18th Sep 2014 07:48
LONDON (Alliance News) - Petra Diamonds Ltd saw its shares rise early Thursday after it reported higher profit and revenue for its last financial year, and said its outlook is positive because it expects its production to increase, rough diamond prices to rise, and it is continuing to find exceptional diamonds in its mine.
The stock has already risen 67.1% so far in 2014, after a string of good news including finding three exceptional rough stones in its Cullinan mine in South Africa. It has previously said it would start paying dividends in fiscal 2016, but Thursday said it could bring the date forward. It will give more detail on this at the end of January, 2015.
It reported a net profit of USD67.5 million for the year to June 30, up from USD27.9 million a year earlier, as revenue rose to USD471.8 million, from USD392.5 million.
Production rose 17% to 3.1 million carats, from 2.7 million in the previous year, beating market forecasts for output of 3.0 million carats. It is forecasting that production will rise to 3.2 million carats in the current financial year, and said its expansion plans mean it's on track to increase output to 5.0 million carats by fiscal 2019.
It is currently mining old areas in its South African mines that have been mined before. The ore from these areas is heavily diluted with waste rock, resulting in a lower overall diamond content in the tonnages mined. However, it is now opening up new areas of undiluted ore, and expects grades and carat production to increase substantially.
"Petra's production growth comes at a time when demand for diamonds is continuing to grow around the world, but particularly in the major US market and in emerging markets such as China and India," Petra Diamonds Chief Executive Johan Dippenaar said in a statement.
"There is subsequently a positive outlook for the company, particularly given our expectations for further increases in production, rising margins, supportive rough diamond prices, and the continued contribution of exceptional diamonds. We look forward to entering a period of significant cash generation and the commencement of dividend payments to our shareholders in due course," he added.
Its operating cashflow, adjusted for the cash effect of the movement in diamond debtors between each financial year end and excluding unrealised foreign exchange translation movements, was USD181.2 million, up from USD132.8 million in fiscal 2013, due to the growth in revenue and profit from mining activity.
Petra Diamonds shares were up 1.1% at 197.80 pence early Thursday, a one-month high.
By Steve McGrath; [email protected]; @stevemcgrath1
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