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Petra launches project to boost cash flow

South Africa diamond miner Petra Diamonds is expected to provide more detail on how it proposes to deliver up to US$200 million of free cashflow over the next three years via its Project 2022 initiative ahead of its mid-September FY19 financial results announcement as the company strives to reduce its debt load in a flat diamond price environment.
Petra launches project to boost cash flow Petra launches project to boost cash flow Petra launches project to boost cash flow Petra launches project to boost cash flow Petra launches project to boost cash flow

Petra Diamonds' Cullinan mine in South Africa

Staff reporter

Petra CEO Richard Duffy said at today's trading update the company's short-term focus was on "driving efficiencies across the business through Project 2022" to improve its cost base and enhance  cash flow generation to "significantly reduce our net debt".

The Project 2022 goals were based on "flat nominal pricing over the three years".

Petra finished the year to June 30 with net debt of US$560.5 million compared with $520.7 million a year earlier after producing net free cash of $17 million in the second half FY19 and repaying $20 million against its BEE debt and $23.6 million in bond coupon. South African lenders to its BEE partners had agreed to an amended repayment schedule for $54.2 million of BEE bank debt. "The balance will now be spread over the period to November 2021 with $5 million payable in November 2019 followed by four equal bi-annual instalments of $12.3 million each from May 2020," Petra said.

The company is aiming for FY2020 diamond production of 3.8 million carats after achieving 3.87Mct in FY19 when revenue dipped 6% to US$463.6 million on "a weaker diamond market" with 5% average lower diamond prices per carat.

Petra said operational capex fell to $81.7 million from $129.6 million in FY18 in "line with the company's reducing capital expenditure profile".