Canaccord Adams raises target price on potential future diamond finds.
Analyst Canaccord Adams has increased its target price for mining company Petra Diamonds following the sale of the 507ct Cullinian Heritage diamond in March, which broke sales records for rough diamonds when it sold for £23.1m.
Canaccord Adams has raised its target price from 120p to 125p and reiterated its buy recommendation. It follows the sale of the Cullinan Heritage diamond and takes into account what the analyst described as "potentially unrecognised revenue that we expect to arise from special stones produced by the Cullinan mine in coming years".
The analyst has estimated that large stones from Cullinan have produced historical five-year weighted average annual revenues ranging from US$20 million to US$35 million a year (£13.4 million to £23.4 million) while the mine was owned by De Beers.
Canaccord Adams analyst Tyler Broda said: “This suggests to us that the impact from the 507ct diamond is not as one-off in nature as may be perceived and that investors should anticipate other revenue bumps in future.”