South Africa's Cullinan mine puts sparkle back in Petra Diamonds

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This 39.34-carat blue diamond sold for $40 million, the most valuable single diamond ever sold by Petra.
This 39.34-carat blue diamond sold for $40 million, the most valuable single diamond ever sold by Petra.
Petra Diamonds Limited
  • Petra Diamonds Cullinan Mine unearthed a series of high quality diamonds in the 2021 financial year.
  • The company has resolved to exit its Williamson operation in Tanzania.
  • Increased financial performance helped the miner cut down debt which had put pressure on the balance sheet.


"Exceptional stones" unearthed at its Cullinan Mine - which contributed a record $62 million during the year - gave Petra Diamonds' revenue and sales a boost - even in 2021's tough economic climate. 

The mining group, which owns the famed Cullinan Mine outside Pretoria, as well as Finsch in Northern Cape, Koffiefontein in the Free State, and the Williamson in Tanzania, saw revenue for the full 2021 financial year increase 65% to $402.3 million (~R5.7 billion) compared to $243.3 million in 2020.

The company said the marked increase was driven by sales from exceptional stones. The $62 million contribution during the year was up from $14.9 million seen in the previous years.

The figure was the highest annual contribution to revenue from the sale of exceptional stones in Petra's history.

The 2021 financial year was a good period for the Cullinan mine, as it yielded a number of rare gems including the collection of five high-quality blue diamonds totalling 85.6 carats, which were all recovered in the space of one week’s production in September 2020.

The stones were sold to a partnership between De Beers and Diacore for $40.36 million in November 2020.

In January 2021, a 299-carat high-quality white diamond was recovered and sold to Stargems DMCC for $12.18 million. That was soon followed by a 11.82-carat blue diamond in February, which fetched $9.53 million.

An adjusted net loss after tax of $16.1 million was reported, down from a loss of $54.7 million in 2020.

Historic finds

Petra's chief executive Richard Duffy said record production at Cullinan, as well as the highest annual contribution to revenue from exceptional diamond sales, resulted in a 65% improvement in revenue and operational free cashflow of US$120.1 million for the year.

"These record recoveries have continued post year-end, with the sale of the magnificent 39.34-carat blue diamond for $40 million, being the most valuable single diamond ever sold by Petra," said Duffy.

"The $1 million per carat realised for this stone is likely the highest per-carat price for a rough diamond ever achieved."

The Cullinan mine was the site where the 3 106-carat Cullinan diamond - which was cut to form the 530-carat 'Great Star of Africa' and the 317-carat 'Second Star of Africa' - was mined. The stones are part of the Crown Jewels of the UK.

Things have not always been rosy for the London-listed miner. In June 2020, Petra Diamonds announced that it was seeking offers for all or part of the company as it battled to service its debts, with the repayment of a $650-million senior loan due on 1 May, 2022. The firm also announced that it was looking for buyers for its exploration assets in Botswana.

Williamson troubles

In March 2021, the company concluded its recapitalisation drive, which Duffy said allowed the company to consolidate net debt, which reduced by nearly two-thirds to $228.2 million at 30 June 2021, from $700.3 million at 31 December 2020.

Petra has also faced operational challenges at its Williamson mine in Tanzania, including damaging rights abuse claims, which led to it reaching an R85 million settlement earlier this year, although the company said the payment was not an admission of liability.

The company was sued by 71 anonymous claimants who held the miner liable for human rights violations at the mine south of Mwanza in the Shinyanga province of Tanzania. They claimed to have been mistreated and suffered injuries at the hands of the mine's security personnel and that there were casualties reported.

The company is now selling the Williamson operation which it acquired in 2009 and operates with the government of Tanzania, with the miner being the majority owner. It said the board had decided to review its strategic options at Williamson and the asset has therefore been classified as an asset held for sale.

The Williamson had been under care and maintenance, and production is expected to resume in the first half of 2022.

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