Petra at Disposal of Helam mine
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 partners' interest in Helam Mining Pty Ltd, is a Diamond Mine in South Africa owned by Petra Diamonds, to Lindleys Mining Pty Ltd for a nominal consideration of ZAR200 million 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, 1: 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 2: 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 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.
