Petra in talks for more credit as pandemic takes shine off diamonds

(Image courtesy of Petra Diamonds)

Africa-focussed miner Petra Diamonds said on Thursday it was in talks with its lenders to access ZAR1 billion ($54.95 million) in credit, as it fully draws down on its working capital facility of ZAR500 million due to depressed diamond prices and faltering demand amid the coronavirus crisis.

The company is operating at lower levels in South Africa and said a total of 24,254 carats were withdrawn from its fifth sales cycle, which saw rough diamond prices fall 27% from February.

Petra, which declared a force majeure at the Williamson mine in Tanzania, said it would look to resume operations at the mine “once diamond prices are at a level that make it operationally sustainable”.

Shares of the company have lost more than two-thirds of their value so far this year. They fell another 8% by 1421 GMT.

“Given the unprecedented trading conditions, we are taking all steps necessary to preserve the company’s liquidity position in order to withstand this very difficult period until market conditions improve,” Chief Executive Officer Richard Duffy said.

In February, Petra Diamonds said the coronovirus outbreak had hit Chinese demand for diamonds, forcing it to push back targets for cashflow and debt reduction.

The company has been fixing its balance sheet after spending years investing in its flagship Cullinan mine in South Africa.

($1 = 18.1978 rand)

(By Yadarisa Shabong; Editing by Shailesh Kuber)

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