Tuesday, October 09, 2007

Market experiencing a 'diamond rush'

Johannesburg - Diamond mining junior Petra Diamonds said on Monday that the market was experiencing a 'diamond rush' because of "the shift of power in the diamond industry". The company said a number of diamond companies have recently sought to raise money and acquire a public listing in London. It said this was due to the diamond industry opening up to new players due to the shift of power in the industry and the "dramatic restructuring of the diamond pipeline". While Petra reported the widening of its full year losses from 13.11 US cents a share to 13.60 US cents a share, the company believed the current financial year held far more promise.

An assortment of fancy color rough diamonds displaying skin texture and color.

"The compelling investment case for diamonds continues, with the market widely predicted by analysts to slip into a major supply deficit within the next five years, due to the lack of significant new production coming on stream," said Petra in a statement on its results for the 12 months to end June 2007. "At our recent tenders diamond prices recovered from the weaker prices recorded during the financial year and, despite the turbulent events in the financial markets, many market participants believe that an increase in diamond prices is overdue," the company said. Petra, which has bought several of diamond giant De Beers' older operations in and around Kimberley, said revenue decreased by $3.9 million to $17 million in 2007 from $20.9 million in 2006. This was despite a slight increase on production. In the year to end June 2007, the company produced 180,474 carats compared to 175,011 carats for the same period the year before. The 3.1% was attributed to the increase in production from Petra's South African mines. Besides South Africa, Aim-listed Petra is also active in Angola, Botswana and Sierra Leone. A loss for the year of $20.9 million was reported compared to last year's $18.8 million on larger amortisation, exchange losses and depreciation charges. The company had also expected production from the Koffiefontein mine, which it acquired from De Beers Consolidated Mines for R81.9 million, to count towards its 2007 results. However, the one-month delay in the completion of the acquisition meant that the deal was only finalised post year-end.

Business Report - Market experiencing a 'diamond rush