Petra Diamonds has got the blues after a gem sale disappointed the markets.
The company sold a rare blue diamond from its Cullinan mine in South Africa for $27.6m, but this was below some analyst expectations. The 122.52 carat diamond, recovered in June, was bought by a partnership majority owned by an unnamed polishing group, with Petra retaining a stake. The company will also receive 15% of anyh price when the gem is sold on.
Petra shares have slipped 0.8p to 195.6p, but Panmure Gordon analyst Alison Turner said:
Petra Diamonds has announced that it has sold the 122ct blue diamond from Cullinan into a partnership comprising Petra (15%) and (85%) a polishing partner. In effect this means that Petra gets $23.5m up front (being the partner's share of the $27.6m sale price) and also gets 15% of the profit (if any) when the polished stone is sold. Whilst this is less than the $35m-$40m I had in my figures, given that the company does share in the upside it is not a disastrous number. Nevertheless my 2015 estimated pretax profit falls by $15m to $153m.
Numis analysts said:
Valuing large stones on the back of an envelope remains challenging with little info on colour, clarity and potential cutting properties. Petra is a part of the partnership buying the stone and it does make us question the robustness of the market for these super large diamonds going forward. Nevertheless, there's little downside in recovering and selling large stones, so this is still positive and a good result for Petra.
Petra caused some excitement earlier this month when it unveiled a $10m-plus white diamond from Cullinan.
