TIDMPDL
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]) 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
Camarco (Financial PR)
Gordon Poole Telephone: +44 20 3757 4980
Owen Roberts 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 .
[1] 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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