REG - Petra Diamonds Ltd - Class 2 Announcement

Petra DiamondsAnnouncement

31/05/2023 07:00

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RNS Number : 0857B  Petra Diamonds Limited  31 May 2023

 

 31 May 2023  LSE: PDL

Petra Diamonds Limited
("Petra" or the "Company" or the "Group")

 

Class 2 Announcement

 

Entry into definitive transaction agreements pursuant to MOU for the sale of
50% of Petra's holding in Williamson Diamonds Limited

 

Further to the announcement made on 15 December 2021 in relation to the
entry by Petra into a non-binding Memorandum of Understanding (the MOU) with
Caspian Limited (a company now known as Taifa Mining and Civils Limited,
Taifa), Petra announces it has entered into definitive transaction documents
which give effect to the MOU and involve the sale by Petra of 50% less one
share of the entity which holds Petra's shareholding in Williamson Diamonds
Limited (WDL) and a prorated portion of shareholder loans owed by WDL(( 1 
(#_ftn1) )) for a total consideration of US$15m (the Transaction).

 

Under the UK's Listing Rules, the Transaction is Class 2 and as such this
announcement is made in accordance with Petra's disclosure obligations
pursuant to Chapter 10 of the Listing Rules.

 

Petra has entered into these transaction documents with Pink Diamonds
Investments Limited (Pink Diamonds), a company nominated by and affiliated
with Taifa. Taifa remains the long-term technical services contractor at the
Williamson Mine.

 

Pink Diamonds' payment of the US$15m purchase price will be satisfied through
payments owed by WDL to Taifa for past technical services, dependent on WDL's
ability to meet these obligations.  It is expected that these payments will
be received by Petra in instalments over the next five years.

 

WDL is the operator of the Williamson Mine, and is currently 25% owned by the
Government of Tanzania and 75% owned by Petra, with Petra having acquired its
majority interest in WDL in 2009. Petra entered into a Framework Agreement
with the Government of Tanzania in December 2021, in which it was agreed that
Petra's effective interest in WDL will decrease to 63%, with the Government of
Tanzania's interest increasing to 37%.

 

Upon completion of the Transaction and the Framework Agreement, Petra and Pink
Diamonds will each indirectly hold an effective 31.5% interest in WDL, with
Petra retaining a controlling interest.

 

Completion of the Transaction is subject to the parties obtaining necessary
regulatory approvals, including approvals from the Tanzanian Mining Commission
and the Tanzanian Fair Competition Commission.  The parties are targeting to
complete the Transaction by the end of CY 2023.

 

Petra intends using the US$15m proceeds from the Transaction to continue
strengthening its balance sheet.

 

As noted in the Company's FY 2022 Annual Report, the book value of WDL's gross
assets as at 30 June 2022 was US$140.5m, with WDL recognising a profit before
tax of US$41.1m in FY 2022.

 

 

Richard Duffy, Chief Executive of Petra, commented:

 

"Our partnership with Taifa places Williamson on a stronger basis for the
future. This new structure will reduce our equity interest in WDL, limiting
our exposure in line with our stated objectives whilst retaining control and
maintaining a share of the upside.  Williamson holds a unique place in the
sector with its significant resource base and ability to produce high quality
pink diamonds. In a supply constrained sector, this asset has the potential to
become increasingly valuable.

 

Taifa brings considerable local and mining experience to the partnership. This
will help us to optimise the orebody to the benefit of all Williamson's
stakeholders, both in the short term with the restart of operations and going
forward as we look to fully realise the mine's potential in a more favourable
economic environment."

 

Rostam Azizi, Chairman of Taifa and a director nominated by Pink Diamonds,
commented:

 

"Taifa Mining is a wholly Tanzanian owned company. It is also Tanzania's
largest mining contractor with over 30 years mining related experience. We
have been the contractor of choice to most mines in Tanzania and have
maintained long and successful relationships with companies such as Petra, De
Beers, Barrick and AngloGold Ashanti. In addition, we also own the largest
fleet of mining equipment in Tanzania. As a company, we are committed to
adopting and adhering to the latest internationally recognised standards
throughout all aspects of our business.

 

We have been contracting at the Williamson Mine for over 20 years and as such
we are particularly pleased to enter into this next phase of our involvement
at the mine as co-owners. The mine has the largest kimberlite deposit in the
world by surface area - with Reserves and Resources of 37.7mcts as at 30 June
2022.  We recognise the mine's viability in providing sustainable employment
and a significant contribution to the Tanzanian economy."

 

 

 

~ Ends ~

 

For further information, please contact:

 Petra Diamonds, London

 
 Patrick Pittaway                              Telephone: +44 20 7494 8203

 
 Julia Stone                                   investorrelations@petradiamonds.com
                                               (mailto:investorrelations@petradiamonds.com)

 Camarco (Financial PR)
 Gordon Poole                                  Telephone: +44 20 3757 4980
 Owen Roberts                                  petradiamonds@camarco.co.uk (mailto:petradiamonds@camarco.co.uk)
 Elfie Kent

About Petra Diamonds Limited

Petra Diamonds is a leading independent diamond mining group and a supplier of
gem quality rough diamonds to the international market. The Group's portfolio
incorporates interests in three underground mines in South Africa (Cullinan
Mine, Finsch and Koffiefontein) and one open pit mine in Tanzania
(Williamson).

Petra's strategy is to focus on value rather than volume production by
optimising recoveries from its high-quality asset base in order to maximise
their efficiency and profitability. The Group has a significant resource base
which supports the potential for long-life operations.

Petra strives to conduct all operations according to the highest ethical
standards and only operates in countries which are members of the Kimberley
Process. The Group aims to generate tangible value for each of its
stakeholders, thereby contributing to the socio-economic development of its
host countries and supporting long-term sustainable operations to the benefit
of its employees, partners and communities.

Petra is quoted with a premium listing on the Main Market of the London Stock
Exchange under the ticker 'PDL'. The Group's loan notes due in 2026 are listed
on the Irish Stock Exchange and admitted to trading on the Global Exchange
Market. For more information, visit www.petradiamonds.com
(http://www.petradiamonds.com/) .

 1  (#_ftnref1) Upon the Framework Agreement becoming effective and as
previously announced in December 2021, Petra is also required under Tanzanian
law to contribute to the Government of Tanzania 16% of the value of the
shareholder loans owed by WDL.  Therefore, upon completion of both the
Framework Agreement and the Transaction, Petra will retain approximately 42%
of the shareholder loans owed by WDL.

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