South Africa’s Petra Diamonds (LON:PDL) has found yet another big rock at its iconic Cullinan mine, one of the many coloured diamonds it has unearthed at the operation this year.
The “exceptional” 20.08 carat blue gem quality diamond, Type IIb, demonstrates that Cullinan remains a significant source of rare blue diamonds, and confirms the ability of the mine’s plant to recover the full spectrum of precious stones, the company said.
Recovery demonstrates Cullinan remains a significant source of rare blue diamonds, said the company.
In April this year, the company a 424.89 carat exceptional D colour Type IIa diamond at the same mine. The stone was sold the next month for just under $15 million.
Petra’s shares hit an all-time low last week after it reported a net loss of $258.1 million for the year ending in June, amid challenging market conditions.
Richard Duffy, who has been at
Petra’s helm since April, said the diamond market was in its worst state since
the financial crisis in 2008, but expects it to stabilize in the next 12 to 18
months.
Petra has been trying to turn
around its fortunes after piling up debt to expand its flagship Cullinan
mine in South Africa, where the world’s largest-ever diamond was found in 1905.
Struggling market
Diamond miners are struggling across the board, especially those producing cheaper and smaller stones, where there is an over-supply.
The US-China trade row and protests
in Hong Kong dented demand in Asian markets.
Increasing demand for synthetic
diamonds has also weighed on prices. Diamond prices
Man-made diamonds require less
investment than mining natural stones and can offer more attractive margins.
Synthetic producers spend around $300-500 per carat produced, according to a 2018 report by Bain & Company.
Diamond miners are struggling across the board, especially those producing cheaper and smaller stones, where there is an over-supply.
Lab-grown diamonds produced by De
Beers, the world’s top diamond miner by value, sell for $800 per carat.
Petra, by contrast, has to shift
20,000 tonnes of earth at Cullinan to yield just one cup of diamonds. Average
cost in the 2019 financial year was $110 per carat, 12% less than in 2018.
Buyers, those that polish and cut
diamonds for retailers, have been hit this year by lower prices and tighter
credit, prompting them to delay purchases. Tiffany’s reported in August
a 3% decline in like-for-like sales, while shares in Signet, the world’s
largest retailer of diamond jewellery, have lost more than 60% of their value
this year.
De Beers has responded by axing
production — with a target of 31 million carats this year compared with 35.3
million in 2018. It has also announced it would spend more on marketing.
In March,
Africa-focused Firestone Diamonds (LON:FDI) put plans to extend the life
of its 75%-owned Liqhobong mine in Lesotho on the back burner, saying that current market conditions
didn’t support such project.
Petra will report production and sales results for the September quarter on October 21st.