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(Sharecast News) - Petra Diamonds has agreed to dispose of its exploration assets in Botswana, it announced on Monday, via the sale of all of its holding in Sekaka Diamonds Exploration, previously known as Petra Diamonds Botswana, to Botswana Diamonds.
The London-listed firm said the total consideration for the sale would be $0.3m (£0.24m), and a 5% royalty on future diamond revenues should any of the prospects within the exploration licences be brought into production.
It said the assets of Sekaka Diamonds included its three existing prospecting licenses in Botswana, including the KX36 project - a 3.5 hectare kimberlite that was a new discovery by Petra in 2010 - as well as a bulk sampling plant.
The assets had been classified as 'assets held for sale' since 30 June 2018, following a decision by Petra's board to dispose of its Botswana exploration assets, with the transaction not a result of the recent sales process announced on 26 June.
Petra said the purchase price of $0.3m would be payable in two equal instalments of $0.15m on or before 31 August 2021 and 31 August 2022, respectively.
It would also be entitled to a 5% royalty on the sale of diamonds commercially produced from any kimberlite which falls within the licence areas covered in the sale.
Botswana Diamonds has the option to buy-out the royalty for a cash payment of $2m.
The board said the sale remained subject to a number of regulatory approvals, including ministerial consent in Botswana, approval from Petra's lenders and noteholders and, to the extent required, approval from the Botswana Competition Commission.
It said the long-stop date for fulfilment of those conditions was 31 August, which could be extended by mutual agreement.
"This disposal forms part of our strategy to focus on driving efficiencies from our high quality producing mines, but allows us to maintain upside to potential future commercial production from the Botswana assets, particularly from the KX36 deposit," said chief executive officer Richard Duffy.
"We wish Botswana Diamonds well with their exciting exploration programme in Botswana and look forward to following their progress."
At 0857 BST, shares in Petra Diamonds were up 1.85% at 1.65p.
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