Questor share tip: Sparkling Petra Diamonds can continue to dazzle The company swung into losses at the interim stage, but most of this was down to currency effects. In the six-month period to December 31, revenues rose 13pc to $101.4m (£64m), but the group posted a pre-tax loss of $26.7m compared with a pre-tax profit of $24.5m in the first half of last year. Johan Dippenaar, Petra's chief executive, explained to Questor yesterday that this was caused by the way operating subsidiaries are funded. The subsidiaries are funded through a loan account because this is more effective for tax planning. Costs are in rand, but income is in dollars. In fact, if we had taken the figures from today, there would have been an exceptional gain, so this non-operational issue is not really a concern. Diamond production in the first half of the year jumped by 64pc following the Finsch purchase to 953,553 carats. Some analysts were concerned yesterday that, once Finsch production is stripped out, production across the rest of the group fell. However, Mr Dippenaar said that the objective of making the purchase was to produce a more balanced portfolio, where production issues in one mine would be offset at another. This is fair comment. Petra expects production to be "substantially" higher in the second half and the company expects to beat its target of 2m carats for the year. This is the most important point. Production and sales are expected to be higher because of a full six months of production from Finsch, as well as increased production across the group. The fundamental argument for investing in the diamond industry remains strong. Many of the world's main diamond mines are in decline and cannot maintain previous output. There have been no significant diamond finds since those in Canada in the early 1990s - and Petra's strategy is to focus on extending the lives of existing assets. Diamond prices peaked in July last year, but have stabilised since November. Asian buyers from China and India are taking up the slack from the sluggish US market, but there are signs of a recovery. Barring any global economic disaster, diamond prices should continue to rise and Petra is delivering on its strategy. The current-year earnings multiple of 18.3 falls to 9.4 next year. Petra does not pay a dividend. Named as a tip of the year in January at 115p, the shares are up 30pc compared with a FTSE 100 up 6pc and remain a buy.