Struggling gem producer Petra Diamonds Ltd. found five blue stones, typically among the most valuable in the world, at its flagship mine in South Africa.
While the discovery will be a boost for the company that's put itself up for sale after being dragged down by huge debts and a collapse in the diamond market, Petra cautioned that it alone won't be enough to turn around its fortunes.
Petra said it found five Type IIb blue diamonds of high color and clarity at its Cullinan mine, ranging in size from 9.6 carats to 25.8 carats. It didn't indicate their potential value and said it's looking at the best way to sell them. Blue stones are among the rarest and most valuable and can fetch record prices. Last year, Petra sold a 20-carat blue gem for almost $15 million.
"These finds, whilst a positive development, will not have a material impact on the likely terms of the required long-term solution to improve the group's capital structure, nor the significant level of equity dilution that existing shareholders are likely to experience in connection with its implementation," Petra said Wednesday.
The shares were little changed by 11:30 a.m. in London, paring an earlier advance of as much as 13%. The stock is down 76% this year.
In June, Petra said it was seeking offers for the whole company, parts of the business or any of its assets as it seeks to pay down debts. The company is also talking with lenders and bondholders to try to improve its debt situation.
Petra, which has mines in South Africa and one in Tanzania, was already facing multiple problems with a mountain of debt and falling diamond prices before the Covid-19 pandemic shut down the global trade in gems. The company has slid from a peak value of more than $1.5 billion as it redeveloped the Cullinan mine, where the world's biggest diamond was found in 1905.