Petra Diamonds Ltd on Friday said the increase of its revolving credit facility has been approved, while also reporting a growth in diamond prices at its latest tender sale.
The Southern Africa-focused diamond miner and supplier said South African firm Absa Bank, which is part of Absa Group Ltd, has approved the increase to its revolving credit facility to $93 million from $53 million.
A total of $45 million is currently drawn, leaving a balance of $48 million that will be available under the ‘upsized’ facility, it said.
Petra has been in talks with Absa Bank since last month after it reported that it was cutting back capital expenditure plans for financial 2024 by up to $65 million, in response to diamond market weakness. This includes a 17% decline in prices at its second tender of stones for the financial year. The spending cuts also include deferrals of work programmes at the Cullinan and Finsch mines in South Africa, as well as the deferral of $3 million to $5 million in sustaining capital expenditure compared to prior guidance.
As a result, Petra said it would also be cutting operating costs by $7 million to $10 million.
Chief Executive Officer Richard Duffy commented: ‘Securing this increased facility, coupled with the recently announced capital deferrals and cost optimisation, further improves our resilience and operational and sales flexibility in the event of a weaker-for-longer diamond market.’
Seperately on Friday, Petra announced 462,794 carats sold in tender 3 of the financial year ending June 30 for a total of $58.7 million. This is a 4.2% increase from 444,029 carats sold in tender 2 for a price of $40.5 million. Meanwhile, the price was up by 20% like-for-like.
It said final sales for this third cycle are scheduled to close next week.
Duffy said: ‘The 20% increase in like-for-like prices for our third tender of [financial 2024] supports the view that diamond prices have likely bottomed. We believe actions taken by major producers to curb supply and the two-month Indian moratorium that comes to an end on [Friday next week, together with strengthened retail sales in the US, have improved market conditions as inventory levels across the pipeline rebalance. Ongoing discipline by the key players is important to provide some price stability in the new year.’
Shares in Petra were up 2.0% at 51.00 pence each in London on Friday morning.
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