15 December 2021 |
LSE:
PDL |
Petra Diamonds
Limited
("Petra" or the "Company" or the
“Group”)
Execution of
Memorandum of Understanding with Caspian Limited
regarding sale of
shares in Williamson Diamonds Limited
Petra Diamonds Limited announces that it has executed a
non-binding Memorandum of Understanding (“MoU”) to sell 50% (less
one share) of the entity that holds Petra’s shareholding in
Williamson Diamonds Limited (“WDL”), along with a pro rata portion
of shareholder loans owed by WDL, to Caspian Limited or its nominee
(“Caspian”) for a total consideration of US$15 million. Caspian is the long-term technical services
contractor at the Williamson Mine in Tanzania.
WDL is the operator of the Williamson Mine. WDL is
currently 25% owned by the Government of Tanzania and 75% owned by Petra, with Petra
having acquired its majority interest in WDL in 2009. However,
further to the Framework Agreement with the Government of
Tanzania announced on 13 December 2021, which provides for a capital
restructuring of the WDL entity, Petra’s effective interest is due
to decrease to 63% and the Government of Tanzania’s to increase to
37%. Upon completion of the transactions contemplated by the MoU
and upon the capital restructuring in the aforementioned Framework
Agreement becoming effective, Petra and Caspian will each indirectly hold a 31.5%
stake in WDL but with Petra retaining a controlling interest in
WDL.
Caspian’s purchase will be funded through the settlement of
US$11.1 million of past technical
services payments owed by WDL to Caspian, including services rendered during
the recent restart of operations following the care and maintenance
period, with the remaining amount being funded by Caspian rendering US$3.9 million of technical services to WDL in
order to ramp-up operations at the Williamson Mine.
The transactions in the MoU are subject to Petra and
Caspian agreeing definitive
transaction agreements, including a share purchase agreement and a
shareholders’ agreement, with the parties seeking to agree those
transaction agreements in early CY 2022. The sale of the 50%
stake in the entity that holds Petra’s shares in WDL is subject to
the parties obtaining all necessary Governmental, regulatory and
lender approvals, including approvals from the Tanzanian Mining
Commission, the Tanzanian Fair Competition Commission and The Bank
of Tanzania, and a binding ruling
from the Tanzania Revenue Authority on the tax treatment of the
transaction. The parties are seeking to obtain such approvals
by the end of H1 CY 2022.
As noted in the Company’s FY 2021 Preliminary Results released
on 14 September 2021, the Board
decided to review its strategic options at Williamson which
resulted in the asset being classified as an asset held for sale
for financial reporting purposes. The transaction announced today
will see Petra consolidating Williamson’s operating and financial
results, with an appropriate recognition of non-controlling
interests attributable to both Caspian and the Government of Tanzania.
As announced in the Company’s Q1 FY 2022 Trading Update dated
26 October 2021, production at
Williamson has recommenced post the care and maintenance period and
is expected to ramp-up over the course of FY 2022, with estimated
production at the Williamson Mine in FY 2022 of 0.22 to 0.27
Mcts.
Petra will continue to meet its obligations under the settlement
it reached on 12 May 2021 in relation
to claims brought in London by the
UK law firm Leigh Day on behalf of a number of anonymous
claimants. This includes the design and implementation of a
non-judicial Independent Grievance Mechanism to address allegations
of human rights impacts at the Williamson Mine, and the funding of
various restorative and community programmes intended to provide
long-term sustainable support to the communities living around the
mine.
Richard Duffy, Chief Executive of
Petra, commented:
“We are very pleased to be partnering
with Caspian, who bring
considerable local and mining experience. This will assist us in
optimising the orebody for the benefit of all of Williamson’s
stakeholders, both in the short term as we continue to ramp-up
operations and in the longer term to fully realise the mine’s
potential in an improved economic environment.
Our new arrangement with Caspian, following the Framework Agreement
signed with the Government of Tanzania on 13 December, puts Williamson on a
very solid basis for the future. The reduction in Petra’s equity
interest in to WDL, from 75% to 31.5% while still retaining
control, both reduces Petra’s exposure in line with our stated
objectives outlined in our Preliminary Results while maintaining a
share of the upside that we believe exists following the signing of
the Framework Agreement with the Government who continue as
partners.”
Rostam Azizi, Chairman of
Caspian, commented:
“Caspian is a wholly Tanzanian owned
company. It is also Tanzania’s largest mining contractor with over
30 years mining related experience. We have been the contractor of
choice to most mines in Tanzania and have maintained long and
successful relationships with companies such as Petra, De Beers,
Barrick and AngloGold Ashanti. In addition, we also own the largest
fleet of mining equipment in Tanzania. As a company, we are committed to
adopting and adhering to the latest internationally recognised
standards throughout all aspects of our business.
“We have been contracting at the Williamson Mine, the largest
kimberlite diamond mine in the world by surface area for close to
20 years and as such we are particularly pleased to enter into this
next phase of our involvement at the mine as co-owners. We
recognise its viability in providing sustainable employment and a
significant contribution to the Tanzanian economy.”
This announcement includes inside information as defined in
Article 7 of the Market Abuse Regulation No. 596/2014 and is being
released on behalf of Petra by the Company Secretary.
~ Ends ~
For further information, please
contact:
Petra Diamonds,
London
Telephone: +44 20 7494 8203
Cathy
Malins
investorrelations@petradiamonds.com
Des Kilalea
Julia Stone
About Petra Diamonds Limited
Petra Diamonds is a leading independent diamond mining group and
a supplier of gem quality rough diamonds to the international
market. The Company’s portfolio incorporates interests in three
underground producing mines in South
Africa (Finsch, Cullinan and Koffiefontein) and one open pit
mine in Tanzania (Williamson).
Petra's strategy is to focus on value rather than volume
production by optimising recoveries from its high-quality asset
base in order to maximise their efficiency and profitability. The
Group has a significant resource base of ca. 230 million carats,
which supports the potential for long-life operations.
Petra strives to conduct all operations according to the highest
ethical standards and only operates in countries which are members
of the Kimberley Process. The Company aims to generate tangible
value for each of its stakeholders, thereby contributing to the
socio-economic development of its host countries and supporting
long-term sustainable operations to the benefit of its employees,
partners and communities.
Petra is quoted with a premium listing on the Main Market of the
London Stock Exchange under the ticker 'PDL'. The Company’s
US$336.7 million notes due in 2026
are listed (subject to temporary suspension) on the Irish Stock
Exchange and admitted to trading on the Global Exchange Market. For
more information, visit www.petradiamonds.com.
About the Williamson Mine
The Williamson Mine was discovered in 1940 by Dr John Williamson, a Canadian Geologist, and is
the largest economic primary diamond deposit to have been in near
continuous production for over 70 years.
The Williamson Mine’s Special Licence Area covers an area of
30.6km2 in the Shinyanga province in north-western
Tanzania. The mine is an open pit
operation based upon the 146 hectare Mwadui kimberlite pipe, which
is one of the world’s largest economic kimberlites.
Despite having been in operation since 1940, the pit is only 120
metres at its deepest point due to the large size of the deposit.
The low grade of the deposit is countered by the high value of its
diamonds and lends itself well to high volume, bulk mining
methods.
Williamson is renowned for ‘bubblegum’ pink diamonds, including
the Williamson Pink, which is considered one of the finest pink
diamonds ever discovered. It was found in October 1947 weighing 54 carats in the rough. The
mine, then owned by the Canadian geologist and royalist Dr
John Williamson, gave the diamond to
Princess Elizabeth in 1947 as a
wedding present. It was cut into a 23 carat round brilliant and set
as the centre of a brooch in the form of a jonquil flower, designed
and set by Cartier in 1953. The mine also produces beautifully
rounded white diamonds of high quality.
In FY 2019, the Company achieved the highest level of production
at the mine in over forty years, with 399,615 carats produced (FY
2020: 298,130 carats). The Company’s current mine plan for
Williamson has a life to 2030 but given that the Mwadui kimberlite
hosts a major resource of 39.0 Mcts, there is potential to
substantially extend the LOM.