Petra Diamonds reported that gross revenue from its mining operations rose 44 percent to $90 million during the six months that ended December 31, 2010, boosted by strong rough diamond prices during the year.

“The strong growth in revenue for the period reflects the strength of the market and the positive rough diamond price environment,” said Johan Dippenaar, Petra’s chief executive.

He explained that the recovery in rough prices was underpinned by continued growth in demand from emerging markets, particularly China and India, which emanated from retail consumers rather than re-stocking cutting center inventories. In addition, price increases were driven by a slow but steady improvement in the U.S. market, he said. “Initial reports indicate that polished sales in the U.S. will be better than previously expected and polished traders are anticipating healthy activity going forward in 2011,” the company added.

Petra noted that the major diamond producers also buoyed the strong rough pricing environment through their supply policies. “The relative scarcity of rough diamonds ensured increasing levels of competition from both dealers and manufacturers to secure quality goods,” the company explained.

Petra’s production fell 5.2 percent to 582,102 carats due to a planned suspension of production from the main pit of the Williamson mine while the existing plant is being replenished, and the planned depletion of the high-grade tailings resource at Cullinan mine. The company maintained its outlook to mine 1.3 million carats in the fiscal year ending June 30, 2011. Output in fiscal 2012 is expected to accelerate at a faster rate once production from the Williamson open pit resumes, the Kimberley underground ramps up production and the Cullinan expansion gains traction.

Gross production at Cullinan, in which Petra owns a 74 percent stake, declined 1.2 percent to 468,056 carats. Sales from the mine grew 44 percent to $57.8 million with the average price of diamonds sold increasing 38 percent year on year to $120 per carat. Output at Williamson fell 84 percent to 10,847 carats, while sales from the mine dropped 71 percent to $2 million. The average price of sales from Williamson rose 87 percent to $264 per carat.

Output at the Koffiefontein mine rose 11 percent to 34,500 carats while sales grew 83 percent to $17.2 million and the average price increased 39 percent to $470 per carat. The Kimberley underground operation brought an additional 24,988 carats after Petra bought the mine in May 2010, with sales of $4.9 million at an average $285 per carat. Combined production at the Helam, Sedibeng and Star fissure mines grew 4.5 percent to 43,710 carats as sales from the operations rose 36 percent to $7.9 million and the average price of the sales by 12 percent to $192 per carat.

By: Avi Krawitz of RAPAPORT

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