Petra Diamonds (LSE: PDL) has reported a 36% fall in revenue and a net loss of £168.7 million (US$223 million) for the year ended June 30, as the pandemic deepened the company’s financial woes.
The diamond miner, which has three operations in South Africa and one in Tanzania, said Covid-19 affected production, sales and prices in the period.
Petra posted revenue of US$295.8 million in the 2020 fiscal year, compared to US$463.6 million in the 2019 fiscal year.
It reported cash outflow of US$12.3 million versus free cash flow of US$70.5 million last year, and took an impairment charge of US$91.9 million due to reduced diamond pricing estimates.
The global spread of Covid-19 and the consequent demand drop contributed to a 58% year-on-year decrease in Petra’s earnings before interest, taxes, depreciation and amortisation (EBITDA), to US$64.8 million in the reporting year.
The adjusted EBITDA margin also worsened to 22%, compared with 33% in the prior fiscal year. In terms of output, Petra churned out 3.59 million carats of diamonds for the year, a 7% fall compared to the 3.87 million carats it mined in 2019.
The diamond miner was already struggling before the pandemic hit, with a loss of US$258.1 million last year.
More bad news
The company’s weak financial position led it to put itself up for sale in June. Petra changed its mind in October, opting instead for a debt-for-equity restructuring. The deal would leave existing shareholders with just 9% of the company.
On top of empty coffers, Petra is also dealing with allegations of human rights abuses at its Williamson mine in Tanzania, reportedly resulting from the actions of its security guards.
The company has hired an external consultancy to assess the claims. It noted the investigation would be completed by year-end and that the mine, which it closed in April, remains suspended.
As a result, production during the first quarter of financial year 2021 (July-September 2020) is down 10% to 974,346 carats from the same period in the previous year.
Revenue, however, jumped by 33% to US$82 million owing to the release of inventory carried over from the preceding quarter.
Despite the numerous challenges, Petra is targeting a ramp-up to pre-Covid-19 production levels. For now, it’s keeping a lead on production targets for 2021, as a second coronavirus wave keeps markets guessing.