Petra slumps to first-half loss

Johannesburg - Africa-focused miner Petra Diamonds said first-half earnings fell as unrealised foreign exchange losses wiped out improved revenues earned from a jump in production.

A loss per share of 5.23 US cents was posted for the six months to end December, from earnings per share of 6.79 US cents the year before.

Unrealised foreign exchange losses of $35.7m were recorded against a 13% rise in revenue to $101.4m.

The bulk of Petra’s operations are in South Africa, which means the company’s earnings are sensitive to movements in the rand exchange rate.

Petra is expecting an improved performance in the second half, with significantly higher production and sales as well as a more stable diamond market.

Production in the first half jumped 64% to 953 553 carats, and the inclusion of the Finsch diamond mine for the full six months of the second half is expected to push production "significantly higher".

Petra acquired the Finsch diamond mine, South Africa’s second-largest diamond operation by production, from De Beers in September.

The company said it was on track to produce 2 million carats in its current financial year. Its next target is 5 million carats by 2019.

This will translate into considerably higher revenues as rough diamond prices stabilise.

Rough diamond prices were lower in the final months of 2011 as economic uncertainty, caused by the eurozone crisis, continued to take its toll.

Prices strengthened slightly in the beginning of this year and Petra expects the stabilisation trend to continue at least until June.

Petra listed on London’s main market in December and expects to enter the FTSE 250 index in March.