Petra Sells Kimberley Mine for $22M

RAPAPORT... Petra Diamonds will offload its majority stake in theKimberley mine, claiming the deal will ensure a sustainable future for theproject and help the company focus on its core assets. Ekapa Mining has agreed to buy Petra's 76% interest in the SouthAfrica deposit for $22 million (ZAR 300 million), Petra said Thursday. Thecompanies are currently in a joint venture incorporating the Kimberleyunderground mine and its associated tailings operations, with Ekapa holding 24%. Local businesses known as Petra's Black EconomicEmpowerment partners also own a portion of the miner's share, and will beselling their interest. "The rationale for the disposal is to ensure asustainable future for [the Kimberley joint venture] by placing the operationunder the sole stewardship of an operator best suited to maximize its value,"Petra said. Ekapa's experience of operating in Kimberley and itsability to focus solely on those assets will help maintain employment andeconomic activity in the historic diamond center, the miner added. The deal will also free up Petra executives' time toconcentrate on key mines such as Finsch and Cullinan, and reduce operatingcosts and risks, the company said. The Kimberley project still needs timebefore its income exceeds spending, Petra cautioned. In addition, the salevalue will help Petra's cash availability, it noted. Petra expects to complete the sale in the first fiscalquarter ending September 30, with Ekapa paying the purchase amount in 24monthly installments beginning January 2019. The London-listed miner said it would review itsportfolio 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 tobuy additional shares in the company, thereby raising $178 million to repaybank debt. The miner has accumulated significant debts due toseveral difficulties at its mines, including production delays at Cullinan andFinsch, strikes at its South African operations and the seizure of a diamondparcel by the Tanzanian government.Image: Petra Diamonds