Gold Mining News Hubb
Advertisement
  • Home
  • Gold News
  • Mining News
  • Contact us
No Result
View All Result
  • Home
  • Gold News
  • Mining News
  • Contact us
No Result
View All Result
Gold Mining News Hubb
No Result
View All Result
Home Gold News

Petra facing squeeze on cash flow as Williamson cost adds to dampened consumer demand

admin by admin
December 17, 2022
in Gold News


Rough diamonds sit on a sorting table during the grading process at the Yakutsk Diamond Trading Enterprise (YaPTA), operated by Alrosa PJSC, in Yakutsk, Russia, on Wednesday, Feb. 17, 2016. The world’s two biggest diamond miners, De Beers and Alrosa, just sold $1 billion worth of gems and it’s making smaller rivals nervous. Photographer: Andrey Rudakov/Bloomberg via Getty Images

PETRA Diamonds was facing a significant reduction in free cash flow in 2023 owing to an increase in capital expenditure and the cost of suspending production at Williamson mine in Tanzania where there was a breach in a tailings dam.

Free cash flow was forecast to be $12m next year compared to $213m in Petra’s 2022 financial year, said BMO Capital Markets analyst Raj Ray in a report this month.

Ray was also cautious regarding recent Petra auction sales which showed a marginal 2.2% lift in the average realised price to $138 per carat. Petra said this reversed “the downward trend observed in the previous two tenders”, but Ray said the outlook for 2023 would be shaped by the impact of inflation on consumers.

The possible reopening of China following hardline Covid-19 shutdowns might be a mitigating factor to dampened consumer appetite, especially in the US which comprises about half of global diamond jewellery sales.

Petra announced on November 30 that Williamson would not return to production before the middle of 2023 following the partial collapse of a tailings dam in November. The company has previously said the mine would be suspended for three months.

Williamson produced 228,000 carats of diamonds in Petra’s 2022 financial year ended September 30, equal to about 7% of total production for the year. The mine was reopened during the last financial year following an improvement in diamond prices.

The company was investigating whether it could sell a previously impounded parcel of diamonds in order to finance the mine whilst operations were suspended.

The parcel of diamonds, which Petra had valued at $14.8m, was seized by the Tanzanian government in 2017. The government claimed the true value of the parcel was $27m. It alleged Petra had “cheated” the government by declaring a lower valuation.

The Tanzanian government subsequently agreed to allocate the parcel to Petra following the Framework Agreement with Williamson.

Bank of America recently moderated its diamond sales outlook for the year.

It has now forecast a 10% correction in rough diamond prices. “Globally, we consider recession risks and continued Covid headwinds in Asia,” it said.

“The sequentially lower sales should not come as a surprise, given the usual seasonality for midstream demand as polishing factories are reopening in India following the Diwali holidays,” said analysts at Morgan Stanley.

Google Trends indicated that searches for “diamond jewellery” and “diamonds” are at a five-year low, potentially pointing to softening buying intentions amid high inflation and economic uncertainty. MasterCard spending on jewellery in October turned negative for the first time since December 2020 and came in at -3.8% compared to +7% in September.



Source link

Previous Post

مؤتمر جنوب السودان للنفط والطاقة هو مكان انعقاد اتفاقيات الطاقة في عام 2023

Next Post

Barrick Gold signs final deal with Pakistan for Reko Diq project

Next Post

Barrick Gold signs final deal with Pakistan for Reko Diq project

Recommended

The Top Feeder Schools into Silicon Valley

November 7, 2022

How to ease PVC collection

December 19, 2022

Don't miss it

Gold News

EFCC arrests bank official over alleged hoarding of new naira notes

February 6, 2023
Mining News

Football’s Big Game: Charting Super-Sized Bets (2013-2022)

February 6, 2023
Mining News

China’s development of Russian mine

February 6, 2023
Gold News

Sibanye-Stillwater studying start-up in nuclear reactors as signals return to dealmaking

February 6, 2023
Gold News

First Abuja International Marathon to hold in April

February 5, 2023
Mining News

The Top Online Music Services in the U.S. by Monthly Users

February 5, 2023

gold mining-66

© 2022 Gold Mining News Hubb All rights reserved.

Use of these names, logos, and brands does not imply endorsement unless specified. By using this site, you agree to the Privacy Policy and Terms & Conditions.

Navigate Site

  • Home
  • Gold News
  • Mining News
  • Contact us

Newsletter Sign Up

No Result
View All Result
  • Home
  • Gold News
  • Mining News
  • Contact us

© 2022 Gold Mining News Hubb All rights reserved.