Petra, which has been hit by a triple whammy of weak market conditions, power emergencies in the home country and covid-19, found the Type IIb blue diamonds at its flagship Cullinan mine.
The high quality stones, in terms of both their colour and clarity, range in size from 9.6 carats to 25.8 carats, the company said.
The miner didn’t indicate the diamonds’ potential value but said it is considering sale options.
“These finds, whilst a positive development, will not have a material impact on the likely terms of the required long-term solution to improve the group’s capital structure, nor the significant level of equity dilution that existing shareholders are likely to experience in connection with its implementation,” Petra said in the statement.
The company also warned that measures to improve its capital structure could result in significant equity dilution.
Blue stones are among the rarest and most valuable and have lately fetched higher prices than white diamonds. Last year, Petra sold a 20.08-carat blue gem for $14.9 million, or about $741,000 per carat.
“Flexible” approach to sales
Petra was already struggling when the covid-19 pandemic added further pressure to a sector that was just beginning to show some green shots.
The miner tried in 2019 to turn around its fortunes after piling up debt to expand its flagship Cullinan mine in South Africa. The renowned mine, where the world’s largest-ever diamond was found in 1905, produces about a quarter of the world’s gem-quality diamonds. It is also the source of the vast majority of blue stones.
In May, Petra failed to make an interest payment on a $650 million bond, but won some breathing space from creditors who said they would not declare a default until August.
The diamond producer also cancelled May and June tenders because of travel restrictions and low demand from the midstream. While it originally expected to hold a tender in September, Petra said it was still evaluating the optimal route to market for the stones it mines. It added it would release further information to its customer base once a decision about the marketing plan to follow had been made.
For now, the company is taking a “flexible” approach to selling diamonds in light of ongoing travel restrictions triggered by the global pandemic.
Despite the numerous challenges, Petra is targeting a ramp-up to pre-covid-19 production levels. It added it will disclose production targets for 2021 once it reaches a “sustainable level of operational stability.”