Petra reports profit ahead of Friday’s big stone sale

Finance

Petra Diamonds Ltd swung back to profit in the half year to end-December 2009, after heavy write-downs contributed to a US$88 million loss a year earlier.

The US$37.9 million interim profit was dominated by a US$31 million write up of the valuation of the company’s Cullinan mine near Pretoria in South Africa. Petra took control of the asset late last year.

“The total fair value gain of US$31 million reflects the difference between the book value of the original 50% interest and the fair value (as determined by the price paid for the second 50%),” said the results statement.

Group revenue totalled US$48.4 million during the period an increase of 43%. This figure does include the increase of revenues thanks to the larger stake in Cullinan. Without it, revenue would have been 25% higher at US$42.3 million.

Mining and processing costs were up 72% at US$40.5 million. Again, the inclusion of more of Cullinan was a contributor, as well as a full six-month reporting period for the Williamson mine in Tanzania.

The strong rand, up by almost 14% has contributed to higher dollar costs, while the company says that costs in rand terms were up 11% due to electricity and labour increases.

The company is due on February 26 to sell its 507ct Heritage stone at auction, named after the public holiday (September 24) when it was discovered.

The company’s cash balance was bolstered by a US$120 million fund raising during the period. By the end of December the balance was US$65 million after debt was reduced. Since then the company says another US$30 million was paid to settle December trade creditors and further reduce other group debt.

The group had current liabilities of US$71.5 million at the end of 2009.