Petra Diamonds (LON:PDL) management used its interim results investor presentation for the six months ended December 31, 2025 to emphasize progress made after recent portfolio changes, while acknowledging continued weakness in the rough diamond market. Joint CEO Vivek Gadodia said the group entered FY2026 “as a much leaner business” following the disposal of Williamson and Koffiefontein, leaving two “capital-optimized assets” with “a world-class resource base.”
Gadodia said the company believes its approved capital programs are set up to unlock operational leverage through improved product mix and higher grades, supporting increased carat production over time even if diamond market conditions remain subdued. He also pointed to cost and capital discipline in rand terms, noting U.S. dollar figures were affected by a stronger rand.
Refinancing completed and liquidity tools added
Chief Financial Officer Johan Snyman said consolidated net debt at December 31, 2025 was $284 million, compared with $261 million at June 30, 2025 and $215 million at December 31, 2024. He cautioned that the reported figure includes fair value adjustments and other items tied to the refinancing modification date and transaction costs.
From a liquidity perspective, Snyman reported unrestricted cash of $36 million at period-end, plus additional restricted cash balances. He added that $11 million remained available for drawdown under the revolving credit facility as of December 31, 2025, and that there were no covenant breaches at the reporting date. Snyman outlined that the Absa facility covenant package includes senior net debt to adjusted EBITDA, senior interest cover (tested semi-annually), a minimum 12-month forward-looking liquidity requirement of $20 million, and a capex variance limit versus base-case budgets.
Diamond market remains weak, but product mix supports pricing
Management described an “ongoing weakness” in the diamond market, with particular pressure in smaller stones where lab-grown diamonds have “manifested as a separate proposition.” However, Gadodia said demand for coarser material and high-value diamonds “has seemingly turned a corner,” which he argued positions Petra well given the Cullinan mine’s tendency to produce larger stones and Type II white and blue diamonds.
During the half, Petra reported revenue of $100 million from the sale of approximately 964,000 carats, compared with $115 million from the sale of 1.1 million carats in the prior-year period. Gadodia attributed the decline primarily to the timing of tenders, with the December tender largely shifting into January.
Despite market pressure and a 20% like-for-like pricing dip between the first and second quarters, Gadodia said the half-year average realized price “held up well” and improved versus the prior half, supported by the product mix—particularly at Cullinan as new areas of the ore body were opened. He also noted the recovery of a 41.82-carat blue Type II diamond in December, which he described as having “exceptional color and clarity.” Petra said the stone is being marketed and it expects proceeds to be realized in the second half of the financial year.
Petra also appointed the Bonas Group to provide diamond sales and marketing services, which management said will give it flexibility to market diamonds in Johannesburg and Antwerp as well as Dubai, which it described as an increasingly significant trading hub.
Operational update: safety and production trends
Joint CEO Juan Kemp, responsible for operations, highlighted safety performance, stating the company has been “more than eight years fatality-free” and has maintained a lost time injury frequency rate consistently below 0.3 since 2014, including in the first half of FY2026. He said Cullinan received several awards at the MiNE SAFE 2025 Awards, including Best Safety Performance in Class, and that Finsch was recognized with second position in the underground mines category at the Northern Cape Mine Managers Association Awards.
On production, Kemp said both mines delivered steady performance during the period, though Cullinan’s carats recovered were lower year-on-year due largely to the transition from a continuous operation model to a three-shift structure. ROM tonnes treated declined in line with the updated life-of-mine plan, but this was partially offset by improved recovered grade as fresh ore from the CC1-East block contributed more. As mining shifts further east in the C-Cut, Kemp said the product mix continued to improve, evidenced by recoveries of high-value stones including Type II whites and the 41.82-carat blue diamond.
At Finsch, Kemp said carat production is trending upward, with both tonnes treated and recovered grade higher than the comparable period last year. He said the mine has stabilized within a two-shift structure and is extracting greater volumes of fresh ore from the 81 and 86 levels, supporting grade improvements. With production ramping up in level five project areas, management expects a coarser diamond mix and higher grade, leading to higher carat production.
However, Kemp reported a development shortfall in meters at Finsch’s 3-level SLC project, delaying handover of some production tunnels due to “unforeseen ground conditions.” He said this had been partially mitigated by increased carat contribution from the 78 and 81 levels, with plans underway to catch up the development shortfall.
Financial performance: higher EBITDA, but statutory loss driven by impairments
Snyman said adjusted mining and processing costs were $72 million, down from $98 million, while adjusted EBITDA rose to $26 million from $15 million in the prior-year period. He attributed the year-on-year cost reduction to diamond inventory movements of $25 million and $7 million of reductions in on-mine cash costs, partly offset by about $3 million from the U.S. dollar’s impact on the cost base and roughly $5 million of inflation.
By contrast, the statutory result reflected a net loss after tax of $90 million, “primarily driven by impairment charges.” Snyman said the company revised its impairment models for Cullinan and Finsch due to the combination of a stronger rand and weaker dollar. He reported impairment losses of $106,000 for Cullinan and $51 million for Finsch.
Operational cash flow was an outflow of $6 million compared with an inflow of $16 million in the prior-year period. Snyman said the main drivers were the buildup in diamond inventory due to tender timing and the non-recurrence of a diamond debtor release that benefited the previous period. Capital expenditure was $34 million versus $30 million, and the company expects FY2026 capex to be weighted to the second half.
Closing diamond inventories were 608,000 carats valued at approximately $46 million at cost as of December 31, 2025, compared with 385,000 carats valued at around $40 million at cost at the previous half year. Management said converting inventory into cash through tender sales is a key focus for the second half.
Second-half sensitivities: FX, tender timing, and cost discipline
Snyman described foreign exchange as a “first-order sensitivity,” given rand-denominated costs and U.S. dollar revenues. He said a one rand move in the exchange rate equates to approximately $8 million to $10 million impact on EBITDA and $12 million to $13 million on operational free cash flow on an unmitigated annual basis.
He also noted that the group realized $6 million in foreign exchange profit from hedging during the first half, but said this is not expected to repeat in the second half.
During Q&A, management reiterated that it does not guide on earnings. Addressing a question on covenant headroom, Gadodia emphasized that covenants apply only to senior debt and exclude the nominal second lien debt and associated interest in the covenant calculation. He said management believes the covenant package agreed in the refinancing provides sufficient headroom against downside pricing relative to assumptions shared previously.
On Cullinan operations following the shift change, Gadodia said transitional issues seen in the first quarter were largely resolved in the second quarter. Kemp added that plant capacity is adequate and that, as mining continues toward the east in the C-Cut and ore tunnels open up, the mine should be able to meet requirements for tonnes hoisted and treated in the second half. Management concluded by reiterating its focus on safe, reliable operations, continued progress on expansion projects, and expectations to deliver on production guidance previously shared in August 2025.
About Petra Diamonds (LON:PDL)
Petra Diamonds is a leading independent diamond mining group and a supplier of gem quality rough diamonds to the international market. The Company’s portfolio incorporates interests in two underground mines in South Africa (Cullinan and Finsch Mines) and one open pit mine in Tanzania (Williamson). In January 2025, Petra announced that it has entered into an agreement to sell its entire shareholding in the entity that holds Petra’s interest in Williamson.
Petra’s strategy is to focus on value rather than volume production by optimising recoveries from its high-quality asset base in order to maximise their efficiency and profitability.
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