Petra sales Helam Diamond Mine
Helam
has the potential
to
be a small-scale sustainable
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.
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