October 9, 2017 / 9:17 AM / a year ago

UPDATE 1-Petra Diamonds likely to breach key bank loan condition

(Adds details, share movement, analyst comment)

Oct 9 (Reuters) - Petra Diamonds Ltd said on Monday it was likely to breach a key condition of its banking agreements this year following the temporary shutdown of its mine in Tanzania and labour disruption in South Africa.

Shares in the London-listed company fell as much as 6 percent earlier and were down 4.2 percent at 79.83 pence by 0851 GMT after the company said it had told lenders it was likely to breach a core earnings ratio this financial year that is part of its banking arrangements.

Petra has been hit by a crackdown on mining firms in Tanzania as the government aims to secure a bigger take from the sector.

On Sept. 7 the government confiscated a consignment of diamonds from the Williamson mine majority-owned by Petra after accusing the company of under-declaring the value of the stones by about half. Petra has denied the charge.

The company has also experienced strikes in South Africa over better pay, higher rent and housing allowances and demands for medical expenses.

Although the wage disputes in South Africa have been resolved, the lack of sales from Williamson would likely lead to a covenant breach in December, said BMO Capital Markets analyst Edward Sterck.

But lenders may give the company some leeway and allow a covenant holiday as the situation in Tanzania is outside Petra’s control, he added.

Petra said it was unsure about final sales volumes for the Williamson mine for the first half of 2018. (Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Mark Potter and Louise Heavens)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below