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Jan 28 (Reuters) - Shares of Petra Diamonds Ltd slid as much as 10 percent on Monday after lower diamond prices at its flagship Cullinan mine and an increase in net debt took the shine off higher half-year revenue.
The company has been trying to keep a lid on debt after heavy investments and a stronger South African rand had burdened the miner, which pays in rands and earns in dollars.
Petra’s net debt jumped to $557.2 million in the six months to Dec. 31 from $538.9 million as at Sept. 30. The company was forced to raise $178 million last May by issuing equity to cut its debt burden.
Rough diamond prices fell to $96 per carat from $140 per carat in the previous year at the Cullinan mine, which in 1905 yielded the Cullinan diamond - the largest rough gem diamond ever found and now part of the Crown Jewels of the United Kingdom.
“The significantly lower realised Cullinan pricing and the impact on cashflow generation sees us take renewed caution,” said RBC, which cut the miner’s price target to 40 pence from 65 pence after the company’s half-year report.
Petra posted an 8 percent jump in revenue to $207.1 million, about 10 percent below RBC forecasts of $230 million, hurt by lower pricing at Cullinan. The company stuck to its production forecast 3.8 - 4.0 million carats for fiscal 2019.
Shares of the miner, which runs four mines in South Africa and one in Tanzania, were 8.5 percent lower at 41.12 pence at 0847 GMT. (Reporting by Devika Syamnath in Bengaluru Editing by Saumyadeb Chakrabarty)