Petra Diamond's first quarter revenue fell by 17 per cent to
$78.7 million after the Tanzanian government seized one of its
consignments on allegations of underdeclaration.
President
John Magufuli said he will renegotiate the gold, diamond and tanzanite
mining agreements to ensure that the country gets better terms from the
miners.
“Revenues fell from $94.8 million to $78.7
million as there were no sales from Williamson in Tanzania included in
the revenue stream due to a parcel of diamonds from the mine being
detained by Tanzania,” the firm’s chief executive officer Johan
Dippenaar said.
A week ago, Petra received authorisation from the government to resume diamond exports and sales.
Already,
a parcel of 40,000 carats from the Williamson mine has been shipped to
the company’s marketing office in Antwerp, Belgium.
“We
also remain engaged with the Tanzania government about the first parcel
of diamonds in order to reach a satisfactory resumption, which would
leave about 111,000 Williamson carats available for sale. This is not
included in the quarter revenue numbers to date,” Mr Dippenaar said.
The
Tanzanian government confiscated a consignment of diamonds from the
Williamson mine, which is majority-owned by Petra, alleging that the
company had underdeclared the value of the stones by about 50 per cent.
Two
weeks ago, while overseeing the signing of an agreement between his
government and Barrick Gold, the owners of Acacia mining, President
Magufuli instructed Justice and Legal Affairs Minister Palamagamba
Kabudi to ensure that other mining firms align themselves to the
conditions that Acacia has agreed to.
“I would want to
see all other gold mining firms follow suit and append their signatures
to this kind of agreement. The same should go for diamond and tanzanite
mining firms, which should adhere to this arrangement. Those who don’t
want this, can leave. We would like to see Tanzania benefit more from
its resources and such kind of agreements will guarantee that,”
President Magufuli said.
Meanwhile, Petra’s debt
continues to rise. The London-listed firm said its net debt had risen to
$614 million, from $555 million as of June 30 due to no sales from the
Williamson mine during the period.
The company
currently has undrawn bank facilities of $20.9 million, up from June’s
$5.6 million, with an additional cash balance of $125.8 million, down
from $203.7 million in June.
Breach debt covenants
Early
this month, Petra announced that it was likely to breach key debt
covenants with its lenders as a result of the labour disruptions in
South Africa and the seizure of its $15 million consignment by Tanzania.
“The
compliance with the two Ebitda (earnings before interest, tax,
depreciation and amortisation) -related maintenance covenant
measurements related to the senior debt facilities for the 12-month
period ending December 2017 has been placed at risk,” the company said.
Petra’s
chief finance officer Jacques Breytenbach said that they expect to
reduce net debt to $620 million by December on the assumption that $30
million is realised from Williamson during the second quarter.
In
September, the company suspended operations at one of its mines after a
dispute with the government, becoming the second mining firm after
Acacia to have its minerals seized.
The same week,
Tanzania announced that it would nationalise the diamond consignment
owned by Petra that was en route to Belgium after it was said to have
been underdeclared by more than $14.7 million.
“While
Williamson Diamonds Ltd declared in its documentation that the value of
the diamonds was $14.798 million, a fresh valuation done by the
government established that the actual value of the diamonds is $29.5
million. Legal action to be taken includes the nationalisation of all
the diamonds seized after it was established that there was cheating
involved in declaring the actual value of the minerals,” Tanzania’s
Finance and Planning Ministry said in a statement at the time.
The
Williamson mine, from where the diamond consignment originated, is
majority owned by Petra (75 per cent), with the other 25 per cent owned
by the Tanzanian government.
No comments:
Post a Comment