Last checked at 23 Sep 2008 07:00
| 23 September 2008 | AIM: PDL |
Petra Diamonds Limited
Disposal of Calibrated Diamonds
Petra Diamonds Limited ("Petra", "the Company" or "the Group"), the international diamond mining group, announces the disposal of Calibrated Diamonds Investment Holdings (Pty) Limited ("Calibrated"), together with associated assets, to Gem Diamonds Limited ("Gem Diamonds") for a total cash consideration of R47.0 million (US$5.9 million) ("the Transaction").
This disposal follows the substantial growth of Petra's production and revenue base, and the Board's decision to focus on the Group's core skills of diamond production and exploration.
Background and rationale for the Transaction
Petra acquired Calibrated in November 2006 with the objective of growing Group revenues by cutting and polishing ('beneficiating') Petra's own rough diamond production using Calibrated's proprietary technology processes.
Since the acquisition of Calibrated, Petra has transformed its diamond production operations with the acquisitions of the Cullinan, Koffiefontein, Kimberley Underground and Williamson diamond mines. These acquisitions will increase Group production from 200,000 carats in the financial year ("FY") 2008 to over 1 million carats for FY 2009. There is also the potential for further substantial upside from FY 2010 given the opportunities for production increases at certain of the operations.
Given the dramatic change in the Group's production and revenue base, Petra will now focus on its core skills of diamond production and exploration. Petra is expecting substantial revenue and cash flow growth from these assets and the increased focus will enable the Company to maximise returns.
Petra will continue to evaluate its beneficiation strategy over the medium term, particularly with regards to certain of its mines which are renowned for the production of high value and large diamonds.
The Transaction agreement with Gem Diamonds includes an option which gives Petra future exposure to Gem Diamonds' soon to be established beneficiation businesses in Mauritius (utilising advanced laser cutting and technology for rough diamonds of between 3 carats and 10 carats) and in Dubai (utilising sophisticated diamond mapping and analysing technology for larger (+10 carats) complex rough diamonds).
Petra's option to access these facilities in Mauritius and Dubai is subject to (i) available capacity after the processing of Gem Diamonds' own rough production and (ii) payment at commercial rates. Such option shall be continuously exercisable for a period of 30 months from the date of the Transaction.
In addition, Petra also has an option (which expires 24 months from the date of the Transaction) to enter into separate negotiations with Gem Diamonds to establish, using the Calibrated technology, a diamond analysis, cutting and polishing facility at Cullinan, or elsewhere in South Africa, which Petra could then use for processing its production in the longer term.
When Petra acquired Calibrated, a deferred consideration was payable to certain of the vendors based on pre-agreed targets having been reached. All such claims for deferred consideration have been settled by a once-off payment of R5 million which Petra is settling from the proceeds of this transaction. Petra, Calibrated and Gem Diamonds do not have any further financial obligations with regards to the deferred consideration.
Key terms of the Transaction and related agreements
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For further information, please contact:
| Cathy Malins | Telephone: +44 (0) 20 7318 0452 |
| Petra Diamonds, London | cathym@petradiamonds.com |
| Adrian Hadden | Telephone: +44 (0) 20 7523 8350 |
| Collins Stewart, London | ahadden@collins-stewart.com |
Media relations:
| Julian Walker | Telephone: +44 (0) 20 7357 9477 |
| Hogarth Partnership, London | pdl@hogarthpr.co.uk |
| Charmane Russell | Telephone: +27 (0) 11 880 3924 |
| Russell and Associates, Johannesburg | charmane@rair.co.za |
About Petra Diamonds
Petra Diamonds is an international diamond mining group with a balanced portfolio combining major producing mines and world class exploration assets.
With operations in South Africa, Angola, Botswana, Sierra Leone and Tanzania (following completion of the acquisition of the Williamson Diamond Mine in October 2008), Petra's objective is to continue to grow production, developing its stature as a leading diamond producer in all of the countries in which it operates.
In South Africa, Petra currently has five producing mines - Cullinan, Koffiefontein, Helam, Sedibeng and Star. The Group has also reached agreement to acquire two further assets from De Beers - the Kimberley Underground mines, also in South Africa, and the Williamson mine in Tanzania. The group is on track to increase its annual production from 200,000 carats in the year to June 2008 to over 1 million carats in the year to June 2009.
Complementing the Group's production is an exploration and development portfolio spread across some of the world's most prospective diamond fields. In Angola, Petra is developing the world class Alto Cuilo and neighbouring Luangue projects. In Botswana, Petra has established the largest diamond exploration landholding in the country, where it believes that modern exploration techniques will hold the key to the discovery of new, major kimberlites. In Sierra Leone, Petra is developing a fissure operation with its JV partner Stellar Diamonds and test work to date indicates the potential for economic operations.
The Petra group now employs some 4,000 people and over the last 10 years the Company has developed a range of social initiatives which continue to make a meaningful impact upon the lives of employees and surrounding communities. Petra's focus remains upon sustainable development, via educational programmes and skills transfer, to ensure a broad based approach with a lasting legacy, and all operations are carried out with the highest regard for the environment according to best practice.
Petra will only commit to working in countries which are members of the Kimberley Process and shareholders can remain assured that Petra's diamonds will only ever be 100% conflict free.
For further information, please visit www.petradiamonds.com.