Petra Diamonds Regulatory News (PDL)

18 Dec 2006 12:17

Petra Diamonds Ld18 December 2006 For release 18 December 2006 Petra Diamonds Limited Update - Koffiefontein mine Petra Diamonds Limited ("Petra" or "the Company"), the AIM-quoted and ASX-listeddiamond group, announces that it and its wholly owned subsidiary, Blue DiamondMines (Pty) Limited ("BDM"), have entered into a conditional agreement ("theAgreement") with De Beers Consolidated Mines Limited ("De Beers") to acquire themining and associated capital assets ("Assets") previously used by De Beers inthe operation of the Koffiefontein diamond mine ("Koffiefontein") situated inthe Free State province of South Africa. BDM has also applied to the South African Department of Minerals and Energy ("DME") for a mining right in respect of Koffiefontein; De Beers ceased mining atKoffiefontein when its old order mining right expired in February 2006. Inaccordance with South African mining legislation, BDM is not permitted tocommence mining until the new mining right is issued; Petra expects this to beissued shortly and BDM will then use the assets acquired from De Beers tooperate Koffiefontein. The consideration for the Assets is R81.9 million (£5.98 million); thisconsideration is to be settled by BDM assuming De Beers' rehabilitationobligations at Koffiefontein, which amount to R80 million (£5.84 million), plusthe payment in cash by BDM to De Beers of R1.9 million (£138,700). There is nofurther consideration with regards to the Assets. Completion of the Agreement is conditional upon the following key conditions: (i) the DME issuing to BDM a new mining right in respect of Koffiefontein; and (ii) the DME issuing a closure certificate to De Beers in respect of Koffiefontein; and (iii) the DME consenting to the cession, transfer and delegation of the rehabilitation obligations and liabilities in respect of Koffiefontein from De Beers to BDM; and (iv) the return to De Beers by the DME of all amounts and financial guarantees previously deposited by De Beers with the DME as part of De Beers rehabilitation obligations in respect of Koffiefontein; and (v) approval by the South African Competition Commission. When the conditions above have all been met, which is expected to be in early2007, Petra will commence production from Koffiefontein. BDM has been, withpermission from the DME, conducting care and maintenance activities for the lastfew months in order to maintain the condition of the cave to ensure theefficient commencement of mining activities on receipt of the mining right. Given the nature of the proposed transaction, the Company has provided suchdisclosure, as it is able, in accordance with Schedule 4 of the AIM Rules as aSubstantial Transaction. A further announcement will follow in due course whichwill include a resource statement for the Koffiefontein mine, currently underlicence review, as described above. An exchange rate of R1:£0.073 has been used for the purposes of thisannouncement. Ends For further information, please contact: Cathy Malins / Annabel Leather Telephone: +44 (0) 20 7851 7480Parkgreen Communications, London This information is provided by RNS The company news service from the London Stock Exchange