on display in the crown jewels.

Petra is extending the life of its iconic mine and the new pit is due to come on stream in the second half of the year, with a full ramp-up in 2017. At this point, the miner expects diamond prices to be already showing “modest growth".

In recent months, Petra has attracted media and investors interest as it found three major diamonds at the mine, which were sold at record prices. One of those rocks, the “Blue Moon” became the world’s most expensive diamond after fetching $48.5 million at a Sotheby's auction in November.

Petra Diamonds remains upbeat. It says it expects a better performance in the second half, as diamond prices are already showing encouraging signs of recovery.