Petra acquires Cullinan from De Beers for R1bn

De Beers Consolidated Mines (DBCM), the South African arm of diamond giant De Beers, on Thursday said it had agreed to sell the Cullinan Diamond Mine as a going concern to the Petra Diamonds Cullinan Consortium (PDCC) for a consideration of R1-billion payable in cash.

PDCC is comprised of AIM-listed diamond mining junior Petra Diamonds, Saudi-based investment company al-Rajhi Holdings and their empowerment partner, Thembinkosi Mining Investments.

Thembinkosi’s shareholders include Sedibeng Mining, Namoise Mining, Umnotho weSizwe Group and a Petra Employee Share Trust.

“This transaction is a transformational deal for Petra and reflects the opportunities DBCM is creating for new players in the diamond industry,” said Johan Dippenaar, CEO of Petra.

The second-largest producer of diamonds in South Africa after De Beers, Petra Diamonds also has operations in Angola, Botswana and Sierra Leone.

Petra, whose share of the acquisition price is R325-million, also acquired the Dancarl Mine in the Barkley West district of the Northern Cape and the Koffiefontein mine in the Free State from De Beers.

It also reached an agreement with DBCM to purchase the company’s Kimberley underground mines in September 2007, which the parties hope to finalise by early 2008.

De Beers said to date these three transactions have secured 1 050 jobs that would otherwise have been lost in South Africa.

Apart from these sales, De Beers’ million-carats a year Namaqualand assets are being combined with those of Alexkor, the embattled state diamond miner.

That leaves De Beers with just a handful of producing mines in South Africa, among them its younger Finsch mine in the Northern Cape and Venitia mine near Musina in Limpopo province.

It also means De Beers has managed to dispose of three of its four unprofitable operations—the final one being The Oaks in the Limpopo Province, which is likely to be discontinued rather than sold.

Sale of its unprofitable mines in South Africa is part of De Beers’ new global strategy of not only maximising market share, but also seeking higher return on capital.

With its portfolio review process now complete, De Beers is once more focusing on new projects such as the South African Sea Areas project, a recently operational marine mining operation off the West Coast of South Africa, and the Voorspoed diamond mine in the Free State, which will come fully on stream in 2008 and 2009.—I-Net Bridge

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