Petra withdraws interest at KEM JV

Completion of Disposal of Interest in

Kimberley Ekapa Mining Joint Venture (KEM JV)

Petra Diamonds Limited announces that the disposal of the Company’s and its black economic empowerment (BEE) partners' 75.9% interest in the KEM JV to the Company’s joint venture partner Ekapa Mining (Pty) Ltd (Ekapa Mining) for a cash consideration of ca. ZAR300 million, as previously announced on 5 July 2018, completed following all conditions precedent in the terms of the agreement having been met. 

KEM JV was a joint venture between Petra and its partner Ekapa Mining and incorporates the Kimberley Underground mine, extensive tailings retreatment programmes and the high volume Central Treatment Plant – all located in or around the historic diamond mining centre of Kimberley in South Africa. The Disposal is on a going concern basis, with Ekapa Mining taking on all of the Company’s financial, employee, environmental, health, safety and social obligations with regards to the KEM JV operation.

The terms of repayment of the R300 million purchase consideration, originally to be payable in 24 monthly instalments starting in January 2019, have been amended to allow Ekapa Mining to maximise the prospects of the financial viability of the operation. According to the terms, the purchase consideration will be settled as follows:

-     A fixed portion of R60 million payable in 24 monthly instalments starting on 1 April 2019;

-     The balance of the purchase consideration will be repayable from a 50% share of future operating cash flows including proceeds from the sale of assets, potential proceeds from a pending insurance claim that is subject to ongoing discussions, in relation to the mud-rush incident at Bultfontein, and adjusted for sustaining capital of between R110 million and R130 million per annum, for a period of five years to 30 June 2024. 

Johannes Dippenaar, CEO commented, “The completion of the disposal is in line with the Company’s strategic priorities which include the ongoing review of the asset portfolio in order to maximise return on capital and ensure that all assets are in a position to contribute positive cash flow to the business.”

The Company recorded an attributable loss on discontinued operations of US$104.3 million relating to the reclassification of KEM JV as a discontinued operation in the Company’s results for the year ended 30 June 2018.