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RBC Europe analyst Tyler Broda attributes the "sector perform" upgrade to the rights issue, a "crucial discouragement" for Petra's record and a "clearer passage" in the ramp-up phase ". A $ 178 million injection meant that Petra's balance sheet did not result in more expensive South African debt and improved cash flow by about $ 6 million a year.
Petra had already planned to use up to $ 120 million
Broda added that the weakness of the South African rand should also help cash flow.
"Our forecasts suggest that the ND / EBITDA will now be less than 2x until 2019. However, the biggest improvement" This change allows Petra to focus on the operations, and ultimately move the cave to Cullinan to planning years. "
Broda added that the balance sheet improvement should also increase Petra's long-term diamond price option ascribed by investors because of the reduced risk
The diamond market is also expected to grow, "We consider the diamond market's exposure to be compelling over the next 12 to 24 months," said Broda.
The reasons for RBC were the stronger exposure of the diamond market in the US De Beers and Alrosa moderated supply growth and domestic growth in 2019.
He also noted that diamond prices have and a relative protection against inflation if the general economic environment was stagflationary, with high inflation rates and a slowing of economic growth.
Broda, however, remained cautious, noting that with the acceleration of the Cullinan mine ramp-up, there remained inherent risks until speleology rates increased. added that there was continued pressure on the diamond market in substandard products, with fears of synthetic products and an increase in supply prices.
"This momentum will be important for," Broda said, reducing RBC's Cullinan base price to $ 140 per carat over the long term and $ 125 / ct for the June quarter. [19659010] Petra's target price fell to 65p (US56c) from 80p
The company's shares traded at 52.5p on Wednesday, down 1.78%.
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