Petra Diamonds halts 2020 production target

Cullinan diamond mine. (Image courtesy of Petra Diamonds)

Petra Diamonds (LON:PDL) has had to halt its production outlook for fiscal 2020 as it is closing its mines in South Africa for a mandatory 21-day lockdown aimed at tackling the worsening coronavirus pandemic.

The scaled-back operations will be monitored and managed according to the new procedures put in place to protect the health and safety of all staff, Petra said.

Petra noted that after the lockdown period is over, it would be possible to ramp operations to steady-state production levels within a relatively short timeframe.

Petra had been already hit by weak diamond market conditions and power issues in South Africa, where it has two of its three mines

The company, which had been already hit by weak diamond market conditions and power emergencies in South Africa, had said in July it expected to produce 3.8 million carats during fiscal 2020.

Petra Diamonds also said it was in “active talks” with a South African lender for near-term financing.

The company has tried to turn around its fortunes after piling up debt to expand its flagship Cullinan mine in South Africa, where the world’s largest-ever diamond was found in 1905. The renowned open-pit mine produces about a quarter of the world’s gem-quality diamonds, and the vast majority of blue stones.

The company’s share price collapsed to a record low amid falling diamond prices that forced it to write down the value of its mines in September by almost $250 million.

The financial struggles prompted the miner to launch a restructuring that ended in November with a number of organizational changes.

Petra also owns the Koffiefontein diamond mine in South Africa and Williamson in Tanzania, which remains in full operations.

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