Petra realises R616m from five-diamond sale
Cash-strapped Petra sells five blue diamonds as a collection from its SA Cullinan mine for $40m
London-listed and deeply indebted Petra Diamonds realised R616m from the sale of just five diamonds from its flagship Cullinan mine near Pretoria.
Petra, the second-largest miner of SA diamonds after De Beers, is undertaking a major debt restructuring that will entail shareholders reducing their stake in the company to just 9% as it tackles its $650m bond that matures in early 2022.
The sale of the five blue diamonds, which collectively weigh 85.6 carats, were sold as a collection to De Beers and Diacore for $40.4m (R616m) in cash. Diacore is a specialist diamond company that cuts and polishes exceptional stones.
This equates to about $472,000 per carat. One carat is equivalent to 0.2g and the diamonds collectively weight 17.12g. The diamonds sold for $2.4m or R36.5m per gram.
“The result of this special tender affirms the very high value placed on blue diamonds, which are undoubtedly one of nature’s rarest treasures,” said Petra CEO Richard Duffy.
“We believe this to be the first time that five rough blue diamonds of significant size, colour and clarity have been offered for sale at one time and we are delighted that the collection has been bought in its entirety.”
The Cullinan mine near Pretoria is known for its large diamonds, and it is the source of the biggest diamond ever recovered, the 3,106-carat Cullinan stone in 1905, which was subsequently cut up into various diamonds that are in the British crown jewels.
De Beers, the largest miner and seller of rough diamonds by value, sold the Cullinan mine to Petra in 2007.
“The sale of a single parcel of five blue diamonds for more than $40m underlines the scarcity of the production of these gemstones. The Cullinan mine remains a significant source of blue diamonds as well as high quality white diamonds,” said SP Angel analyst John Meyer.
The sale of the five diamonds comes at a time when the rough diamond market is staging a fragile recovery after the global economy and purchases of luxury items such as diamonds are taking a battering from the Covid-19 pandemic, closure of borders, reduced economic activity and job losses.
For Petra, the cash from the diamond sale will have no consequence for its debt restructuring plans.
Consolidated debt was $688m at the end of September. Petra has reached an agreement in principle with the bond holders — who will take a 91% stake in the enlarged equity of Petra in exchange for $400m of their bonds — and a consortium of SA banks. The debt deal, which is subject to a shareholder vote, is expected to be finalised early in 2021.
Update: November 25 2020
This article has been updated with analyst comment.
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