A mine worker is seen under ground at Cullinan mine, near Pretoria
Petra Diamonds' new CEO to work on strategy, seeks stability first
By Barbara Lewis
LONDON (Reuters) - African miner Petra Diamonds', which has high debt levels, aims to be cash flow positive in the second half of the year and will then be able to consider future developments, its new chief executive said on Monday.
The company's share price has fallen 55 percent since the start of the year as weak diamond prices weighed and Petra grapples with debt following years of capital expenditure to upgrade its mines.
On Monday the company reported lower output in the quarter ended on March 31, as an upgrade of operations at one of its mines fell behind schedule, but also said it sees signs that diamond prices are recovering.
CEO Richard Duffy, who took office at the start of the month, said his short-term focus was "on stabilising the operations as we transition from a stage of high capital investment".
The company would be on track to consider future developments, he said, once it has delivered free cash flow and cut net debt, which was about 3.3. times EBITDA (earnings before interest, tax, depreciation and amortisation) at the end of last year versus a goal of 2 times.
"I'm two weeks into the job," Duffy said in a maiden round of media interviews, when asked about strategy. "We expect to announce strategy towards the end of the calendar year."
On Monday, Petra's share price was 0.2 percent lower by 1013 GMT.
A new section at Petra's flagship Cullinan mine in South Africa has the potential to be rich in high-quality stones, the company says. In March it said it had found a 425-carat diamond, which it plans to sell later this year.
Edward Sterck, analyst at BMO Capital Markets, which rates Petra "outperform", said a pickup in special diamond recoveries was "the significant catalyst that investors have been waiting for".
The company meanwhile is in talks with its South African lenders on new terms, which it expects to finalise by the end of the month.
It is also negotiating with the Tanzanian authorities over a parcel of diamonds seized in September 2017, in a crackdown on foreign mining companies as the government seeks more revenue from its minerals.
Petra's Williamson mine in Tanzania delivered a 21 percent increase in year-on-year output, helping to offset the impact of delay in an upgrade at South African mine Finsch.
"We're continuing to engage with the authorities. It's difficult to talk about time, but we are having constructive conversations," Duffy said.
(Reporting by Barbara Lewis; additional reporting by Samantha Machado in Bengaluru; Editing by Susan Fenton)
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