Petra Diamonds’ share price fell on Monday as industrial action at its Cullinan mine forced the company to offer a cautious outlook on production.
Labor stoppages delayed the expansion program known as the C-Cut extension at the South Africa mine, the company said. The project’s commissioning has consequently been pushed back eight weeks to the end of March.
Petra is still on track to meet its production guidance of about 4.4 to 4.6 million carats for the fiscal year ending June 30, but the company “is mindful of the potential to be toward the bottom end of this range” due to the labor actions, which have since been resolved, according to a statement Monday.
“While labor relations are currently stable, there remains the potential for labor action in South Africa,” the miner added.
Petra extracts diamonds from the Finsch, Cullinan and Koffiefontein mines in South Africa, as well as the Williamson deposit in Tanzania. The company also operates the Kimberley mine in South Africa jointly with Ekapa Mining.
Combined production from the mines increased 24 percent to 2 million carats in the six-month period that ended December 31, 2016. Output from Cullinan rose 30 percent to 419,754 carats during that time.
The announcement came as the miner reported a revenue jump of 48 percent to $228.5 million in that half-year. By volume, sales grew 47 percent to 1.9 million carats, while the company recorded a profit of $35.2 million compared to a $2.2 million loss in the same period a year before.
“Signs of stabilization in the rough-diamond market are evident, with steady demand across the majority of size ranges,” the miner explained.
The exception to this improvement was in smaller, lower-value diamonds, which have come under price pressure because of the Indian government’s decision to scrap INR 500 and INR 1,000 notes – a move that sapped liquidity from medium-sized and smaller diamond companies in India. However, these categories recovered in a tender earlier this month, the statement pointed out.
Petra’s share price fell almost 5 percent in early trading on Monday before recovering to a decline of about 0.5 percent at press time.