Acquisition

14 Sep 2007 10:12

Petra Diamonds Ld14 September 2007 Petra Diamonds Limited Acquisition of Kimberley Underground Mines Petra Diamonds Limited ("Petra" or "the Company") announces that it has enteredinto a conditional agreement ("the Agreement") with De Beers Consolidated MinesLimited ("De Beers") to acquire the mining and associated assets ("Assets")previously used by De Beers in the operation of the Kimberley Undergrounddiamond mines ("Kimberley Underground"), which are situated near Kimberley,South Africa. Highlights • Petra to acquire the mining and associated assets of the Wesselton, Du Toitspan and Bultfontein mines (together the Kimberley Underground mines) from De Beers for a total consideration of R78.5 million • Petra to run the mines on a care and maintenance basis on behalf of De Beers until all required mining authorisations are received from the South African authorities • Based on historical production and sales information , Petra expects annual sales from Kimberley Underground in excess of 100 000 carats at an average of US$160 per carat once full production is recommenced, giving gross annual revenues in excess of US$16 million and a life of mine of at least 12 years Adonis Pouroulis, Petra's Chairman commented "Alongside Petra's highlyprospective Angolan exploration assets the acquisition of Kimberley Undergroundis an important addition to Petra's substantial base of producing assets inSouth Africa. Together Kimberley Underground, Koffiefontein and Petra's fissuremines will contribute annual production in two years time of around 400,000carats." Based on historical production and sales information Petra expects annual salesfrom Kimberley Underground in excess of 100,000 carats and gross revenues inexcess of US$16 million, adding approximately US$12 million (74% JV share *) tothe Petra group revenues in the year to June 2009. The consideration of R78.5 million (US$11 million) is to be settled by Petraassuming De Beers' rehabilitation obligations with regards to KimberleyUnderground of R63.5 million (US$8.9 million), and the payment in cash by Petrato De Beers of R15 million (US$2.1 million). The acquisition is conditional on the required mining rights and associatedapprovals from the South African Department of Minerals and Energy ("DME") asdetailed below. Petra is not permitted to commence mining in its own right untilthe DME approvals are received. In the meantime, Petra has entered into a careand maintenance agreement with De Beers in respect of Kimberley Underground inorder to maintain the condition of the caves and, ensure the efficientcommencement of mining activities when the conditions are met. Completion of the Agreement is conditional upon the following conditions: (i) the DME converting the old order mining right in respect of Kimberley Underground held by De Beers into a new order mining right; and (ii) the amendment of the new order mining right to subdivide the Kimberley Underground mines from other rights to be retained by De Beers; and (iii) DME consenting to the cession to Petra of the new order mining right in respect of Kimberley Underground; and (iv) the DME consenting to the cession, transfer and delegation of the rehabilitation obligations and liabilities in respect of Kimberley Underground from De Beers to Petra; and (v) other related sale assets being sub-divided as required, and all regulatory approvals or consents being obtained in that regard; and (vi) issue of appropriate guarantees to De Beers; and (vii) all other regulatory approvals as may be required. Petra has concluded a joint venture agreement ("JV Agreement") with SedibengMining (Pty) Limited, its Kimberley Underground Black Economic Empowerment ("BEE") partner, and the joint venture will use the assets acquired from De Beers tooperate Kimberley Underground. Under the terms of the JV Agreement, Petra'sinterest in the JV will be 74%, with the BEE partners holding the remaining 26%. Given the nature of the proposed transaction, the Company has provided suchdisclosure, as is required, in accordance with Schedule 4 of the AIM Rules as aSubstantial Transaction. A further announcement will follow in due course whichwill include a Kimberley Underground resource statement. An exchange rate of US$1:R7.15 has been used for the purposes of thisannouncement. * Petra's net interest in Kimberley Underground will be 74%, with its BEEpartner, Sedibeng Mining (Pty) Ltd holding the remaining 26%. Ends Notes 1. The information in this update that relates to Exploration Results, MineralResources or Ore Reserves is based on information compiled by Jim Davidson, Pr.Sci Nat (reg No 400031/06), who is a Member of the Geological Society of SouthAfrica, a 'Recognised Overseas Professional Organisation' ('ROPO'). Jim Davidsonis the Qualified Person for the purposes of the AIM Guidance Note on Mining, Oiland Gas Companies dated March 2006. Jim Davidson is a full-time employee of theCompany and has sufficient experience which is relevant to the style ofmineralisation and type of deposit under consideration and to the activity whichhe is undertaking to qualify. Jim Davidson has given his written consent to theinclusion in this announcement of the matters based on his information in theform and context in which it appears. 2. It should be noted that the potential quantity in this report is conceptualin nature, there has been insufficient exploration to define a Mineral Resourceand it is uncertain if further exploration will result in the determination of aMineral Resource. For further information, please contact:Louise Goodeve / Justine Howarth Telephone: +44 (0) 20 7851 7480Parkgreen Communications, London Adrian Hadden Telephone: +44 (0) 20 7523 8000Collins Stewart, London This information is provided by RNS The company news service from the London Stock Exchange