Petra Diamonds Limited Disposal of Helam Mining (7048J)
December 06 2018 - 8:03AM
UK Regulatory
TIDMPDL
RNS Number : 7048J
Petra Diamonds Limited
06 December 2018
6 December 2018 LSE: PDL
Petra Diamonds Limited
("Petra" or the "Company" or the "Group")
Disposal of Helam Mining (Pty) Ltd and Related Party
Transaction
Petra Diamonds Limited announces that it has entered into a Sale
of Shares and Claims Agreement with regards to the disposal of the
Company's and its black economic empowerment ("BEE") partners'
interest in Helam Mining (Pty) Ltd ("Helam") to Lindleys Mining
(Pty) Ltd ("Lindleys Mining") for a nominal consideration of ZAR200
with immediate effect.
The Helam mine was put on care on maintenance by the Company
during FY 2015, following previous attempts to source a suitable
purchaser, and no mining activities have been conducted by Petra
since then.
The rationale for the disposal is to support the South African
Government's intention to prolong the lives of mines facing closure
by facilitating opportunities for emerging miners to the benefit of
entrepreneurs, host communities and local employment. The disposal
is also in line with Petra's strategic priorities, which include
that the Board continues on an ongoing basis, to review the asset
portfolio of the business with a view to maximising return on
capital and to ensure that all assets are in a position to
contribute positive cash flow to the business.
The Board has determined to enter into a Sale of Shares and
Claims Agreement based on the following benefits to Petra:
- whilst Helam has the potential to be a small-scale sustainable
and economic diamond producer, it is better suited to an operator
with an owner-manager approach that is able to solely focus on the
optimisation of these assets; and
- it will reduce cash outflow with existing care and maintenance
expenditure amounting to ca. US$2million per annum.
Lindleys Mining will take on all of the Company's environmental
obligations with regards to Helam, currently estimated at ca. ZAR23
million excluding VAT (ca. US$1.7 million). As part of the
disposal, agreement has been reached for the joint use of the
processing plant at Helam, which has historically been utilised to
conduct resource and production sampling and analyses for the Petra
Group. Lindleys Mining have agreed to continue with such sampling
and analyses for a period of up to two years. Petra intends to
establish appropriate sampling facilities elsewhere in the Group
which, once commissioned, will replace the need to continue with
this arrangement.
Due to Helam being the owner of an old-order mining right, the
sale is not conditional upon ministerial consent; the transaction
will thus become unconditional with immediate effect.
Smaller related party transaction
1. Jim Davidson, former technical director of Petra who retired
from the Company on 30 June 2018, was approached by the existing
owners of Lindleys Mining to be a co-shareholder in this venture
given his extensive experience with Helam and to maximise their
chances of success. Jim has agreed to subscribe to 49% of the
shares in Lindleys Mining. As such, Jim Davidson is considered to
be a related party of the Company under Listing Rule 11.1.4R.
The Disposal falls within Listing Rule 11.1.10R (smaller related
party transactions) and this announcement is made in accordance
with Listing Rule 11.1.10R(c).
2. As disclosed in the Company's FY 2012 annual report, Mr.
Johan Dippenaar, CEO, and Mr. Jim Davidson, former technical
director, exercised an option to acquire the Helam game farm from
the Company for R2.5 million (ca. US$0.3 million at the prevailing
exchange rate) granted in 2004. Although Mr Dippenaar and Mr
Davidson duly paid the option price, the transfer of the properties
has to date not been effected. In the interest of the Disposal, and
to ensure the surface rights (including the mining right area and
the Helam game farm) are transferred without any encumbrance to the
new owners, Helam entered into a cancellation agreement with Mr
Dippenaar and Mr Davidson prior to the Disposal as announced above,
to unwind the exercise of the original option through the repayment
of the original option price of R2.5 million (US$0.2 million at
current exchange rates), the "Option Cancelation". The Option
Cancelation is classified as a small transaction as defined in
Listing Rule 11 Annex 1.
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Ends
For further information, please contact:
Petra Diamonds, London Telephone: +44 20 7494 8203
Marianna Bowes investorrelations@petradiamonds.com
Salisha Ilyas
Buchanan Telephone: +44 20 7466 5000
(PR Adviser) pdl@buchanan.uk.com
Bobby Morse
About Petra Diamonds Limited
Petra Diamonds is a leading independent diamond mining group and
a consistent supplier of gem quality rough diamonds to the
international market. The Company has a diversified portfolio
incorporating interests in three underground producing mines in
South Africa (Finsch, Cullinan and Koffiefontein) and one open pit
producing mine in Tanzania (Williamson). It also maintains an
exploration programme in Botswana and South Africa, which is
currently under review.
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 of ca. 290 million carats,
which supports the potential for long-life operations.
Petra conducts all operations according to the highest ethical
standards and will only operate in countries which are members of
the Kimberley Process. The Company 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'
and is a constituent of the FTSE4Good Index. For more information,
visit www.petradiamonds.com.
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END
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