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Petra Sells Kimberley Mine for $22M
Jul 5, 2018 8:54 AM
By Rapaport News
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RAPAPORT... Petra Diamonds will offload its majority stake in the
Kimberley mine, claiming the deal will ensure a sustainable future for the
project and help the company focus on its core assets.
Ekapa Mining has agreed to buy Petra’s 76% interest in the South
Africa deposit for $22 million (ZAR 300 million), Petra said Thursday. The
companies are currently in a joint venture incorporating the Kimberley
underground mine and its associated tailings operations, with Ekapa holding 24%.
Local businesses known as Petra’s Black Economic
Empowerment partners also own a portion of the miner’s share, and will be
selling their interest.
“The rationale for the disposal is to ensure a
sustainable future for [the Kimberley joint venture] by placing the operation
under the sole stewardship of an operator best suited to maximize its value,”
Petra said.
Ekapa’s experience of operating in Kimberley and its
ability to focus solely on those assets will help maintain employment and
economic activity in the historic diamond center, the miner added.
The deal will also free up Petra executives’ time to
concentrate on key mines such as Finsch and Cullinan, and reduce operating
costs and risks, the company said. The Kimberley project still needs time
before its income exceeds spending, Petra cautioned. In addition, the sale
value will help Petra’s cash availability, it noted.
Petra expects to complete the sale in the first fiscal
quarter ending September 30, with Ekapa paying the purchase amount in 24
monthly installments beginning January 2019.
The London-listed miner said it would review its
portfolio of assets on an ongoing basis when it announced a stock sale in May.
That process, known as a rights issue, saw Petra grant its investors rights to
buy additional shares in the company, thereby raising $178 million to repay
bank debt.
The miner has accumulated significant debts due to
several difficulties at its mines, including production delays at Cullinan and
Finsch, strikes at its South African operations and the seizure of a diamond
parcel by the Tanzanian government.
Image: Petra Diamonds
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Tags:
Black Economic Empowerment, Cullinan, Ekapa, Ekapa Mining, Finsch, kimberley, Kimberley Mine, Kimberley underground mine, petra, Petra Diamonds, Rapaport News, South Africa, tailings
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