Blue diamonds are a girl’s best friend: Petra’s five rare stones sell for R600m

Petra’s five blue diamonds, the Letlapa Tala Collection sold for about R600m ($40.36m) this week, according to diamond miner Petra Diamonds.

The collection, weighing 85.6 carats in total, sold to a partnership between De Beers and Diacore.

Richard Duffy

Richard Duffy, Petra Diamonds CE, says the special tender process for the blue diamonds collection closed on 24 November. The results were announced on 25 November.

Petra’s rare collection was recovered in September 2020 at the famous Culinnan Mine in South Africa.

“The result of this special tender affirms the very high value placed on blue diamonds. We believe this to be the first time that five rough blue diamonds have been bought in its entirety.”

Read also: Petra Diamonds to sell 5 rare blue diamonds as it struggles against Covid-19 downturn

In 2014, Petra mined a 26 carat blue diamond cut into a 12 carat gem, the Blue Moon of Josephine. At $4 million per carat, it still holds the record for the highest price per carat ever paid for a diamond. This is equivalent to $20 million per gram, says Duffy.

Petra abandons sell of business in favour of debt-for-equity restructuring

In a media statement, Petra said it had decided not to sell the business in favour of the debt-for-equity restructuring.

“We have reached an agreement (in principle) with noteholders and lender group on long-term capital structure. This provides a sustainable future for the company, once operating conditions normalise,” says Duffy.

Petra will restructure its business, converting its remaining note debt into equity. Debt holders will hold 91% of the company thus diluting existing shareholders to a combined stake of 9%.

The company with a market cap of £14.83 million, and share price at 1.70p (at the time of publishing), released its FY 2020 results last week.

Revenue fell 36% to $295.8 million (FY 2019: $463.6 million). Consolidated net debt as at 30 June 2020 reached $696.6 million (30 June 2019: $595.2 million).

As of 30 September 2020,  consolidated net debt reached $687.8 million.  Unrestricted cash was $49.3 million (30 June 2020: $53.6 million), with the company’s banking facilities remaining fully drawn.

This was due to lower sales and the capitalisation of the deferred coupon payment on Petra’s $650 million loan notes of $23.6 million.

“Constrained production, lower pricing and limited sales had a considerable impact on our balance sheet,” says Duffy.

He says diamonds sold for the year were down by 23% to 2,895,497 carats (FY 2019: 3,736,847 carats). Rough diamond prices decreased ca. 18%, with the overall effect that revenue decreased 36% to $295.8 million (FY 2019: $463.6 million).

Revenue for Q1 FY 2021 has increased 33% to $82.0 million (Q1 FY 2020: $61.6 million). This is mainly due to the release of inventory carried over from Q4 FY 2020, according to Petra.

Read also: WORLDVIEW: Why are investors dumping London-listed SA miner Petra Diamonds?

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