Petra Diamonds Ltd (LON:PDL) have seen their shares hit an eight-year low following their profit warning in January.
Revenue has increased 21% on-year for the firm, to $576.4 million, as production grew to 4.6 million carats. However, this came alongside operation costs which remained in line but came under pressure from below-target throughput, additional security measures for their KEM joint venture, and a strong Rand, which had adverse effects on the firm’s US dollar-based operating costs.
“As outlined in the recent rights issue prospectus in May, financial year 2019 and financial year 2020 production guidance was stated to be at the lower end of the guidance issued in July 2017”, a Petra spokesperson said.
“This will be accompanied by an ongoing focus on delivering the most effective capital and operational cost profiles for its portfolio in order to protect overall profit margins.”
The firm reported that its projected output is expected to be down by over half a million carats in 2019, once it has stripped out its operations at its KEM JV asset. Its on-mine cash costs are expected to be “largely flat” versus 2018, whilst it reports that the diamond market is “stable”.
While the diamond market may be stable, Petra’s debt level rose alarmingly for the year, and incurred a five-for-eight $170 million rights issue. The firm’s shares are currently trading at 46.56p, down 6.88% or 3.44p since trading began this morning. Analysts from Barclays Capital have reiterated their ‘Overweight’ stance on Petra stock, while Panmure Gordon have upgraded their stance from ‘Hold’ to ‘Buy’.