Petra Diamonds commented on the release of its share price performance for the financial year of 2019, saying it delivered “solid set of operational results for 2019,” with improved safety, a production of 3.87 million carats – in line with guidance – and lower capital expenditure of $81.7 million, down from US$129.6 million in 2018
Petra generated $17 million of free cashflow in the second half of the year, after paying the interest on a bond of $23.6 million and repaying $20 million. “In other words, operating free cashflow for the second half of FY 2019 was over $60 million. This is a significant achievement given the current challenging market conditions in rough diamonds,” Petra wrote in a statement.
Also, the update introduced Project 2022, an initiative that will identify and drive efficiencies and improvements across all aspects of the business to enable the miner to deliver an initial target of $150-200 million free cashflow over a three-year period.
“Project 2022 will focus on enhancing cashflow generation and reducing net debt to provide optionality to address the refinancing of the bond. The company is not considering raising equity to refinance the bond.”
“Therefore the initial target of $150-$200 million of net free cashflow in the years 2020-2022 has potential upside in additional cash generation from improved rough diamond prices, a weakening in the Rand beyond the assumptions above and the continued recovery of exceptional diamonds from Cullinan,” the statement said .
Petra said it has cash resources of $90 million together with a $70.4 million revolving credit facility and $35.2 million in working capital facilities. The firm emphasized that the miner “has the third largest global diamond resource – [reserves] in excess of 250 million carats per 30 June 2018 – providing organic growth opportunities well beyond 2030.”
Richard Duffy, CEO of Petra Diamonds said “We are executing our plans and delivering to budget as we launch Project 2022. We expect that this will deliver significant incremental cash flow over the next three years, further improve our net debt position and provide us with future growth options”.
News Source: idexonline
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