PETRA Diamonds secured at least $20m in advance payments from a diamantaire in return for all future production from the famed Cullinan mine in South Africa, while its senior lender also agreed to hold off enforcing on defaults.
These are the steps the miner outlined which are aimed at keeping it afloat, even as net debt rose yet again, according to first quarter operating numbers published on Wednesday.
CEO Vivek Gadodia said Petra had “the platform to progress the other workstreams within the strategic review process” which could ultimately see Cullinan sold. Its other South African mine, Finsch, is being closed under business rescue. Petra has also made further cuts, with 25 positions made redundant across Cullinan and the rest of the group, saving about $3m in costs a year.
Petra announced its strategic review on October 1 following “consultation with certain key stakeholders including its first and second lien creditors”. It was the latest in a string of refinancings and cost-cutting exercises as the company battled against a hefty decline in diamond prices.
Alongside a possible sale of its assets, Petra will seek “a consensual refinancing”, having ticked off the first workstream of the review, which was to address its short-term liquidity crunch.
Whether lenders or shareholders bet on Petra management is a key question, especially as the diamond market continues to dwindle. Petra reported a decline in first quarter revenue to $21m (Q1 FY2026: $36m) amid a 52% year-on-year average price decline. Gadodia said there was “a cautious but uneven bottoming of the overall market towards the end of September”. Yet the first quarter’s average price of $63 per carat was well off the $76/ct average in the fourth quarter.
Net debt rose to $348m.
In terms of the $20m advance, an unnamed mid-stream diamantaire will take future run-of-mine production from Cullinan, effectively tying up the historic mine’s whole output to a single offtaker, although Cullinan can exit without penalty once the advances are repaid.
Cullinan was founded as the Premier Mine in 1902. It is famously the source for the Cullinan diamond, recovered in 1905. At some 3,106 carats, the diamond remains the largest gem-quality rough diamond ever found. Cullinan I and Cullinan II, pieces of the diamond, were cut and polished for use in the UK's Crown Jewells.
As for the forbearance, Petra said its senior secured lender wouldn’t enforce on “specified defaults” for up to 12 months, or until the advances are repaid. This was a condition of the $20m advance deal.
Discussions with lenders are running concurrently with the ongoing audit of Petra’s accounts for the year ended June 30, the publication of which missed the four-month reporting deadline and resulted in the suspension of the firm’s shares.
There was other regulatory trouble in October when a UK court issued a winding-up order against Petra Diamonds UK Treasury Ltd, a non-operating subsidiary, over £5.65m in corporation tax owed to the British government for the 2025 financial year.
Petra also reported a messy internal staffing issue in which a court in Dubai found against the firm’s former head of sales and marketing for setting up a competing diamond company – Noble Star DMCC – whilst still employed. The former employee was also sued in South Africa. Petra was awarded about AED7.76m, equal to about $2.1m, in a first-instance ruling.