(IDEX Online) - Petra Diamonds Limited is selling off its interest in Helam Mining (Pty) Ltd in South Africa to Lindleys Mining (Pty) Ltd for a nominal consideration ZAR200 ($14) with immediate effect.
Petra put the Helam mine on care on maintenance during FY 2015 following previous attempts to find 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 maximizing return on capital and to ensure that all assets are in a position to contribute positive cash flow to the business."
Petra said its directors made the decision 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 optimization of these assets
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 utilized to conduct resource and production sampling and analyses for the Petra Group. Lindleys Mining has 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.