Petra Diamonds has resumed operations at its Williamson mine in Tanzania, but remains uncertain when it will be cleared to export goods from the east African nation again.
Mining paused for four days last week after the Tanzanian government, which owns a 25% stake in the asset, seized a parcel containing 71,654 carats of rough diamonds over a reported disagreement about valuation. The parcel has still not been released for export, and spokespeople said they were unsure whether future exports would be affected.
“Sales from Williamson will be dependent on the government, not Petra,” a company spokesperson told Rapaport News on Monday.
Revenue from the mine fell 26% to $58.4 million in the fiscal year that ended June 30, due to a sharp decline in the sale of exceptional diamonds from the project, Petra reported. Group revenue increased 11% to $477 million for the year, driven by increases at the Finsch, Cullinan and Kimberley mines in South Africa.
However, delays in expansion programs at Cullinan and Finsch meant the company did not meet its previously stated production and revenue targets for the year, CEO Johan Dippenaar said in the company statement. That resulted in higher operating costs, which, together with the strengthening South African rand, led net profit to plunge 69% to $20.7 million.
Group production is back on track to reach between 4.8 million and 5 million carats in the current fiscal year, from 4 million carats in fiscal 2016-17.
The four-day halt to mining at Williamson will not impact the company’s production outlook for the year, Dippenaar said in a conference call later on Monday, adding that the company would assess the long-term prospects for exports before making a decision to place the operation on care and maintenance.
For now, the parcel remains in government custody, even though the reasons for seizing the goods “have still not been formally made known to the company,” Petra said.
Petra declared the diamonds as being worth $14.8 million, in keeping with a government ministry evaluation that the company published on its website. However, a separate ministry later valued the parcel at $29.5 million, Reuters reported last week.
Petra is “committed to ongoing dialogue” with the Tanzanian government, the miner said in its Monday statement.
However, if the company is unable to resume sales from Williamson in the fiscal half-year that ends December 31, it may fail to meet its loan commitments, it cautioned. In such a case, the company would start talking with lenders to reach a resolution, it added.
Shares in Petra Diamonds fell 6% in Monday afternoon trading on the London Stock Exchange, and have dropped 12% since news broke of its dispute in Tanzania on September 8.