Mine workers are seen in front of a giant drill-cum-vacuum cleaner that accelerates drilling at an underground tunnel at Cullinan mine outside Pretoria, northeast of Johannesburg
Petra Diamonds' core profit climbs, CEO to step down
By Zandi Shabalala
LONDON (Reuters) - Petra Diamonds on Monday reported a jump in full-year adjusted core earnings due to a rise in production at its continuing mines and said its chief executive would step down.
This pushed Petra's London-listed shares, which are down 40 percent this year, jumped more than 6 percent to their highest in over a month while the wider index inched slightly lower.
Petra was hobbled by a stronger South African rand and operational delays in the first half of the year as well as a confiscation of diamonds in Tanzania that left it strapped for cash and in crippling debt.
But improved performance in its diamond mines in the second half, a cash raise in June and a reversal in rand strength have helped the company cut debt and raise core earnings.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose to $195.4 million from $142 million in the previous year.
Petra did not name a successor for its chief executive role and expects to announce two non-executive appointments next month. Outgoing CEO Johan Dippenaar has been at the helm since Petra merged with Crown Diamonds in 2005.
"Its been a hard 13 years... we have made six acquisitions, a substantial rebuild and redesign and that was quite a job," Dippenaar told Reuters.
"In the June 2017 financial year we experienced a lot of challenges to effect this build up but we fought back well this year and the second half was solid."
The Tanzanian government has not yet returned a consignment of diamonds that it confiscated from Petra last year after it temporarily blocked the company's exports. At the same time, the company was hit by a two-week strike in South Africa.
"There have been a lot of uncomfortable conversations with investors over the last two years... they had to do something for shareholders..." an industry source, who declined to be named.
Petra's chairman Adonis Pouroulis said in a statement that the company was approaching the final stage of its expansion plans and was positioned to reap the benefits.
Production rose 19 percent to 3.8 million carats when excluding the KEM Joint Venture because it was sold.
The company slipped into a net loss due to an impairment and a higher depreciation charge as well as higher financing costs.
In July, Petra forecast lower than estimated production for 2019 after reporting 2018 output at the bottom end of its forecast range.
"These results paint an underlying picture of operational improvements and the development of a corporate structure more in keeping with a miner moving from being capex-intensive to a stable and larger producer and, hopefully, a strong free-cash flow generator," said Canaccord Genuity Limited analyst Des Kilalea.
(Reporting by Zandi Shabalala and Barbara Lewis; Editing by Mark Potter and Ed Osmond)
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