Petra Diamonds Ltd (lon:pdl)
Petra Diamonds Is It Mired In Debt Or Am I Missing Something?

Petra Diamonds Ltd Financials

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Commentary History
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Petra Diamonds Ltd Share Price
Grade:The Black Grade - Shares That I Think Could Collapse To Nothing Or Suffer A Massive Share Issue.
Title: Petra Diamonds Is It Mired In Debt Or Am I Missing Something?
Company: PDL - Petra Diamonds Ltd
Share Price Then: 104p
Author: Ian Smith
Date: Mon 10 Jul 2017
Comments: I have had Petra Diamonds in my portfolio before and am looking at it again and am getting worried about capex and debt.

For the 6 months to Dec 2016 there was a $35m net profit and net debt of $463m, by the 31st of March 2017 net debt has risen to $508m.

It is often hard to put debt into context but the only year that PDL paid dividends was 2015 and the Q3 2017 trading update had "With respect to the covenants relating to its banking facilities, the Company has had initial constructive discussions with its lender group and is confident that the likely shortfall in the upcoming ratio measurement, arising from the lower production levels, will not present an issue."

In other words we are borrowing to much, worrying in an industry like mining where eventually the resources run out!

As a mostly non dividend paying business PDL is a capital growth share and at the moment it appears to be in one of its cyclical drops and is still quite a way from the 55p low seen in the last couple of years.

Although financially safe at the moment there are loan notes due in 2022 so it is not long before this starts to be highlighted as an issue spooking many retail investors.
Read Count: 19/11

Buy/No Buy In A Nutshell
NegativesExisted for far too long for the amount of debt that they have.
Positives Unless there is a lucky layer of expensive stones I can't see a way out.
Initial Review Price1.62p
Last Review Price1.62p
Last Review Date18-Jul-2020
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