Petra Diamonds Regulatory News (PDL)

18 Dec 2009 07:00



Petra Diamonds Limited

("Petra" or the "Company")

Completion of Placing & Exercise of Cullinan Option

Highlights:

Completion of the second tranche of the placing to raise total gross proceeds of US$120 million (£72.7 million) ("the Placing")

Exercise of the option to increase Petra's direct ownership in the Cullinan mine from 37 per cent. to 74 per cent.

Placing

Following the passing of the resolution at its Annual General Meeting yesterday, Petra has completed the second tranche of the Placing announced on 3 December 2009, comprising the issue of 41,200,000 new ordinary shares of 10 pence each in the capital of the Company ("Ordinary Shares").

Under the Placing, Petra has now issued a total of 121,200,000 new Ordinary Shares at a price of 60 pence per share (the "Placing Shares") raising gross proceeds of US$120 million (£72.7 million).

The Placing Shares were placed in two tranches. The first tranche of 80,000,000 Placing Shares was admitted to trading on AIM on 4 December 2009. The second tranche of 41,200,000 Placing Shares will be admitted to AIM and trading in the same will commence at 8.00 a.m. today.

Exercise of Cullinan Option 

Following the successful completion of the Placing, Petra also announces that it has exercised the option, announced on 18 November 2009, to acquire Al Rajhi Holdings W.L.L.'s ("Al Rajhi") 37 per cent. interest in the Cullinan mine (the "Option"), increasing Petra's direct ownership in the mine to 74 per cent. 

The exercise of the Option will serve to double the Company's attributable resources and diamond production at Cullinan, give Petra direct access to the cashflows from the Cullinan mine and significantly improve Petra's 

balance sheet by reducing Cullinan debt.

The Cullinan mine is one of the world's most celebrated diamond mines, with a total resource of 204.6 million carats, and Petra plans to substantially increase production from around 1 million carats per annum to 2.6 million carats per annum over the next 10 years. The mine is a regular source of large, high quality diamonds and is the world's only reliable source of very rare and sought-after blue diamonds.

Pursuant to the terms of the Option:

Petra has issued a total of 47,363,636 new Ordinary Shares (the "Option Shares") to Al Rajhi, being 36 million shares in respect of the part consideration for the 37 per cent. interest in Cullinan and 11,363,636 shares to pay down US$15 million (based on a value agreed between Petra and Al Rajhi of 80 pence per Ordinary Share) of the Cullinan loan that has been assumed by Petra, as noted below;

the balance of the Option consideration of US$35 million cash is payable to Al Rajhi by December 2011 (secured by a pledge of shares over Petra's shareholding in Cullinan);

Petra has assumed responsibility for the US$80 million Cullinan loan (plus accrued interest of approximately US$9.6 million) (currently ring-fenced to cashflows from the Cullinan mine) that is due to Al Rajhi.  US$30 million of this loan was settled on exercise of the Option as to US$15 million cash (from the Placing proceeds) and US$15 million by the issue of 11,363,636 new shares to Al Rajhi as noted above. After the share issue and part repayment, the balance on the loan is US$50 million;

the balance of the Cullinan loan (secured by a pledge of shares over Petra's Cullinan shareholding) 

is repayable as to US$35 million in December 2010 and US$15 million in December 2011. The loan will continue to carry an interest rate of 8 per cent. per annum;

Petra has repaid the US$20 million Al Rajhi convertible loan note (plus accrued interest of US$475,000) from the proceeds of the Placing; and

Al Rajhi is entitled to appoint a director to the Petra board (whilst Al Rajhi's holding in Petra is greater than 10 per cent.) and to participate in future issues of shares pro rata to Al Rajhi's holding in Petra at the time. It is expected that Petra will appoint the Al Rajhi representative to the Board in January 2010.

Following the exercise of the Option, Al Rajhi holds 63,948,636 Ordinary Shares representing approximately 

18.1 per cent. of the Company's ordinary issued share capital. 

The Placing Shares and Option Shares will be credited as fully paid and will rank pari passu in all respects with the Company's existing Ordinary Shares at the date of 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 Placing Shares and Option Shares.

The Company advises that, following the issue of the Placing Shares and the Option Shares, the total number of issued Ordinary Shares is 352,569,159, each share having equal voting rights. 

As at the date hereof, 352,569,159 Ordinary Shares may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest, or a change to their interest, in Petra under the FSA's Disclosure and Transparency Rules.

Johan Dippenaar, CEO of Petra, commented:

"The completion of the US$120 million Placing, the increase of our ownership at Cullinan and assuming access to the cashflows from the mine are very significant developments for Petra, which we believe will prove to be highly value accretive to our shareholders as we work to realise the full potential of our production portfolio. Petra's foremost objective is to continue to increase production and further develop our stature as one of the world's important rough diamond producers."

~ 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 the Kimberley Underground mines from De Beers (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, or US$1.35 million per carat, in May 2009 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