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3 years ago
UPDATE 2-Petra Diamonds expects to resolve Helam job dispute by year-end
September 18, 2014 / 7:17 AM / 3 years ago

UPDATE 2-Petra Diamonds expects to resolve Helam job dispute by year-end

* Says may place Helam mine under maintenance or close it

* Sees no material financial impact from Helam cuts

* Full-year adj core earnings jump 47 pct to $187.7 mln

* Full-year production jumps 17 pct to 3.1 mln carats (Adds comments from finance director, analyst; updates share movement)

By Esha Vaish

Sept 18 (Reuters) - Petra Diamonds Ltd expects its dispute with South African unions over job cuts at its Helam mine to be resolved before the year-end, its finance director said.

Petra is facing stiff opposition from the National Union of Mineworkers and the Congress of South African Trade Unions over its plans do away with 370 Helam jobs, or roughly 7 percent of its total workforce.

The company, which acquired a 74 percent stake in the mine situated at Swartruggens in 2005, said in July it was mulling options for the mine that could include putting its operations under care and maintenance.

The remaining stake is held by Sedibeng Mining (Pty) Ltd.

"Our options with the mine, and we are talking with the unions, would be to either go into care and maintenance or close it," Finance Director David Abery told Reuters.

The miner, which has five producing mines in South Africa and one in Tanzania, earlier this year disposed of its interest in Sedibeng and Star mines - projects that it along with Helam made up its Fissure mines portfolio.

"Given that Helam is our smallest operation, it is not going to have significant effect of the group's results," Abery said.

Petra mined 36,287 carats from Helam in the fiscal year ended June 30, down 50 percent from a year ago and accounting for just over 1 percent of its overall production.

On its books, the London-listed miner also took impairment charges of $13.9 million related to the Helam mine review.

MAIDEN DIVIDEND

Petra said it could pay its maiden dividend earlier than expected, after higher prices for the larger number of rough stones it unearthed helped it post a 47 percent jump in full-year core earnings.

The miner said growth in carat production would speed up from its next fiscal year as this year would be its last of relying largely on stones mined from mature working areas.

It has a long-term goal of increasing production to 5 million carats by its 2019 financial year.

Citi analysts said they expected higher grade from the new areas in 2016 to boost operating margins, with improved volumes and efficiencies reducing unit costs.

The brokerage kept its "buy" rating and target price of 196 pence on Petra stock.

Shares in the miner, which have gained two-thirds in value so far this year, were marginally up at 196 pence at 0942 GMT.

Petra said it was on track to mine about 3.2 million carats this fiscal year. It expected to see higher prices for rough diamonds due to limited supply and robust demand from the United States, China and India.

Full-year production increased by 17 percent to 3.1 million carats, slightly ahead of market expectations of 3 million carats, Petra said.

Adjusted core earnings rose to $187.7 million, from $127.6 million a year earlier. Revenue grew by 20 percent to $471.8 million. (Reporting by Esha Vaish in Bangalore; Editing by Gopakumar Warrier)

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