Questor share tips: Petra Diamonds still a buy after sale of 522 carat gem

Published: 8:00AM GMT twenty-three February 2010

Petra Diamonds59p +1pQuestor says, Buy

Petra Diamonds should bank a sizeable cube of money when it sells the budding family valuables a 522 carat mill at the finish of this week.

Diamond sells for jot down $35m The solid marketplace will redeem ? but Petra is a hold Antonio Bianco Flawless blue solid fetches jot down �6.2m at auction Flawless blue diamond, one of the worlds rarest gems, approaching to sell for �6m Rare solid approaching to sell for �6m

The ultimate solid sale follows on from a record-breaking blue solid dug up by Cullinan progressing this year, that was sole by Sotheby"s in Geneva for roughly $9.5m (�5.8m).

The Cullinan cave nearby Pretoria is important for producing a 3,100 carat solid in 1905 with the dual largest gems from this mill apropos centrepieces in the British climax jewels.

This week"s injection will be the second square of great headlines for Petra, after the association done a warn first-half pre-tax distinction of $37.9m (�24.5m) yesterday following a $88m loss the year before.

It has been a severe year for diamonds and their producers. But sales of oppulance products are commencement to revitalise with the light liberation of the tellurian economy, according to Petra. No disbelief the larger volumes compared with the merger of Cullinan and a higher than approaching taxation credit additionally helped.

But Johan Dippenaar, arch executive, expects the cost of changed stones to be firmer as a prolonged tenure trend.

"There competence be a little converging in the marketplace after this year but in the prolonged tenure supply is really parsimonious with couple of new solid finds, that ought to interpret in to higher prices," Mr Dippenaar said.

The South Africa-focused association responded to the tellurian monetary predicament by slicing the scrutiny bill by 80pc and withdrawing from a vital plan at Alto Cuilo in Angola.

Although this was disappointing, it was a essential move since the marketplace circumstances. Petra owned 40pc of the Alto Cuilo plan but contributed 100pc of the project"s costs. The organisation is right away focusing on muscle action worth out of the cash-generative prolongation portfolio.

The association has a little great peculiarity mines already producing profitable stones and believes that an enlarge in prolongation is probable from the benefaction resources Cullinan, Koffiefontein, Williamson and Kimberley.

Questor still believes that Petra is a buy.