Petra Diamonds Regulatory News (PDL)

3 Dec 2009 07:00



Petra Diamonds Limited

("Petra Diamonds" or the "Company")

Placing to raise ca. US$120 million 

Petra Diamonds, the international diamond mining group, announces that it has completed a placing (the "Placing") with institutional and other investors raising gross proceeds of US$120 million (£72.7 million) (the "Placing Proceeds").

The Placing Proceeds will be applied in part settlement of the US$80 million Al Rajhi Holdings W.L.L. ("Al Rajhi") loan as part of the option to increase Petra's holding in the Cullinan mine from 37 per cent. to 74 per cent. (as announced on 18 November 2009); to provide working capital to increase diamond production from its six producing mines in South Africa and Tanzania; to repay the US$20 million Al Rajhi convertible loan note; and to strengthen the Company's balance sheet.

Details of the Placing and use of proceeds

A total of 121,200,000 new ordinary shares of 10 pence each in the capital of the Company ("Ordinary Shares") have been placed at a price of 60 pence per share (the "Placing Shares"), a discount of 9 per cent. to the Company's closing price of 66 pence on 17 November 2009 (the last day prior to the announcement of a potential placing) and a discount of 0 per cent. to the Company's closing price of 60 pence on 2 December 2009. The Placing Shares represent an increase of 65.9 per cent. in the Company's current issued share capital of 184,005,523 Ordinary Shares. The Placing is conditional, inter alia, on admission of the Placing Shares to AIM.

The Placing Shares have been placed in two tranches. The first tranche of 80,000,000 shares, raising gross proceeds of US$79.2 million (£48 million) (the "First Tranche Placing Shares"), has been placed firm on the basis of not exceeding the Company's current authorised share capital of 300 million shares. The remaining 41,200,000 Placing Shares, raising gross proceeds of US$40.8 million (£24.7 million) (the "Second Tranche Placing Shares"), have also been placed firm but are conditional, inter alia, on the passing of a resolution (the "Resolution") to be proposed at the Company's annual general meeting on 17 December 2009 (the "AGM") to increase the Company's authorised share capital to 400 million shares.

The Placing is being led by Canaccord Adams Limited ("Canaccord") and includes Royal Bank of Canada Europe Limited ("RBC").

The Placing Proceeds, net of the placing agents and other professional fees, will be utilised as follows:

in relation to the exercise of the option to increase the Company's ownership of the Cullinan mine from 37 per cent. to 74 per cent. detailed in the announcement of 18 November 2009:

US$24.6 million (£14.9 million) for part settlement of the US$80 million (£48.5 million) Al Rajhi loan in relation to the Cullinan mine, being loan principal of US$15 million (£9.1 million) and accrued interest of US$9.6 million (£5.8 million); and

US$20.5 million (£12.4 million) for repayment of the US$20 million (£12.1 million) Al Rajhi convertible loan note together with accrued interest;

US$15.0 million (£9.1 million) for development capital at the Cullinan mine;

US$15.0 million (£9.1 million) for expansion capital at the Williamson mine; and

US$38.9 million (£23.6 million) for working capital of the Company and repayment of short term debt. The short term debt was mainly accrued in the last year due to the funding by the Company of Petra's 75% interest in the Williamson mine and funding of the feasibility study carried out at the Williamson mine, construction of the plant and all underground development work at the Kimberley Underground mines, and capital development work at the Cullinan mine.

The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the Company's existing Ordinary Shares at the date of their relevant issue, including the right to receive all dividends and other distributions declared, made or paid on or in respect of such shares after the date of issue of the relevant Placing Shares.

Application has been made for the First Tranche Placing Shares to be admitted to trading on the AIM market of the London Stock Exchange plc ("AIM"). It is expected that admission of the First Tranche Placing Shares to AIM will take place and that trading in the same will commence on 4 December 2009. Subject, inter alia, to the passing of the Resolution, it is expected that admission of the Second Tranche Placing Shares to AIM will take place and that trading in the same will commence on 18 December 2009.

Johan Dippenaar, CEO of Petra, commented:

"Petra is delighted with the overwhelming support from our new and existing shareholders, who share our vision of becoming one of the world's leading diamond producers. We welcome over 40 new international long-only institutional investors to the register, which we hope will transform the liquidity of the Company's shares. The Placing not only strengthens the Company's balance sheet, allowing Petra to invest in the development of our producing mines, but will also significantly increase our attributable resources, production and cash flow following the consolidation of our holding in the Cullinan mine."

~ Ends ~

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About Petra Diamonds

Petra Diamonds is a leading supplier of rough diamonds. A number of acquisitions have established Petra as one of the world's largest independent diamond groups by resources, with a gross total resource base of 262 million carats. Petra increased its annual production fivefold in the year to June 2009 to over 1 million carats and the Company's objective is to continue to increase supply and develop its stature as a world-class diamond group.

In South Africa, Petra has interests in five producing mines - Cullinan, Koffiefontein, Helam, Sedibeng and Star - and has also agreed to acquire, from De Beers, the Kimberley Underground mines (this acquisition is expected to complete imminently). In Tanzania, Petra has an interest in the Williamson mine. These mines are noted for the production of valuable diamonds, but in particular the Cullinan mine is famed as the source of the largest rough gem diamond ever found. More recently an internally flawless, fancy vivid blue diamond of 7.03 carats from the Cullinan mine sold for US$9.4 million in May 2009, the highest price per carat ever paid for any gemstone sold at auction, and a white diamond of over 507 carats was recovered in September 2009. A 168 carat white diamond recovered in the same production series as the 507 carat diamond was sold on 26 November 2009 for US$6.28 million.

Petra conducts all its operations according to the highest ethical standards, and will only work in countries which are members of the Kimberley Process.

The Company is quoted on the AIM market of the London Stock Exchange (AIM: PDL).

www.petradiamonds.com