The “exceptional” 20.08 carat blue gem quality diamond, Type IIb, demonstrates that Cullinan remains a significant source of rare blue diamonds, and confirms the ability of the mine’s plant to recover the full spectrum of precious stones, Petra said.
In April this year, the company found a 424.89 carat exceptional D colour Type IIa diamond at the same mine. The stone was sold the next month for just under $15 million.
Petra’s shares hit an all-time low last week after it reported a net loss of $258.1 million for the year ending in June, amid challenging market conditions.
Richard Duffy, who has been at Petra’s helm since April, said the diamond market was in its worst state since the financial crisis in 2008, but expects it to stabilize in the next 12 to 18 months.
Petra has been trying 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.
Diamond miners are struggling across the board, especially those producing cheaper and smaller stones, where there is an over-supply.
The US-China trade row and protests in Hong Kong dented demand in Asian markets.
Increasing demand for synthetic diamonds has also weighed on prices. Man-made diamonds require less investment than mining natural stones and can offer more attractive margins.
Synthetic producers spend around $300-500 per carat produced, according to a 2018 report by Bain & Company.
Lab-grown diamonds produced by De Beers, the world’s top diamond miner by value, sell for $800 per carat.
Petra, by contrast, has to shift 20,000 tonnes of earth at Cullinan to yield just one cup of diamonds. Average cost in the 2019 financial year was $110 per carat, 12% less than in 2018.
Buyers, those that polish and cut diamonds for retailers, have been hit this year by lower prices and tighter credit, prompting them to delay purchases. Tiffany’s reported in August a 3% decline in like-for-like sales, while shares in Signet, the world’s largest retailer of diamond jewellery, have lost more than 60% of their value this year.
De Beers has responded by axing production — with a target of 31 million carats this year compared with 35.3 million in 2018. It has also announced it would spend more on marketing.
In March, Africa-focused Firestone Diamonds (LON:FDI) put plans to extend the life of its 75%-owned Liqhobong mine in Lesotho on the back burner, saying that current market conditions didn’t support such project.
Petra will report production and sales results for the September quarter on October 21st.